How COVID-19 Is Impacting the Seattle Real Estate Market
While the U.S. economy slowed to a grinding halt over the past several months, experts wonder what this means for the future of the real estate market. When Washington State’s governor, Jay Inslee, enacted a “Stay Home, Stay Healthy” order it restricted non-essential businesses from operating through various phases. The order severely limited the number of essential businesses that could remain open and how they could reopen in various phases as the pandemic subsided. Nevertheless, during this period of time, private lenders in Seattle have been considered essential businesses and could remain open for business. Many conventional lenders remained open but were requiring higher credit scores, greater down payments or increased interest rates in order to make loans to borrowers.
Many people have been concerned that in the wake of this novel virus, our economy would struggle for a period of time before regaining footing, potentially causing a financial crisis worse than we experienced in 2008. This is in spite of the fact that prior to the pandemic, lenders were offering loans with rock-bottom interest rates. Even though recessions don’t necessarily have a huge effect on the overall real estate market, COVID-19 completely shut down non-essential businesses which has been historic in nature and the likely impacts are unprecedented.
Essential Businesses
Real estate and the banking industry have been considered “essential businesses” under Governor Inslee’s “Stay Home, Stay Healthy” order. Nevertheless, even though considered as “essential businesses”, some construction companies, developers, real estate agents and lenders have been required to follow specific rules related to face masks, social distancing requirements, all of which have made business nothing like normal.
Stricter Traditional Lending Requirements
However, due to the novel coronavirus, many lenders have been requiring higher FICO credit scores, greater down payments, charging higher interest rates and lower reducing loans to cost and value. Many real estate developers and investors that were in the process of applying for loans prior to the pandemic have been unable to secure financing and have been turning to private lenders whose underwriting standards have remained relatively unchanged for commercial loans in the greater Seattle area.
What Are Private Loans?
During these unprecedented times, as more developers and investors are unable to obtain financing to acquire or refinance commercial properties it is not surprising that private lenders like Private Capital Northwest are seeing a surge in loan requests.
Private loans refer to financing that is provided by a non-institutional source (unlike a bank) which is secured by a deed of trust and a promissory note. The process is no different except that the source of the funds is from a private lending source.
With fewer credit restraints than traditional mortgage institutions, hard money lenders in Seattle are better able to quickly offer money to a variety of developers and investors to fund their real estate ventures and projects. Hard money loans are often used for construction loans, bridge loans or fix and flip loans. These types of loans are ideal for short-term real estate opportunities.
Private Capital Northwest provides private loans in the greater Seattle, Washington, area. As a leading Washington hard money lender, we offer fix and flip loans, construction loans and any variety of bridge loans. If you are a real estate investor and need private loan in Seattle, Tacoma or Bellevue, contact our experienced team of professionals today for more information.
