The U.S. Housing Market – What Role will Private Lending Play?
It is Crucial to Have a Network You Can Rely on
By Amy Kame
As the U.S. housing market continues to navigate the complexities of supply and demand dynamics and interest rate hikes, the role of private lenders has become increasingly important. NPLA members provide leadership and education to an industry that contributes innovative solutions to increase the availability and affordability of homes in America.
Leading economists from Zillow, the National Association of Realtors (NAR), John Burns Research and Consulting, Fannie Mae, and the National Association of Home Builders (NAHB) anticipate the housing market will continue to experience growth, albeit at a slower pace.
The latest research estimates that the housing shortage in the U.S. ranges from 1.7 million to 7.3 million units. The National Low Income Housing Coalition cited a 7.3-million-unit shortage, Realtor.com at 6.5 million, Fannie Mae at 4.4 million, and John Burns Research & Consulting at 1.7 million.
The disparity in these estimates diverges due to different definitions of “shortage” and methodologies in calculating the number of homes needed. Fannie Mae suggests that the U.S. should both build new units and preserve existing ones to tackle the housing shortage, as rehabilitating existing units can be cheaper than constructing new ones. According to a report from the Joint Center for Housing Studies of Harvard University, the U.S. has a significant number of older housing units, many of which require rehabilitation. In 2019, about 37% of the U.S. housing stock was at least 50 years old. Rehabilitating these units will help address the housing shortage.
According to Lawrence Yun, NAR’s chief economist, “the market will continue to shift toward a more balanced state in 2023 and 2024, with inventory levels gradually increasing and price growth slowing down” (NAR, 2023). He mentioned that “new construction activity, especially for entry-level homes, will be key to addressing the ongoing housing shortage.”
Products offered by private lenders help local communities repair unsafe or unhealthy housing, convert industrial and retail properties into residential properties, and rehabilitate outdated housing stock. Private lenders will continue to play a crucial role with their ability to strategically direct capital to areas in need of development and offer flexible financing and an accelerated funding process.
Implications for Private Real Estate Lenders – Stay in the Know
The factors discussed in this article indicate that private real estate lenders will encounter both opportunities and challenges in the near future. With the constant flow of information and different predictions from economists and research houses, it is crucial to have a network of professionals within the industry that you can rely on for guidance, advice, and leadership. Stay informed about all things private lending and consider joining the NPLA community.
The NPLA Conference is Headed to the Tri-State Area
June 19-21
Hard Rock Hotel & Casino, Atlantic City
The National Private Lenders Conference is the premier Private Lending Conference in the country. We have served the private lending space for 21 years, and our success can be attributed to our track record of consistently producing premium events for industry professionals to network and grow their businesses.
Our mission is to facilitate commerce between capital providers, lenders, investors, brokers, and service providers. At our conference, you can expect to hear from industry experts who will share their insights and experience on the latest trends and developments in private lending. We cover a wide range of topics, including risk management, deal structuring, market analysis, and legislative and regulatory compliance.
As we move through 2023 and look ahead to 2024, private real estate lenders face a complex and evolving market. Taking part in the NPLA Conference and the Association allows you to access a network that has proven invaluable for sharing knowledge, receiving advice, and finding new opportunities. Being part of the NPLA means you can rely on industry leaders’ collective knowledge and expertise.
What’s the Buzz About
The National Private Lenders Conference in Atlantic City will showcase the biggest players in the Private Lending Industry, educational and motivational speakers, and newly added networking sessions with hundreds of local brokers. We welcome you to join our community and attend our upcoming conference. Register by visiting www.nplaconference.com.
Monday, June 19
NPLA Charity Poker Tournament Supporting St. Jude
St. Jude Children’s Research Hospital is a leading pediatric treatment and research facility focused on curing childhood diseases, including cancer. By participating in our poker tournament, you will be helping to support this incredible organization and its mission to advance cures and means of prevention for pediatric diseases. Let’s help support the amazing work of St. Jude Children’s Research Hospital together. Fee not included in registration.
