Will the recent Silicon Valley Bank (SVB) collapse cause a ripple effect in the economy and the Lewis County real estate market?
Silicon Valley Bank (SVB) Collapse and Local Real Estate Markets
The Silicon Valley Bank was a major player in the technology industry, providing loans and banking services to many startups and companies in Silicon Valley. However, the bank’s collapse has had a significant impact on the tech industry and the broader economy. So what really happened to SVB?
How Do Banks Work and How Did SVB Collapse
Essentially, when you park your money in a bank, they are required to hold on to 10% of it. The rest of it they use to invest. This particular bank invested in a good deal of government bonds when interest rates were low. Bonds are considered incredibly safe, low risk low reward. Now that the government bumped the rates up, their money is tied up in low interest accounts. This is not a problem unless a lot of people come to pull their money out of the bank. Because of the poor economy and inflation, people aren’t making as much money so they start making withdrawals instead of deposits.
When the bank doesn’t actually have the money sitting in a vault, they had to sell the bonds at a loss of about 2 BILLION DOLLARS. There’s a little more to it than that, but this is what happens when “experts” try to control the economy. So, now the government comes and bails them out and it looks like some other banks are starting to have similar issues. This is eerily similar to 2007-2008, however, the difference between then and now is we no longer have weak lending standards that caused the banks to fail.
The more people that run to their banks and pull their money out, the higher chance we have of creating a crash. Most people are insured, as most accounts are insured up to $250,000. I think the average American has about 5k in their account! That’s another issue!
Real Estate and the SVB Collapse
So how will this affect real estate? Well, the real estate market is still highly competitive, at least in our area. The demand for housing is still high, but the number of people who can afford to buy a home has decreased due to these increased interest rates. This has caused a slowdown in the real estate market, and many people are still expecting a crash. However, the market has gone up quite a bit in the last few months (see my other videos).
So, it is important to note that the real estate market is highly localized, and the impact of the Silicon Valley Bank collapse may be different in other areas of the country. In some areas, the real estate market may continue to thrive despite the collapse, while in others, the impact may be more significant.
Despite the challenges presented by the Silicon Valley Bank collapse, the real estate market remains a valuable investment opportunity. With mortgage rates stabilizing there is more demand for housing. There are still many opportunities for buyers and sellers to find success in the real estate market.
How to Avoid Losing Your Money
It is important to stay informed about the local real estate market and to work with a trusted real estate professional to navigate the challenges presented by the current economic climate.
Do know know anyone affected by the bank collapses? Are you considering pulling your money out of the bank and why? Let me know in the comments below.
If this was helpful to you in any way, consider sharing it so more people who have the same question can see it and consider subscribing to my YouTube channel so you don’t miss any need to know information about our current market. Again, I’m Eren Millam with Premiere Property Group, and remember, never settle for less than extraordinary!
If you’re thinking of buying or selling your home in the west Lewis County area, contact me today! I’d love to hear from you! Eren Millam – Managing Broker Premiere Property Group, LLC WA License No. 26933
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