The New Normal in Real Estate: Economics
Yes and no, in my experience.
Keep in mind that traditional financing requires a down payment of up to 25% for the second home. Even with HELOC money, this is still a good obstacle. When financing the second property, the bank will notice your heloc and include it in your debt-to-income ratio.
Nonetheless, it will certainly help exacerbate the housing shortage. I see more in the holiday home market or vanity virtual reality than investment.
Buying a new house for rent now is a bad strategy for heloc. If you have a lot of cash and need to park somewhere, it makes sense, but the purchase price does not make sense compared to the market rent.
But in general, I agree with this article. Heloc’s money is very real. Everyone I know who has a house is making a lot of upgrades, using this windfall to buy a RV, boat, or new car.
At some point, the market will correct this, and many people will over leverage. do not know when.