Equity Financing – A Solution to Today’s Housing Crisis?
By Paige Tepping Print Article
RISMEDIA, October 12, 200
9—As the housing market continues to struggle its way toward stabilization, Steve Cinelli, founder and chief strategy officer at PRIMARQ, discusses the notion of equity financing and how he and his team are working with leaders in Washington, D.C., to change the face of real estate. “As the housing market began to crumble and financial institutions began to fail, both Washington and Wall Street provided solutions in hopes of fixing the economy, but most of them aren’t going as far as they should,” says Cinelli.
PRIMARQ is currently in the process of building the first-ever exchange for investing and trading in owner-occupied real estate equity and is creating a lot of buzz throughout the real estate industry. While the exchange is not yet open, its premise could change the way in which the real estate industry does business. Based on the same principles as NASDAQ, PRIMARQ is bringing a method of shared ownership to the housing industry—one of the only industries in the country that doesn’t revolve around a shared-ownership foundation.
“We have to change the game,” says Cinelli. “Banks can’t afford to lend at the same levels at which they have been lending and it isn’t prudent for home owners to have 90% of their monthly income tied up in monthly payments,” he continues. “Within the U.S., a preponderance of financing for the housing market is debt, but we need to employ a practical financing system for the future of the housing market.”
With housing stock being the single largest asset in the U.S. and there being no practical method of shared ownership, PRIMARQ is working on behalf of the homeowner, home buyer and investor to put the American dream within reach as the company lowers the barrier to homeownership.
“Our approach to equity financing is to enhance the downpayment capital within the real estate market, and rather than overleveraging the process, we have created a system in which a portion of the home can be sold.” Equity financing will add affordability and sustainability to the real estate market as it reduces the amount a homeowner pays monthly as the mortgage loan is smaller.
“Our equity financing solution can assist buyers into getting into homes and it applies to all income levels,” says Cinelli. “Real estate transactions will become more affordable because individuals buying homes won’t have to borrow as much money from banks and their payments won’t be as high as they have been in the past- creating more financeable transactions and more sustainable ownership.” The program is beneficial to the industry as it creates financeable transactions since deals won’t fall through because of financing problems.
“Housing will remain soft until mortgage lenders get back in the game and equity financing can help expedite this process since mortgage lenders won’t have to lend on excessively aggressive terms,” he continues. “Because of the enormity of the challenge, there need to be game changing ideas. PRIMARQ has provided an innovative solution that is well-timed and will have a huge impact on the real estate industry as a whole.”
