Iryna Lotitska - Core Realty & Investments

Iryna Lotitska - Core Realty & Investments Serving Your Real Estate Needs
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Just closed on this beautiful and spacious townhome in Lemont.🙂🥳👩🏻‍💼Feel free to reach me for your real estate needs.
10/12/2021

Just closed on this beautiful and spacious townhome in Lemont.🙂🥳👩🏻‍💼Feel free to reach me for your real estate needs.

Using Real Estate To Hedge Against InflationTo say that the economy is in uncharted territory would be an understatement...
08/27/2021

Using Real Estate To Hedge Against Inflation

To say that the economy is in uncharted territory would be an understatement. Two market forces are currently at play that can cause economic pain for years to come depending on how things play out. These two forces are inflation and unemployment. How the government and the Federal Reserve respond to the pressures from these two historically opposing forces can have a lasting impact on our economy and pocketbooks for years to come.

All eyes are now on the Fed and how it responds to inflation. At the beginning of this article, the economy is in uncharted territory because unemployment is already high. The question is will the Fed raise rates to slow inflation but, in doing so, throw a wrench in employment growth? Inflation will put the Fed's new inflation policy to the test. Last August, the Fed announced its new policy of "average inflation targeting" in which it would allow inflation to run "moderately" above its long-standing target of 2% in the name of job preservation. Will it stick to its guns now that inflation is more than double its historic target of 2%?

The current situation is eerily similar to the early days of the Carter Administration in 1977 when unemployment was hovering around 7.4 percent. President Carter initiated a spending program while asking the Fed to expand the current money supply. After two years, the rate of inflation was at 13.3% and the Fed stepped in again to tame the high inflation of 1979 by constraining the money supply growth. Soon after, the unemployment rate went up to some of its highest levels.

Like in 1977, loose monetary policy and free money in the form of trillions in stimulus money are partly to blame for rising prices. Nobody wants a repeat of the late '70s, and early 90's where both inflation and unemployment reigned.
Neither situation is good for the economy or retail investors of public stocks. Hyper-inflation means less buying power and less spending by consumers in response to higher prices. On the side, higher interest rates mean higher unemployment and fewer wages being earned by workers for injection into the economy. Either way, public companies will take a hit along with their stock prices.

Inflation doesn't have to be the enemy of every investor. In fact, savvy investors leverage inflation to their advantage by investing in insulated assets from both recessions and inflation. In an inflationary environment, the ideal asset will produce goods or provide services that move in the same direction as rising prices without a dip in demand. What kind of goods or services can demand higher prices without losing demand? Essential goods and services — products consumers cannot live without — like housing, food, energy, etc. Luxury goods will be the first to go as consumers stick to the basics of survival.

Certain segments of real estate, such as affordable housing, are ideal inflation buffers because people will always need shelter. As buying power is diminished, consumers will allocate to more affordable options. Not only is affordable housing an ideal inflation buffer, but it also tends to be recession-resistant. While specific real estate segments like office and retail suffer along with the broader economy in a recession, affordable housing thrives as the Great Recession and the pandemic demonstrated. When workers lose jobs or experience wage reductions, many downsize to more affordable housing options. In 2020, while most commercial real estate sectors saw increases in vacancies and declines in rents, affordable housing like mobile homes and multifamily bucked the trend and saw decreased vacancies and increased rents.
Nobody is sure how inflation and unemployment will play out in the coming months. One segment of investors will take a wait-and-see approach while another segment isn't waiting for the shoe to drop. They take a proactive approach to protecting their portfolios by allocating tangible assets that hedge against inflation and buffer against recessions.

Whether runaway inflation or runaway employment rules the day, investing in real estate segments like affordable housing can help build a buffer for investors. With rents that track rising prices in inflationary times or that experience bumps in demand in recessionary times, investors can profit in either situation and stand a better chance of surviving the coming storm.

Just closed this beautiful condo today in Des Plaines. Congratulations to my client!
08/18/2021

Just closed this beautiful condo today in Des Plaines. Congratulations to my client!

Just closed this beautiful condo today in Des Plaines. Congratulations to my client!!
08/18/2021

Just closed this beautiful condo today in Des Plaines. Congratulations to my client!!

