Did you see President Biden’s announcement?
He’s forgiving the student loans of millions of Americans. In fact, 20 million people are about to have their debts cancelled fully. They’re jumping for joy right now.
But surprisingly, another group of people is also jumping for joy: real estate investors.
Today, I’ll explain why…
Then I’ll show you how to join them for potential returns of 1,000% or even more.
The Relationship Between Student Loans and Real Estate
To kick things off today, let me tell you about a surprising relationship:
The relationship between student loans and real estate.
As a 2021 National Association of Realtors’ (NAR) report revealed, homeownership and student loans are closely connected: 60% of non-homeowning millennials reported that student loan debt is the main reason they can’t buy a home.
Makes sense. As NAR explained, student debt impacts your ability to save for a down payment, increases your debt-to-income ratio, and lowers your credit score. Ouch.
Biden’s debt-cancellation plan will lower the debt burden for these consumers and make it easier for them to buy a home.
But this is where an even bigger problem comes into focus…
A Supply Problem
There aren’t any homes to buy!
You see, housing inventory in the U.S. is at record lows today.
As an NAR spokesperson explained [emphasis added]:
“… we continue to see record lows in housing inventory and while these changes [related to forgiving student debt] may lower the debt burdens on some potential buyers, there are not enough homes on the market to meet current demand.”
There are three main reasons for this…
Three Reasons We’re in this Mess
First of all, as Karan Kaul from the Urban Institute's Housing Finance Policy Center explained, "We just have not built enough new housing in the last decade or so, especially after the 2008 housing market crash."
Secondly, for years now, historically low mortgage rates have enticed millions of consumers — as well as deep-pocketed private equity investors — to purchase homes.
And now there’s a third problem: escalating construction costs.
The National Association of Homebuilders (NAHB) reports that, due to inflation and supply chain issues, building material prices have increased by 31.3% since January 2020.
Add up all these problems — and according to Realtor.com, 5.24 million new homes would need to be built to meet current U.S. demand.
So what’s the solution here?
The Government Will Help? Please…
According to the Chief Economist of the NAHB, it’s time for the government to work with the construction industry to boost the housing supply.
We disagree. We have a different idea. A better idea. Forget about the government! The government only makes a mess of things. Instead, let a startup create a solution.
Here are three startups attacking this problem head-on…
3 Startups Aiming To Fix the Housing Problem
Earlier this summer, I wrote to you about a startup called Boxabl.
Boxabl is a housing company. Its mission is to vastly lower the cost of home ownership.
Thanks to its manufacturing and shipping innovations, it can create affordable, mass-produced housing in a factory. Its first home, a $50,000 house called Casita, folds up flat so it can be shipped easily and inexpensively.
It’s a cool idea. But its $3 billion valuation gives me pause. You see, we aim to make 1,000% gains on our startup investments. And at a $3 billion valuation, that’s unlikely.
But since then, two other housing startups have popped up.
The first is called Azure.
Azure creates 3D printed homes made from recycled materials. This is 70% faster and 30% less expensive than existing construction methods. Studio homes can be printed in one day, and they can be delivered and installed within one week.
Since January 2022, it’s received paid customer deposits of three million dollars.
The second startup is called Paneltek.
With Paneltek’s lightweight panels, a home can be built in less than one day. As the company explains, “Two people with low-to-moderate skills can assemble a home in approximately 6 hours with a cordless drill.” And PanelTek homes cost 50% less than the competition.
Keep in mind…
These are early-stage, risky ventures. They require substantial research to understand how things might play out, and what their return profiles might look like.
But if you believe Biden’s plan to cancel student debt is going to create a new boom for the housing market, they might be worth a look.
To explore Azure and Paneltek in more detail, click here and here.
Happy Investing.
Please note: Crowdability has no relationship with any of the startups we write about. We’re an independent provider of education and research on startups and alternative investments.
Best Regards,
Founder
Crowdability.com
