To recap from Part I (which is here):
A banker friend of mine asked me two questions after I gifted him a book:
1. Where do you think we are at in the 18 year cycle?
2. Do you think the events of covid push us back in the cycle like the wars did in the early 1900s?
=== Here is what will happen moving forward from 2023 ===
So, here is what will happen moving forward. Banks will become more aggressive with lending, lower rates, less spread/margin, riskier borrowers. You will have to engage with this market in order to compete. Be careful – and I’m telling you that but I still want to take your money ;). But, most importantly, watch for signs in the market.
Biden’s Build Back Better plan has not really taken shape but it, or something similar, will. We will need gov’t spending (regardless of politics it will happen so just watch for it, plan for it, and reap the benefits from it then choose how you decide to spend the profits).
We know there is a LOT of dry powder on the sidelines. Once 2024 calendar hits it will start to unleash because investors do not want a year like 2023 where, really, not much happened. Sales volume down. Loan volume down. But somehow prices stayed high – classic supply demand curve. There is still demand.
Again, I mostly avoided buying in 2022, at least the assets that are feeling stress now like retail and multifamily done on floating rate bridge debt, because I had a feeling 2022 was likely to be a “down” year which would bleed over into 2023. And once spring time or so hits in 2024 there will be some more opportunities.
How do I know that timing? Well, let’s do some calendar math. April 2024 minus 24 months is April 2022. Guess when bridge debt became HYPER popular? When there were rate cap costs and GSEs didn’t want to do as many loans. But those bridge loans have fluctuated a lot in interest rates and a lot of those properties are not cash flowing and are not worth their purchase prices.
To me, we are on track for a Q4 2026 / Q1 2027 top in the real estate market and probably 2028 stock market top. Interestingly enough, this matches with my decade cycles based on the “year-ending” number and what typically happens in those years. More to come on this topic later!
Anyways, sorry this got a little long. I’ve really been fascinated by this topic. Really glad you enjoyed the book. Feel free to ask me anything. I’ll waive the consulting fee for the first 10 questions ;). You’ve used two of them – LOL.
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If you are interested in learning more on how credit creation cycles occur and how Time Rhymes you can visit our website for more information at www.ethoscv.com/timerhymes.