Home Price-to-Income Ratio of Large U.S. Cities

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Amid affordability crisis, builders continue to pivot toward condos and townhomes link

• Home construction activity fell in 2023 by 7.1%, but builders are focusing on higher-density housing to address the shortage of 4.5 million homes. Condos and townhomes are increasingly replacing detached single-family homes.

• Pittsburgh, Indianapolis, Dallas, New York, and Las Vegas saw the most single-family home permits issued compared to pre-pandemic levels. These metros continue to lead in housing construction despite affordability challenges.

• The median lot size for new homes dropped by 700 square feet in 2023 as builders aimed to overcome land cost hurdles. Single-family attached home completions grew by 9.6%.

Home seller profit margins drop slightly across U.S. as housing market slows during third quarter link

• Homeowners earned a 55.6% profit margin on typical U.S. home sales in Q3 2024, a slight dip from the previous quarter and the same period last year. This reflects a slowdown in the housing market as home prices leveled off around $360,000.

• The biggest drops in profit margins were seen in San Francisco, Punta Gorda, and Scranton, with declines exceeding 15% year-over-year. Conversely, cities like Trenton, NJ, and Albany, NY, saw the largest increases in margins.

• Despite the downward trend, over two-thirds of metro areas still reported profit margins above 50%, with San Jose, Seattle, and Providence leading the way. The lowest margins were seen in cities like New Orleans and San Antonio.

Midwest rents rise as southern markets see declines link

• Eight out of 10 Midwest markets, including Cincinnati, saw year-over-year rent increases, with only Chicago and Detroit experiencing declines. Meanwhile, eight of the top 10 markets with the steepest rent drops were located in the South.

• Nationally, rents for zero- to two-bedroom units have been declining for 14 consecutive months, with a median drop of 0.5% or $8, settling at $1,743. This brings median rents just 1% below their August 2022 peak.

• Cincinnati leads the nation in rent growth at 3.4%, with Washington, D.C., New York, St. Louis, and San Jose also posting gains. Southern cities like Nashville, Dallas, and Austin recorded the largest declines, with drops ranging from 3.5% to 4.8%.

Investor sentiment improves for multifamily amid broad decline for CRE link

• Multifamily demand is gaining traction due to rising mortgage rates and single-family home costs, pushing renters back into the apartment market. This trend is especially notable in regions with restrained construction activity like the Northeast and Midwest.

• In the Sun Belt, markets like Phoenix, Dallas, and Atlanta are overcoming oversupply concerns due to strong absorption of new units. However, the multifamily sector still holds a cautious outlook as transaction volumes remain below typical levels.

• Home sales have dropped to their lowest levels since the Great Financial Crisis, further boosting multifamily investments. Investors expect sustained demand in this sector, unlike the mixed outlook for office and industrial real estate.

Cost-burdened middle-class homeownership doubles in 10 years link

• Nearly 30% of middle-class homeowners are now spending more than 30% of their income on housing, doubling over the past decade. This higher cost burden has left families with less money for essentials, home maintenance, and savings.

• High home prices, rising property taxes, and insurance premiums are the main drivers, compounded by increasing interest rates. Income growth of over 50% in the last decade has not kept up with these rising costs.

• Single parents and minority groups like Black, Hispanic, and Native American households are particularly affected. Many homeowners struggle with maintenance, contributing to the $150 billion needed to repair the nation’s housing stock.

Brazilian firms target South Florida link

• Brazilian companies are increasingly viewing South Florida, especially Miami and Orlando, as a business hub and "second home." Wealthy Brazilians have moved beyond seeing Miami just as a shopping destination, now seeing it as a place to invest and raise families.

• Leste Group, with offices in Miami and New York, is a key player helping Latin American companies expand in the US. The firm is guiding Brazilian firms into new markets like Austin and Nashville, while focusing on private equity strategies.

• The commercial real estate market in South Florida is expected to shift in favor of sellers by mid-next year. As interest rates drop, demand for assets below replacement costs could rise, creating an opportunity for investors.

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