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RCN Capital offers short-term and long-term financing options for real estate investors. Whether you or your clients are looking to fix & flip properties or hold properties for rental income, RCN has flexible options that suit your needs.

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Key Economic Indicators for Real Estate Brokers & Wholesale Lending Partners


Key Economic Indicators for Real Estate Brokers & Wholesale Lending Partners
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When structuring real estate loans, success isn’t just about knowing your lenders and borrowers—it’s about understanding the bigger economic picture. Properties are deeply influenced by broader financial trends, and as a third-party originator, real estate and GDP trends, interest rates, and employment data should be on your radar.

Whether you're a residential mortgage broker, commercial mortgage broker, private lender, referral partner, or affiliate partner, staying attuned to the most important economic indicators will assist you in advising your clients better. Being aware of these trends enables you to pair borrowers with the most suitable lending programs, predict market changes, and ultimately close more transactions.

Let’s break down the most important economic indicators that affect the real estate lending environment—and why they're significant to brokers such as yourself.

1. Real Estate and GDP: The Backbone of Market Stability

Gross Domestic Product (GDP) calculates the overall economic production of a nation and is a key sign of economic vitality. A growing GDP is indicative of a robust economy, which usually means more lending prospects and a demand for capital.

Why It Matters to Brokers:

  • A robust GDP tends to go hand-in-hand with a hot real estate market, fueling demand for investment and development funding.
  • A slowing GDP can serve as a warning sign—lenders will rein in underwriting standards, and borrowers will find it difficult to get approved.
  • Tracking GDP growth can assist you in forecasting loan volume shifts and advising your customers more effectively on when to fund.

Example: During times of robust GDP growth (e.g., 2017-2019), real estate lending experienced high origination volumes, with commercial property loans increasing at a rate of 6-8% per annum. Conversely, economic downturns (e.g., 2020) resulted in tighter credit conditions and lower funding availability.

2. Employment Rates: The Indicator of Borrower Stability

Strong employment figures reflect a healthy economy, where companies are growing, and people have stable incomes—both key determinants of real estate financing.

Why It Matters to Brokers:

  • High levels of employment translate into more clients being able to qualify for financing, which results in more loan originations.
  • Unemployment surges can cause a surge in defaults, affecting risk considerations for lenders.
  • Lenders take employment patterns into account when evaluating a borrower's capacity to make timely payments on commercial and investment properties.

Example: According to the Bureau of Labor Statistics, in 2023, areas with job growth exceeding 4% saw a 12% increase in commercial lending approvals compared to regions with stagnant employment growth.

3. Inflation Rates: The Cost of Borrowing and Lending

Inflation impacts everything from the cost of construction to mortgage rates. Moderate inflation is good for the economy, but too much inflation can reduce purchasing power and result in increased interest rates.

Why It Matters to Brokers:

  • Higher inflation tends to drive up mortgage rates, which makes loans more costly for borrowers.
  • Inflation impacts construction prices, which affects new development loans and fix-and-flip loans.
  • Knowing inflation trends can assist you in advising borrowers to lock in lower rates before prices increase.

Example: In 2022, inflation hit 9.1%, leading the Federal Reserve to raise interest rates aggressively. This resulted in a 30% drop in real estate loan applications due to affordability concerns.

4. Interest Rates: The Game-Changer in Real Estate Lending

Interest rates, set by the Federal Reserve, establish the price of borrowing. When rates are low, borrowing is desirable, and loan origination increases. When rates increase, affordability diminishes, and lending decreases.

Why It Matters to Brokers:

  • Increased interest rates decrease borrower buying power and decrease real estate transaction speed.
  • Decreased rates can boost loan volume and refinancing potential.
  • Informed clients can obtain the most favorable loan terms.

Example: In 2021, mortgage rates were at historic lows (~2.75%), leading to a 70% increase in refinance applications. By 2023, with rates surpassing 7%, loan originations dropped by nearly 40%.

5. Housing Starts and Building Permits: The Supply Forecast

Housing starts and permits measure the volume of new construction work. It's a measure of an upward or downward moving market if high numbers of permits are issued compared to a decreased slowdown.

Why It Matters to Brokers:

  • More housing starts mean more opportunities for construction and bridge financing.
  • A decline in new construction could signal increasing material prices or more stringent lending terms.
  • Investors seeking fix-and-flip or new construction loans use these metrics to determine market timing.

Example: In 2023, housing starts dropped by 14% due to rising labor and material costs, impacting the availability of short-term construction loans.

6. Consumer Confidence Index (CCI): Measuring Market Sentiment

CCI measures how optimistic consumers feel about the economy. When confidence is high, people are more likely to make big purchases, including real estate.

Why It Matters to Brokers:

  • Strong consumer confidence is associated with higher loan applications and property buying.
  • Falling confidence could point to weaker borrower demand, impacting your pipeline.
  • Tracking CCI trends allows brokers to coordinate their lending strategy with market conditions.

Example: When the CCI was above 120 in 2019, real estate investments surged. In 2022, as CCI dropped below 90, home purchases and loan originations decreased.

7. Rental Vacancy Rates: Gauging Market Demand

Rental vacancy rates reflect supply and demand in the rental market. Low vacancy rates indicate strong demand, while high vacancies suggest oversupply.

Why It Matters to Brokers:

  • Low vacancy rates boost rental property financing demand.
  • High vacancy rates may indicate slowing investment opportunities.
  • Brokers working with private lenders should assess vacancy trends to mitigate risk.

Example: In 2023, cities with vacancy rates under 5% saw rental property loan approvals increase by 18%, while areas with 10%+ vacancy faced financing slowdowns.

8. Home Price Indices: Understanding Market Trends

Home price indices track real estate appreciation. Rising home prices suggest strong demand, while declining prices may signal a correction.

Why It Matters to Brokers:

  • Higher property values create more equity, increasing cash-out refinance opportunities.
  • Declining values can lead to stricter loan underwriting from lenders.
  • Brokers should monitor price trends to adjust loan recommendations accordingly.

Example: In 2021, home prices rose 18% nationwide, creating a surge in cash-out refinance applications. By 2023, price growth slowed to 3%, reducing refinance demand.

9. Real Estate Inventory Levels: Buyer’s vs. Seller’s Market

Inventory levels determine whether the market favors buyers or sellers. Low inventory suggests strong demand, while high inventory can signal a market slowdown.

Why It Matters to Brokers:

  • Low inventory means competitive lending opportunities for fix-and-flip and rental loans.
  • High inventory may indicate a buyer’s market, affecting financing structures.
  • Understanding inventory trends allows brokers to position clients for optimal loan terms.

Example: In early 2022, inventory levels hit a 20-year low, driving aggressive price increases and record-high loan applications.

Why Brokers Need to Watch Economic Indicators

As a wholesale lending partner or third-party originator, understanding these economic signals allows you to:

  • Position your clients for success by timing their financing strategically.
  • Secure better loan approvals by aligning borrowers with the right programs.
  • Stay ahead of market trends to identify opportunities and avoid pitfalls.

By following these tips and partnering with trusted lenders like RCN Capital, you can position yourself as a trusted advisor and go-to resource for real estate financing. Ready to take your brokerage to the next level? Connect with RCN Capital today and see how we can help you and your clients succeed in the competitive world of real estate investing.