Illinois renters fear of being evicted the moratorium ends soonThe moratorium, issued by the Centers for Disease Control...
07/25/2021

Illinois renters fear of being evicted the moratorium ends soon

The moratorium, issued by the Centers for Disease Control and Prevention, officially ends July 31. The most recent extension was issued in June, and federal officials have indicated they have no plans to extend it again. While some states, including Illinois, have given renters a few additional weeks of protection, millions remain worried about losing their homes.

Two weeks before the moratorium ends, more than 1.4 million Americans are saying it's very likely they'll be evicted from their homes in the next two months, according to the U.S. Census Bureau's Household Pulse Survey. On top of that, about 4.9 million renters say they have no confidence in their ability to pay rent next month, while 7.4 million are still trying to catch up on rent payments.

While the federal government has funneled more than $46 billion in assistance to the country's renters during the course of the pandemic, distributing that money has proved difficult. In some cases, the money never reached its intended recipients.
Ultimately, little has been done to curb an all-but-certain wave of eviction proceedings once the moratorium is lifted. Meanwhile, the White House is pushing state and municipal governments to do everything they can to stave off an eviction crisis.
"It's fundamentally the responsibility of state and local governments to get relief in the hands of renters and landlords," Susan Rice, director of the White House's Domestic Policy Council, said during an early July meeting.

Renters in Illinois share the same fears as others across the nation. Nearly 25,209 renters in our state are saying it's very likely they'll be evicted from their homes in the next two months. Meanwhile, 59,416 renters say they have no confidence in their ability to pay rent next month and 252,800 are still trying to catch up on rent payments, according to the Census Bureau.

Now, experts say an eviction crisis is "looming" in the United States. The increase, researchers say, suggests landlords were acutely aware of what moratoriums were in place and were ready to kick out tenants who hadn't paid their rent as soon as it was legally allowed. Around 16 percent of adult renters were not current on their housing payments as of July 2021, according to an analysis by The Center on Budget and Policy Priorities.

Housing Market towards the Fall and Winter 2021 The surge in the housing market has led to scarcity of inventory accordi...
07/03/2021

Housing Market towards the Fall and Winter 2021

The surge in the housing market has led to scarcity of inventory according to data from Illinois Realtors. Compared to last year, the reduction in inventory is more than 50%. The housing market “looks like a wildfire”, said Dennis Rodkin, who covers the residential real estate market for Crain’s Chicago Business. “It is really hard to believe how quickly houses are selling, how fast prices are going up … since 2007, since the end of the last big boom, we have seen like this. We started 2021 with the smallest number of homes on the market going back to about 2007, and we had a very high wave of demand, and it hasn’t solved itself yet. We haven’t brought enough homes on the market,” Rodkin said.

The market boom has prompted concerns that it could lead to a repeat of the last market boom in the mid-2000s, which created a housing bubble leading to the Great Recession. But experts are hesitant to make apples-to-apples comparisons between this housing market fueled in part by pandemic-related demand and low interest rates, and the one that preceded the Great Recession. The circumstances contributing to today’s booming housing market are very different from what caused the last boom. In particular, lenders are being far more careful. The housing boom that prompted the Great Recession stemmed from the rise of easy lending. Banks and other mortgage lenders were originating riskier loans — often requiring little in the way of documentation from borrowers to prove they could afford their monthly mortgage payments.

Currently, there are also signs that gradual flattening of the housing demand is taking place. As the concerns about virus diminishes, we are seeing reopening and a return to the city and no longer the fear there once was. Suburban markets did experience a tremendous amount of appreciation and next six months is the time for a cool down.

Another possible accelerator for the cool down is the Government’s bailout program, which allowed people to delay mortgage payments, will end by September 2021. This program provided a significant help for 10 million borrowers impacted by COVID-19 who have been experiencing financial hardship. Once the forbearance or no-pay period ends, these borrowers will not only resume making their regular mortgage payments but also they need to pay back the payments that are missed.

Combination of lack of virus fears, going back to city, and a sharp increase in foreclosures due to end of the bailout program could spark a faster than expected cool-down by the Fall and towards Winter. It could be a great opportunity for those who are planning to purchase a new property.

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