Tuesday, June 20
NPLA Conference — Networking Lounge and VIP Cocktail Party
Building relationships is crucial in the lending industry. The NPLA conference provides ample networking opportunities for attendees. We facilitate numerous networking events throughout the conference to ensure that guests and sponsors can connect and build valuable partnerships.
Wednesday, June 21
Conference Day Highlights
State of the Industry — Devyn Bachman, Senior Vice President, Research & Operations, John Burns Research & Consulting
Devyn will share JBREC’s macroeconomic outlook for housing. In addition, she will dive into quantitative and qualitative trends driving the current market conditions for investors and lenders in both the for-sale and for-rent sectors. Devyn monitors for-sale and for-rent housing markets nationwide, providing clients and associates with the most timely and accurate insights on housing market conditions.
Panel Discussions and Presentations
Economic Trends in Private Lending (Capital Markets Panel)
Executives from the top capital-providing firms will discuss the current state of Private Lending, including trends and growth opportunities, strategies for managing risk and ensuring profitability, and predictions for the industry and the market in the short and long term.
Unlocking the Potential of Private Lending: Best Practices in a Changing Market (Private Lender Forum)
Changing markets can expose lenders to existential risks. Listen in as industry leaders discuss maximizing your balance sheet by utilizing various funding methods. Executives will discuss best practices for successful lending, such as tips for managing risk and the current interest rate environment, properly underwriting loans, and evaluating borrowers.
The NPLA Presents — The Future of Private Lending: Trends, Challenges, and Opportunities
Members of the NPLA will share their insights into the factors driving growth in the industry, including the rise of alternative lending platforms, changes in regulations, and the impact of new technologies. Where is the Private Lending Industry headed, and how should you prepare?
Maximizing Value with Private Lending Service Providers
The top service providers in Private Lending will share the impact of new technologies and innovations in the industry. You will learn about the platforms and services you need to improve your lending capabilities, from valuations to insurance, legal, and more.
More Networking Sessions & Entertainment
Continue to build relationships and network with new contacts.
Sidebar
The National Private Lenders Association
We are the official trade association representing Private Lenders and real estate service providers nationwide.
The mission of the NPLA is to support, protect, and grow the Private Lending Industry. The NPLA serves as a platform where members collaborate, share ideas, and stay informed. We advise and educate the public, as well as both state and federal policymakers, on the vital role Private Lending plays in real estate markets throughout the United States.
Stay in the Know – The NPLA Educational Content
The NPLA hosts biweekly meetings that have become a trusted resource for members. Members and special guest speakers discuss the most critical issues facing the Private Lending Industry. Here is the content we have scheduled for the next few months!
John Burns Research and Consulting
For Sale Market Update (New Homes & Resale)
Housing Market Forecasts and Economic Outlook for 2023
Learn what various research houses are saying about house prices and the broader economic outlook for 2023.
Funds, REITs, Syndication and Crowdfunding
As liquidity has dried up, the private lending market has gone full circle back to some of the old ways of funding. Learn from different lenders about the various vehicles that they use to fund their loans.
Cash Management for Private Lenders
Managing cash flow is paramount and essential. This encompasses cost management discipline, balance sheet velocity through quick loan sales, and proactive special servicing.
Legal
Understanding key terms in loan sale and participation agreements. This session will discuss methods to ensure that your loan production is tight and adheres to the reps/warrants you are making.
Warehouse Lines
Learn about the types of lines available and how lenders use them to expand their balance sheets and create additional liquidity when capital markets are tight.
Insurance Best Practices
The cryptic world of insurance leaves most lenders inadequately covered. Learn why Homeowners insurance is not enough and the types of policy features and limits that are required.
Questions about the NPLA?
Contact Amy Kame, Managing Director, amy@nplaonline.com.
Visit us at www.nplaonline.com
