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The Current Housing Market 

Real estate can be a profitable venture, but it pays to stay informed of the ever-shifting market. With so many opportunities for professionals, investors and builders alike - let's take an insightful look at what's happening in US real estate right now!

At Groundfloor we understand headlines understandably raise fears, but results don’t lie. You can count on us to value and never take your investments for granted, doggedly pursue recovery of every defaulted loan, and to be unceasingly accountable for how we operate on your behalf. Thank you for continuing to believe in and invest in us.

Remember all markets go up and down, Groundfloor is a safe way to invest your money in real estate. 

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Masterclass Market Outlook and Investing on Groundfloor

Our latest Masterclass session with Patrick Donoghue, Joey Wilson, and Reid Schermer.

What the Real Estate Market Is Showing Us

 

As we move deeper into 2023 and closer to the Fed's 2% inflation target rate, investors should prepare for an interesting normal market leading up to 2024. With loans maturing at the end of that year as well as 18-month construction loans coming due in 2025, there are plenty of opportunities ahead – one which can prove beneficial when sellers and buyers come together with greater alignment.

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With interest rates constantly changing, many are wondering what to expect in the coming years. Experts anticipate that volatility will decrease and eventually we'll see a return to more traditional levels: if federal funds terminate at 5%, mortgages should stand around 6%. This is much lower than recent market trends which have made it difficult for first-time homebuyers to enter the housing market - however, this steady rate environment could prove inviting enough to draw them back into play.

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Homeowners and investors can look forward to the upcoming years being an exciting time for remodeling! In 2027, nearly 24 million homes in America will enter their "Prime Remodel" phase – a period of meaningful renovation and improvement projects. This is an unprecedented surge in home activity since 2021 when homeowners had never refurbished more than 21 million properties before then!

Renters are feeling the pinch of a housing market that continues to become increasingly less affordable--17% fewer tenants made their move into homeownership this year compared with two years prior. As prices rise, renters find themselves stuck in rental homes as they wait for more viable buying options.

What the Groundfloor Data is showing us 

The past decade has provided a roller coaster ride in the U.S. real estate market, going from rock bottom during 2008-2010 to this year's near-record high home prices due to competition between buyers and an abundance of sellers giving homeowners leverage over their properties. In response to rising inflation levels reaching close to 40-year highs, drastic action is being taken by The Federal Reserve in order its attempt at combatting inflation and stabilizing economic activity across America.

The U.S. housing market is entering a period of dynamic change! Interest rates have been climbing steadily and the Fed has just declared more increases are on the horizon - impacting not only prices but also foreclosure trends across America. It's time to keep an eye out for what this major shift will mean for homeowners in the coming months!

While Groundfloor isn’t immune to the impact of market turbulence and no one can predict the future, we’re fortified with the broadest possible base of capital to weather whatever comes our way. Our unique structure frees investors like you from the tyranny of fund managers. Your ability to build your own portfolio of loans tens or hundreds of dollars at a time translates into unique, market-leading flexibility and resiliency for Groundfloor as a capital platform. We theorized about that before COVID and the current developments, and we now have the evidence to demonstrate it.

Invest Now
Retail investment volumes are surging on Groundfloor, as they did during the fear that took hold of markets in 2020. Refugees from Robinhood and cryptocurrencies are now arriving to experience the value of what Groundfloor offers. Investor appetite for Groundfloor LROs and Notes is stronger than ever. In Q3 we saw a 25% increase in investment volume over the previous quarter. Year-to-date, we’ve already surpassed sales records set last year for both investment products.

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Marketing Trends Jan 2023

Monthly Market Trends

Real estate can be a profitable venture, but it pays to stay informed of the ever-shifting market. 

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Asset Management Update

A snapshot of how our Asset Management team is managing our loan portfolio.

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Note from our Founders

Catch up with Brian and Nick and hear their thoughts on the current market. 

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 Groundfloor Investment Performance

While U.S. public stocks finished Q3 down 24.9% for the year, Groundfloor LROs repaid delivered average returns of 10% during that same period.* The average repayment term increased to 11.0 months, up from our historical average of 8.9 months, but our average loss ratio was 0.16%* on loans repaid during the period. This loss ratio is significantly lower than our historical average of 0.44% for all 2,400 loans repaid on our platform since 2014.

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Investors, it's essential to think carefully about our portfolios. GF loans are usually used for home renovations in the lower-to-moderate price brackets. This segment has seen considerably more stability over recent quarters - represented by the solid blue line moving from bottom left to top right - because there's greater engagement with buyers and sellers within that range of prices. Although these values might not be immune to fluctuations, this is still a safer bet than other segments due to its wider reach!

This stability and relative out-performance is a hallmark of investing in debt securities on Groundfloor. Especially in uncertain economic times, the type of investment you make matters. As we're now seeing, the value of equity investments ranging from rental housing to public company stock can change significantly, but debt investments such as our LROs are much less volatile and more predictable. As providers of debt capital, Groundfloor LRO investors are first in line to be paid, just like the bank. That right to first payment is backed by our legal recourse to take over ownership of the property through foreclosure when necessary. It’s good to be the bank, especially if you’re seeking relative safety in turbulent times. 

 

Where the Market Is Leading Groundfloor

Groundfloor has enjoyed positive Home Price Appreciation across all of its target markets over the last year. Atlanta and Jacksonville have been particularly successful, with 13% and 9% YOY growth respectively. Redfin provided this data on these Key MSAs (Metropolitan Statistical Areas), which are known for providing excellent future prospects to businesses like GF. Austin however was an exception due to high price volatility; hence it won't be pursued as a key market in the near future since origination numbers were low there anyway.

 

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Remember, Groundfloor was built for this. 

As a provider of debt, we can preserve investor capital through market turbulence while profiting from capital scarcity and new opportunities to supply equity capital to fill the gap created by lower available leverage while allowing our investors to “buy low.”

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As an intermediary, Groundfloor creates value by matching demand for capital with supply through market cycles. Our unique value proposition for investors is a competitive advantage, especially when traditional capital markets are challenged by economic conditions.

 

Watch Our Latest Videos

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Groundfloor Weathering the Housing Storm

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