Historically, investors have been limited to regionally concentrated, non-transparent private real estate funds. To create a nationally diversified portfolio using this approach can take a substantial amount of capital to achieve the same level of geographic and property-type diversification as a transparent marketplace lending portfolio.
The U.S housing market demonstrated strong growth over the past year. Price appreciation accelerated from 4.9% to 5.3%, existing home sales outpaced 2015 by almost 3%, new home sales were up 13% and housing starts were up 6%[2]. We expect this positive market environment to continue in 2017, supported by demographic trends of increasing demand that should, in turn, support more renovation and new construction of most property types.
For the rehab market, aging inventory (more than half of the U.S. housing inventory is over 35-years old) continues to be an opportunity for developers, and more and more of these developers are turning to real estate marketplace lending platforms for funding because of their fast and reliable services.
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[1] Prime Meridian Capital Management estimate
[2] LendingHome 2016 Year in Review
Source: PMI Funds