Leveridge Monthly: Real Estate Insights for Advisors in 2025

Happy New Year! As we embark on 2025, it’s not just a new year—it’s a new chapter for us as well. What you’ve known as the Wealth Lending Group newsletter is now proudly presented under Leveridge.

This shift reflects our deepened focus on real estate planning tailored specifically for financial advisors and their clients. Backed by the trusted expertise of Wealth Lending Group, Leveridge will continue delivering the actionable insights and tools you need to strengthen your practice and deepen client relationships.

Let’s start this year with fresh perspectives, bold goals, and a shared mission to make 2025 a year of growth and success.

In today’s email…

• Housing Market Secrets: What Homebuilder Stocks Are Telling Us About 2025

• The $1.7 Trillion Deficit Exposed: How It Impacts You and Your Clients

• This Real Estate Tool Could Transform Financial Advising in 2025

Let’s dive in!

Industry Insights: Homebuilder Stocks and the Housing Market in 2025

As we step into 2025, the housing market continues to show signs of resilience, even as high mortgage rates and affordability challenges persist. Homebuilder stocks, often a reliable indicator of market health, provide valuable insights into how the industry is navigating these challenges​​.

Trends Driving Resilience

1. Inventory Shortages Persist:
   Despite increased housing starts, the market remains constrained by limited inventory of existing homes. Many homeowners with low mortgage rates are staying put, making new builds the primary option for buyers. Builders are stepping in to fill this gap, driving demand for new construction.

2. Creative Financing Solutions:
   Homebuilders are mitigating affordability pressures by offering incentives such as rate buydowns, closing cost assistance, and upgrade packages. These strategies are keeping buyers engaged despite elevated borrowing costs.

3. Rise of Millennial Buyers:
   Millennials, now the largest homebuying demographic, are driving demand for new homes, particularly in suburban and Sunbelt areas. They value energy-efficient designs, flexible layouts, and community-focused developments—features that builders are prioritizing.

4. Public Builders Expand Market Share:
   Publicly traded homebuilders accounted for 66% of U.S. finished lot purchases in late 2024, underscoring their growing dominance in shaping the housing landscape. Their ability to scale and adapt gives them a competitive edge.

5. Regional Shifts to Affordable Areas:
   Markets in the Sunbelt, including Dallas, Tampa, and Charlotte, continue to thrive due to job growth, affordability, and lifestyle benefits. Builders are focusing their efforts in these regions, meeting the demand for quality housing in high-growth areas.

What Homebuilder Stocks Are Telling Us
Recent performance of homebuilder stocks like D.R. Horton and Lennar reflects a mixed but promising outlook. While higher rates have tempered some growth, these companies are leveraging their scale and innovation to weather the storm. For instance, new construction inventory remains high, but builders are managing this with pricing adjustments and buyer-friendly programs.

Opportunities and Implications

• For Buyers: New construction homes often come with financing perks and modern designs, making them a competitive alternative to the resale market.

• For Investors: Homebuilder stocks highlight resilience in the housing sector, offering potential opportunities for diversified portfolios.

• For Professionals: Understanding the strategies employed by builders provides valuable insights into shifting buyer preferences and regional growth trends.

Looking Ahead
Analysts project modest growth in housing starts through 2025, supported by creative builder solutions and demographic tailwinds. While challenges remain, the housing market’s adaptability highlights its ability to thrive, even in uncertain times. By monitoring homebuilder strategies, you can stay ahead of the trends shaping the market and position yourself or your clients for success.

Market Waves: The Inauguration, DOGE, and Federal Spending

As we step into 2025, the intersection of politics and markets is more pronounced than ever. The upcoming inauguration of President-elect Donald Trump introduces significant policy shifts poised to influence the economic landscape. A key initiative is the establishment of the Department of Government Efficiency (DOGE), led by Elon Musk and Vivek Ramaswamy, aiming to streamline federal operations and reduce wasteful spending.

Understanding DOGE

The Department of Government Efficiency is designed to overhaul bureaucratic processes, cut unnecessary expenditures, and enhance the effectiveness of government services. By implementing advanced technologies and innovative management strategies, DOGE seeks to save up to $2 trillion by reducing inefficiencies and potentially replacing government workers with software solutions.

