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Curshing Debt
Sorry to be the bearer of more unsavory news, but it is the reality of our industry right now and we cannot pivot without the facts.
Fewer than 2 in 3 Americans can afford a $400 emergency. That could be anything; a blown tire, a medical bill, bail (for getting caught trying to steal the 400 bucks you need to owe), or say, a speeding ticket.
In lighter and brighter news, American’s have finally amassed $1 Trillion dollars of credit card debt and the average credit card charges are at a near-record; 20.53% interest rate and rising as we speak. The fed fund rate is directly tied to credit card rates and that rate is at the highest it’s been in 22 years.
Now, this is shocking and telling, so take note! The number of people who made 401K retirement hardship withdrawals during the second quarter surged from the first three months of the year to 15,950, an increase of 36% year over year!
That statement is saturated in opportunity. The seams in the fabric of our clients finances are stretched beyond the manufactures recommended limitations! We need to come in and alleviate the stress! We do with with seconds, debt consolidated refinances and home-sales. You can make an argument that the last option on the table should be to tap your retirement, especially if you’re going to pay the early withdrawal penalties and tax consequences. My question for these desperate folks is this; where’s your lender and realtor to help you with these decisions? The answer is sadly, at home complaining about their own lack of business..
According to Matt Schulz, the chief credit analyst for LendingTree, “There’s plenty of data that shows people are doing really well. Their debt compared to their expendable income is OK. Delinquencies are low, and unemployment is low, But there’s also only so much hard debt that people can handle before delinquencies really spike.”
And on queue, delinquencies continue to climb from recent historic lows, according to the latest New York Fed report.
This is the big one and nobody seems to know what to do with it! Student loan payments are set to resume in October; really just a few weeks away. That is expected to impact 43.5mil Americans with a total debt load of 1.7 trillion, averaging $37,787 each. Now, consider how many of those are households with two student loan holders?!
Couple this with the increase in car loan defaults and it paints a grim picture for our housing market.
This is why it is more important than ever to be strategic in your marketing efforts and make sure that your time, energy and financial contributions are truly serving your business, and your pocketbook.
It’s still boomers leading the charge in the real estate space so set your sites there! Generally boomers have more savings, paid off student loan debt, and are more likely to be looking to make a move based on their wants and desires vs being pigeonholed where they are! And, they are more likely have cash on hand or equity in their current home to make them less susceptible to the current rate environment.
According to Taylor Marr, the Redfin deputy chief economist “Gen z, aged 18-27 is trampling Gen X in the numbers of who own homes in the their 20’s, but ‘Some cash sales are coming from millennials, but they may be borrowing from ‘the bank of mom and dad’ or a relative” which brings us back to our point. Who’s driving the market? Seniors. You know the generation that probably shouldn’t be driving anymore. I’m talking to you mom! I swear, I think she hates curbs.
Let that be a lesson loan officers and realtors; if you want to succeed you need to mine geriatric gold, the convalescing cash cows, the selling seniors, the buying boomers, the generation that brought us the British invasion. They hold the keys.
