55+ Community Sector is Hot

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Weekly Housing Trends —Data for Week Ending Aug. 24, 2024 link

• The median listing price dropped slightly by 0.2% year-over-year, marking the 13th consecutive week of stable or declining prices. This trend indicates a steady moderation in home prices since June 2024.

• New home listings rose by 2.2% compared to last year, the largest increase in a month, signaling renewed seller activity as mortgage rates begin to fall.

• Active inventory levels are up 33.6% from last year, the highest since May 2020, though still 320,000 homes fewer than in 2019. Homes are taking longer to sell, with time on the market up by eight days compared to a year ago.

• The pace of home sales slowed, giving buyers more time to navigate the market. This is the largest increase in time on market since July 2023, reflecting a more balanced housing environment.

Medical Outpatient Buildings Cap Rates Fall for the First Time in Two Years link

• MOB investment volume surged 60% in Q2 2024 to $2.5 billion, totaling $7.7 billion over the past year. Sale prices reached $291 per sq. ft., significantly outpacing traditional office spaces by 49%.

• Washington, D.C., Los Angeles, and Phoenix led in MOB investment, with $381 million, $352 million, and $345 million, respectively. Houston dominated absorption with 1.4 million sq. ft. over the last year.

• The average cap rate for MOBs declined by 10 basis points to 6.9%, marking the first drop since Q2 2022. This indicates rising investor confidence in the sector. The average MOB triple-net asking rent grew modestly by 0.5% quarterly and 1.4% year-over-year to $24.86 per sq. ft. Net absorption spiked to 2.2 million sq. ft., a significant jump from Q1.

Mortgage Rates Decline to 6.35%, Lowest in 16 Months link

• The Freddie Mac 30-year mortgage rate dropped to 6.35%, its lowest level since May 2023. This decrease follows stabilization in 10-year Treasury yields around 3.8% and anticipations of Federal Reserve rate cuts in the coming months.

• The Federal Reserve is expected to cut rates by 25 basis points in September, November, and December 2024, but larger declines in mortgage rates are unlikely without significant negative economic data.

• Homebuyers might not see substantial rate drops in 2024, but improving credit scores, shopping around, and increasing down payments could reduce their mortgage rate by up to 150 basis points.

Industrial Absorption on the Rise link

• The industrial real estate sector saw a net absorption of 1 million square feet in the recent quarter, marking a positive shift from prior periods. This improvement indicates growing demand in the industrial segment.

• A key factor in this increase is the strong performance in logistics and distribution, driven by e-commerce expansion and supply chain optimizations. Urban centers are particularly benefiting from this trend.

• Despite the positive absorption, there are still concerns about oversupply in some markets. However, steady demand, particularly in regions like the Midwest and Southeast, could mitigate these risks.

A U.S. construction boom is sending rents lower and creating perks for renters link

• The U.S. is experiencing a construction surge, with June seeing the highest completion of multifamily units in nearly 50 years, leading to more available rental inventory. This increase in supply is pushing rents down, with median asking rent for three-bedroom units dropping 2.4% to $2,010.

• About 33.2% of landlords offered rent concessions in July, a jump from 25.4% last year, as they try to attract renters in a more competitive market. Concessions include free rent weeks and parking incentives.

• Rent price declines are especially notable in Sun Belt states like Texas and Florida, with Austin seeing a 16.9% drop and Jacksonville a 14.3% decrease in median rent prices from the previous year.

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Vidit

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