It seems like everyone has an opinion about the long-term effects of the COVID-19 pandemic. While some see nothing but doom and gloom, others are so utterly optimistic that they seem to not have a grasp on reality. And yet, no one really knows. We are in uncharted territory.

The pandemic has affected every area of the economy. This includes hard money lending. What is normally a very lucrative business under strong economic conditions has a tendency to decline along with the economy. So while hard money lenders are still lending, they are not lending as much as they were just a few months ago. Many are wondering what the future holds.

Though there is no way to accurately predict the future, it is worth speculating for the purposes of trying to be prepared. Below are four possible ways the COVID-19 pandemic could affect hard money lending in the long term.

1. Higher Demand for Real Estate Loans

There is a strong possibility that property values will decline due to the general economic malaise introduced by the pandemic. Lower property values wouldn’t surprise anyone. If there is a silver lining here, it is the fact that falling prices tend to spur investors looking to build their portfolios. This could lead to an increased demand for hard money loans.

Actium Partners, a Salt Lake City company with a heavy presence in real estate lending for development, says that short-term price declines could lead to more investors trying to snap up properties as quickly as they can get them. Hard money loans would be a key part of an overall strategy for doing so.

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2. Higher Inflation Devalues Currency

Hard money lending could be affected long-term by steady inflation. There is both good and bad inflation; the inflation caused by the COVID-19 pandemic is bad. It sends prices higher while simultaneously devaluing currency. This would be bad news for hard money lenders.

As the value of currency falls, so does the profit potential of hard money lending. Devalued currency means more cash is required to pay for the same assets. This leaves hard money lenders having to lay out more cash without getting a higher return.

3. Deflation Stalls the Economy

The other side of the inflation coin is deflation. Government action intended to control inflation could have the opposite effect, sending the price of goods and services lower for an extended amount of time. The longer deflation occurs, the less likely economic activity will rebound. Thus, deflation is generally seen as a bad thing if it lasts more than a few months.

Reduced economic activity would mean lower demand for hard money loans. This would obviously be bad for lenders. They only make money when they lend, so a sustained period of minimal demand would limit their moneymaking opportunities.

4. A Permanent Work-from-Home Class

Last but not least is the very serious threat of a new, permanent class of workers that never returns to the office. Instead, they stay home. Imagine what would happen to commercial property values if office buildings were no longer necessary. Markets like San Francisco and New York would crash overnight.

Hard money lenders rely on a robust commercial real estate market for a good portion of their business. Any move to keep the majority of office workers permanently at home could have serious consequences.

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Yes, even hard money lenders have been affected by the COVID-19 pandemic. No one knows how it will all turn out, but you can bet that the hard money industry is as concerned as any other.