Market Implications
The creation of DOGE is expected to have a multifaceted impact on various sectors:

• Technology and Software Companies: Firms specializing in automation and artificial intelligence may find new opportunities as the government seeks to modernize its operations. Companies like Palantir Technologies have already experienced stock surges in anticipation of potential contracts.

• Federal Contractors: Traditional government contractors might face challenges as the focus shifts toward efficiency and cost-cutting, potentially leading to a reevaluation of existing contracts.

• Financial Markets: Investors should prepare for increased volatility as markets react to policy announcements and the implementation of DOGE's initiatives. The emphasis on reducing government spending could influence sectors dependent on federal funding.

The Spending Puzzle: Breaking Down the U.S. Deficit

The U.S. is facing a growing spending challenge, and the numbers tell a striking story. In 2023, federal spending reached $6.135 trillion, but revenues lagged far behind at $4.44 trillion, leaving a staggering deficit of $1.694 trillion. This gap between spending and revenue isn’t just a short-term issue—it’s a structural problem that has been growing for years.

Where Does the Money Go?
As the first chart highlights, much of federal spending is concentrated in a few key areas:

• Discretionary Spending: $1.719 trillion, covering defense and domestic programs.

• Social Security: $1.326 trillion, reflecting the rising cost of supporting an aging population.

• Healthcare: $1.539 trillion, split between Medicare and Medicaid.

• Net Interest: $658 billion, a number set to grow as debt levels rise and interest rates remain elevated.

The $1 Trillion Deficit Era
The second chart shows an alarming trend: trillion-dollar deficits are projected to become the norm. By 2034, annual deficits could exceed $2.5 trillion, driven by structural spending imbalances and limited revenue growth. Without significant changes, these deficits will continue to fuel the national debt, creating long-term economic risks.

What’s Driving the Problem?

1. Aging Population: With more retirees relying on Social Security and Medicare, entitlement spending is ballooning.

2. Rising Interest Costs: As debt grows, so does the cost of servicing it, leaving less room for other priorities.

3. Stagnant Revenue Growth: While revenues are growing, they aren’t keeping pace with spending demands.

Why It Matters
These deficits don’t just affect policymakers—they impact everyone. Growing debt can:

• Increase borrowing costs for households and businesses.

• Crowd out private investment, limiting economic growth.

• Reduce fiscal flexibility to respond to future crises.

The Path Forward
Initiatives like the Department of Government Efficiency (DOGE) aim to address these challenges by streamlining operations and cutting waste. However, tackling this issue will require more than efficiency—it will need hard decisions about spending priorities and revenue reforms.

By understanding these dynamics, we can better navigate the opportunities and risks they create. After all, being informed is the first step to making smart decisions in an uncertain environment.

Introducing Leveridge: Your Real Estate Planning Partner

At Wealth Lending Group, our mission has always been clear: to foster relationships with financial advisors and their clients by building trust, enhancing advisor-client connections, and becoming a reliable extension of their team. Now, we’re excited to expand on that mission with the launch of Leveridge, our dedicated real estate planning initiative tailored specifically for financial advisors.

Why Leveridge?
Leveridge is a natural evolution of our commitment to serving financial advisors and their clients. Backed by the expertise of Wealth Lending Group, Leveridge is designed to:

• Simplify Real Estate Planning: Deliver actionable insights and tailored solutions that integrate seamlessly into your practice.

• Enhance Client Relationships: Empower you to provide value-added services that build trust and strengthen your relationships.

• Unlock Opportunities: Differentiate your practice and elevate your offerings with real estate strategies that align with your clients’ broader financial goals.

• Save Time: Leverage streamlined workflows and expert support, allowing you to focus on what matters most—your clients.

This approach was recently highlighted in Financial Advisor Magazine. In a featured Q&A, we discussed why many financial advisors overlook real estate as part of holistic planning and how Leveridge bridges that gap.

What’s Changing?
Wealth Lending Group remains your trusted partner in securing mortgage financing. Leveridge will focus exclusively on real estate planning, providing the tools and expertise financial advisors need to confidently guide their clients through the complexities of real estate.

Get Started Today
Ready to take your practice to the next level? Book a consultation today and discover how Leveridge can transform your real estate planning services. Visit www.leveridge.io to learn more and schedule your personalized session.

Together, Wealth Lending Group and Leveridge are here to ensure the success of your practice and the satisfaction of your clients. Our success is measured by yours—let’s achieve it together.