All the way from the West Coast and headed for Massachusetts. I'd never heard of this company or their services until today and after a bit of research I have to say I was intrigued. The Boston.com article says this investment company (not to be confused with a traditional lender/mortgage company) will cover half of your down payment on a house in exchange for 40 percent share of the profit when you sell it. What if you never sell it? Why would you make improvements? What prompts a company like this to target Massachusettts as it's next market area? What do we have in common with California, Washington and Oregon where they currently operate? Why does this sound like gambling to me? Read that full story here.
I listened to Anthony Sanders, Real Estate Professor at George Mason University on Bloomberg this morning and he estimates we are currently in a cash and investor recovery, not at the household level yet. What does that mean? It means the real estate recovery, rise in sales, etc. the media continues to talk about, really is only in effect for the folks who already have established wealth, not the average Joe looking to buy a first home. Real median household income continues to fall across the country and the U.S. homeownership rate fell to 65 percent this year, its lowest level since 1995, according to Census Bureau data, as fewer people were able to qualify for a mortgage. About 47 percent of renters hoping to become homeowners say saving enough for a down payment is a major barrier, according to a 2012 survey by Harris Interactive. A total of 12 percent who plan to buy someday would consider borrowing money from friends or family (How about a casino?) for a 20 percent down payment to get a "dream home," a June survey for the firm found. The bright light is that homeownership remains the primary goal for young couples.
Being an optimist, I looked for proof to support my hope. Could this could be a solution, the assistance, a hand for those 'average folks', the 'young couples' starting out, the ones basking in the bright light of hope-of-homeownership, doing all the right things but still struggling with the ominous 20% down payment? In a place like Massachusetts, here on the North Shore anyway, that 20% averages about $80,000, monumental to many. Could this finally be a way to help those renters take part in the American Dream? Sadly, no...all signs point in the other direction...sigh.
Wealthy borrowers are their target market. Again, sigh...the ones who can afford to 'gamble'. California, Washington and Oregon where the average price is $800,000 has been their focus and it's a safe bet they will stay with the jumbo market (loans higher than $625,000) here in Mass, there's certainly plenty.
Wealthy borrowers, take note, the real estate casino is coming to town. Renters, don't give up. It can be done. I've seen it a thousand times over the past 26 years. Not sure where you stand? We can help. 978-356-8922. We have a team of preferred lenders who exceed our expectations every day.