The Current State Of U.S. Commercial Foreclosures

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Multifamily Absorption Posts Strongest Quarter Since 2000link

• The second quarter of 2024 saw the absorption of 138,000 multifamily units, the highest since 2000, reducing vacancies by 10 basis points. This strong performance is linked to a resilient labor market and growing wages.

• Year-to-date absorption is almost 230,000 units, close to the total of 253,000 units for all of 2023. The demand boom contrasts sharply with the reduced construction, indicating a tightening market.

• Vacancy rates are at their lowest since mid-2021, signaling a recovery in fundamentals including rent increases expected over the next two years. The report highlights a robust demand driving the market forward.

Multifamily Cap Rates, IRR Unchanged as Sector Awaits Interest Rate Actionlink

• For the second consecutive quarter, prime multifamily cap rates and unlevered IRR targets have remained steady, following two years of quarterly increases. This stability may be due to anticipated interest rate cuts by the Federal Reserve later this year.

• The spread between going-in and exit cap rates slightly decreased by 11 basis points in Q2. The average prime multifamily going-in cap rate dropped to 4.97%, while the exit cap rate fell to 5.08%.

• CBRE's survey indicates a modest decrease in cap rates, suggesting investor optimism amid potential economic shifts. This trend reflects cautious market sentiment, awaiting definitive actions on interest rates.

U.S. Commercial Foreclosures Decrease in June 2024link

• Commercial foreclosures in the U.S. dropped by 14% from last month but are still up 48% compared to last year. This indicates a significant annual increase despite a recent monthly decline.

• California led with the highest number of commercial foreclosures at 214, followed by Texas, New York, New Jersey, and Florida. California's foreclosures decreased by 10% from last month but surged by 289% year-over-year.

• Texas saw a slight 1% monthly decline in foreclosures but doubled from last year. New York and Florida also experienced yearly increases despite recent monthly decreases.

Only 40% of homes sold include an accurate appraisallink

• A study by Corporate Settlement Solutions found that in 2024, 51% of homes sold in 10 states had appraisals higher than the sale price. This is the largest share since the start of the COVID-19 pandemic in March 2020.

• New York had the most accurate appraisals with only 33.6% of homes over-appraised, while Kentucky had the highest rate of over-appraisal at 72.7%. North Carolina showed the highest percentage value of over-appraisal at 33.3%.

• The report indicates growing challenges in accurate home valuations amid rising market values and limited inventory. Accurate appraisals remain crucial as housing economists predict a potential normalization or decrease in home appreciation.

Student Housing Lift Likely on the Way in Athens, GAlink

• Apartment occupancy in Athens-Clarke County, GA has been rising steadily over the last 13 years, driven by University of Georgia students. The university has over 40,000 students, significantly impacting local housing demand.

• Occupancy dips in late spring and early summer when students leave, but spikes in late summer and early fall as they return. From June to September, occupancy typically increases by about 100 basis points.

• The COVID-19 pandemic reduced this seasonal surge, averaging a 30-basis point rise since 2020. In June, occupancy was around 93.6%.

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That's all, folks.

Cheers,

Vidit

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