800,000 multifamily units enroute

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Manufactured homes are appreciating faster than site-built homes link

• Prices for manufactured homes increased by 58.34% between 2018 and 2023, outpacing the 37.66% rise in single-family site-built homes. Despite this, manufactured homes remain significantly cheaper, averaging $124,300 compared to $409,872 for site-built homes.

• The affordability crisis is more acute in high-cost states like Washington, California, and Arizona, where manufactured homes sell for the highest prices. Washington leads with an average price of $164,100, reflecting broader housing supply shortfalls in these regions.

• HUD and FHA are modernizing manufactured housing through updated standards and loan programs. However, industry leaders are concerned about misrepresentation of land-lease communities, despite federal initiatives to boost demand.

A record-breaking 800,000 multifamily units link

• A record-breaking 800,000 multifamily units are still under construction as of Q3 2024, further exacerbating oversupply issues. Vacancy rates have climbed to 6.8%, their highest since the pandemic began.

• National median rent dropped 0.8% in November, to $1,382, and is projected to decrease further by year-end due to discounts during a slow season. Despite this, rents remain $200 higher than pre-pandemic levels.

• Sunbelt cities like Austin (-6.9%) and Raleigh (-4.1%) experienced sharp year-over-year rent drops, while cities in the Midwest and Northeast like Cleveland and Hartford saw positive growth. This geographic disparity highlights uneven market recovery.

New healthcare trends link

• Banner Health emphasizes early, scalable expansion strategies in high-growth areas like Arizona. Prioritization and efficient capital allocation are essential due to the competing demands within their systems.

• Flexibility is key to leveraging existing assets, with innovations such as dual-purpose spaces being utilized. For example, a facility might serve primary care during the day and urgent care at night to maximize efficiency.

• Newcomers to healthcare real estate are introducing creative solutions for integrating services, optimizing budgets, and addressing gaps. These trends align with demographic and technological shifts that continue to reshape the sector.

Homeowner equity insights – Q3 2024 link

• U.S. homeowners with mortgages gained a collective $425 billion in equity, a 2.5% year-over-year increase, reaching $17.5 trillion in total equity. Average annual equity growth slowed significantly, dropping from $25,400 last quarter to $5,700 in Q3 2024.

• States like New Jersey and Rhode Island led the country with the highest equity gains, increasing by $43,000 each. In contrast, Hawaii saw the largest loss, with average equity dropping by $34,000 due to declining home prices and recent natural disasters.

• The number of homes in negative equity rose by 3.5% from Q2 2024 but dropped 3% year-over-year. A 5% increase in home prices could bring 113,000 homes out of negative equity, while a 5% drop could add 155,000 homes to negative equity.

More Americans are living in malls, as developers get creative to help ease the housing crisis link

• At least 192 U.S. malls have plans to add housing, with 33 projects completed since the pandemic began. States like California, Florida, Arizona, and Texas are leading this trend with multiple apartment developments underway.

• Developers are converting old department stores like Sears into mixed-use spaces with housing, retail, and green areas. These projects address the U.S. housing deficit of 4.5 million homes and bring consumers closer to shopping amenities.

• Challenges include high construction costs, zoning hurdles, and designing apartments that meet modern living standards. Some units face issues like limited natural light due to the original mall layouts.

AI startups are snatching up San Francisco real estate as Gen Z craves office life link

• AI startups are taking advantage of San Francisco's 34.9% office vacancy rate, with rents at their lowest since 2016. This trend coincides with a shift back to in-person work, driven by Gen Z's preference for office culture and the AI boom post-2022.

• Tech accounted for 58% of office leasing in San Francisco through Q3 2024, with 62% of AI leases utilizing sublease spaces. This reflects a strategic approach by startups to secure affordable, flexible offices in prime locations like Hayes Valley and Jackson Square.

• Companies like Tako and Medra are embracing 4-5 day in-office schedules, citing improved collaboration and employee enthusiasm. However, challenges remain, as these models reduce hiring flexibility for remote or non-local talent.

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