The Playing Field For Real Estate is Going to Level Out for Health Care Workers.

Introduction

For more than half a decade, tech employees have dominated the real estate market by buying homes with asymmetrical returns on their equities. This rapid increase in their net worth allowed them to snowball the majority of their gains to buy other assets that were increasing at a slower pace. Other occupations were no match when it came to purchasing homes because this group of people bought homes in cash. As a result, other occupations were shut out or had to settle for less. To be clear, this is not an article to bash on tech employees - in fact, it’s a learning lesson for majority of our audience because tech employees will be winning in the end.

How is it being leveled?

Companies are going to be budget conscious when it comes to a recession or global economic downturn. This means that majority of the people in tech may not have a job to sustain a home mortgage (this does not apply if they bought in cash). Tech also can get paid through an “employee stock purchasing program” (ESPP), but the time it takes for their stock to increase may be delayed. Tech will not be able to keep up in the short term because they are usually paid a lower base than healthcare workers. This gives healthcare workers a chance to go into the market and buy a house because they can stomach the payment with a consistent and stable income.

But the interest is too high

Many people are going to look at the interest and not get into the market, but what is more important is the payment and type of loan. For starters, many will want to be on a fixed rate because it will prevent price fluctuations in payment which increases livelihood through stability. Variable loans will eventually get hard capped, but that is a risk one takes if they decide to go with a variable rate mortgage.

If someone decides to buy a house now, they are sacrificing for the future which will allow them to be one step closer to a refinance if rates come down (or be lucky if they keep increasing). This gives a significant advantage because obtaining a house is usually the hard part - especially if tech is in the market.

Risk first

People may be trying to time the market, but more money has been lost timing the market than having time in the market. What should matter more is how much risk you’re willing to take when you’re buying a house. Are you going to be paycheck to paycheck? Will you be ok if the price of the home decreases in value? Will you be able to save/invest even after buying this house? Many questions need to be answered, but assessing your risk is the most important piece of the puzzle of finance. In a severe market downturn, many people will be stuck with a decision that can hold them back financially for many years. There are golden era times where people can accumulate assets, but a wrong decision can prevent someone from accumulating.

What happens when Tech comes back into the picture?

When tech finally comes back into the real estate market, they will increase the demand for homes and the playing field will no longer be fair. There is no profession that will be able to beat their asymmetrical gains. The cycle will repeat again and those who are waiting again to buy will not be able to get into the market. Areas that do not have enough supply will heavily increase in price due to demand, and other alternatives will need to be made to live in the designated area you wish to live in.

Be proactive. Good luck with everything.