Americans are falling behind on auto loans at a record pace. What opportunities is that creating for real estate investors?
Consumer credit and auto loan debt performance are often metrics that can be used to predict what’s coming in the real estate debt space and housing market.
What do these trends indicate is coming next? What challenges and opportunities do they present?
Auto Loans Set New Records
The number of Americans now 60 days or more late on their car payments recently hit a 30-year high according to a report from Fitch Ratings.
Thanks to high-interest rates, car loan payments are often now topping $1,000 a month. This is also an all-time record high.
It is expected that 1.5M vehicles will be repossessed by the end of the year.
With interest rates expected to stay high, elevated vehicle prices, and some finding out failures in driver assist technology features are lumbering them with skyrocketing insurance bills, this looks like a wreck that could continue to pile up further as consumers deal with incurring extra expenses at the end of the year.
Auto Loans And Real Estate
Lenders typically anticipate that consumers will stop paying on their credit cards and car loans before they default on home mortgages. This suggests that there could be another 1.5M mortgage loans at risk of facing performance challenges next year.
Of course, this is not always the case. Some see their vehicles as their last resort. Without a car, many cannot work. They may see their car as their last refuge for somewhere to sleep if they can’t afford their homes. So, many related mortgage delinquencies may already be in the works, and incorporated into existing data.
While many property owners prioritize their mortgage payments, they often do not fully appreciate the risks of falling behind on other related bills. Examples of these would be homeowners insurance, HOA dues, and property taxes.
What It Means For Real Estate Investors
As we’ve discussed in previous blogs, this is a time when expertise in proactively handling loan workouts is separating the survivors and winners from the losers and failures.
It is also a time of great opportunity. And this is at a level we haven’t seen since 2008. Many owners are highly motivated and may need to let their homes go quickly, at deep discounts. Many will have deferred maintenance due to owners not having the funds to invest in repairs and improvements. These are properties that are ripe for flipping.
As millions of Americans also work to restructure their finances to make ends meet between high inflation and changes in the workforce, demand for affordable housing is also only expected to keep rising over the next year.
Investment Opportunities
Find out more about investing in secured debt and real estate, go to NNG Capital Fund.
If you are an Accredited investor and would like to learn more about how to become a Capital Partner with NNG Capital Fund, Click here to set up a discovery call today!
Photo by Andrea Piacquadio
Article Source: https://nngcapitalfund.com/what-the-new-auto-loan-crisis-means-for-real-estate-investors/
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