Last week I asked all of you what impact does Phantom Debt (like buy now pay later) have on the economy and real estate? The real estate pros have spoken and as you can see from the chart above, the majority (58%) think that phantom debt is increasing credit scores making the economy riskier than the headline numbers are showing. What does this mean for real estate and the economy?
What did real estate pros say about Phantom debt’s impact on the economy?
58% think that Phantom debt is inflating credit scores while 37% thought that the product is to new to make judgement on what happens and very few thought that there was no impact.
Key insights on Phantom debt:
Here are some of the best comments:
- Phantom debt like BNPL is a huge blind spot and shows the consumer is far more risky than the headline numbers are showing
- Debt is debt, bad debt is bad debt. If debt is not paid, credit scores go down, riskier lending continues, and more defaults happen leading to loss in significant other areas including real estate foreclosures and debt collection.
- The “haves” vs the “have nots” The “haves” are driving the consumer spending and they have phantom debt.
- Typically, these BNPL loans are so short term, 3-4 months, I find it hard to believe they will have a big economic impact.
- My top pick for a comment: There seem to be a number of factors that seem to be popping up like this but they continue to have little or no impact on the economy… until they do
Thank you everyone for your participation and insights in my survey. The insight in the comments from readers was amazing and I hope everyone gained a good perspective from your fellow readers. My key takeaway from this survey is that phantom debt is a factor we should be watching as it could have a major impact during the next economic cycle. Thanks again and stay tuned for upcoming surveys
Additional Reading/Resources:
- https://www.fairviewlending.com/phantom-debt-soars-what-does-this-mean-for-real-estate-2/
- https://www.fairviewlending.com/never-buy-a-residential-condo/
- https://www.fairviewlending.com/the-war-on-landlords/
- https://www.fairviewlending.com/house-prices-hit-another-record-should-you-even-care/
- https://www.fairviewlending.com/root-cause-of-real-estate-price-declines/
- https://www.fairviewlending.com/will-real-estate-fall-to-2020-values/
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Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. I’m not an armchair reporter/writer. We are an actual private lender, lending our own money. We service our own loans and own commercial and residential real estate throughout the country.
My day job is and continues to be private real estate lending/ hard money lending which enables me to have a unique perspective on the market. I don’t accept any paid sponsorships or ads on my blog to ensure accurate information. I’ve been writing this for almost 20 years and have over 30k subscribers. Please like and share my blogs on linkedin, twitter, facebook, and other social media and forward to your friends . I would greatly appreciate it.
Fairview is a hard money lender specializing in private money loans / non-bank real estate loans in Georgia, Colorado, and Florida. We are recognized in the industry as the leader in hard money lending/ Private Lending with no upfront fees or any other games. We fund our own loans and provide honest answers quickly. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all we need is our simple one page application (no upfront fees or other games).
Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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