Housing Markets on Florida’s West Coast Are Cooling Faster Than Anywhere Else in the U.S.

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“If I’m not saying ‘Hell Yeah!’ to something, then I am saying no.”

— Derek Sivers

The Pain in Real Estate Continues link

• Vacancy rates for commercial real estate are moving sideways or higher despite a strong economy. This trend is contrary to expectations, which predicted lower vacancy rates with strong employment and GDP growth.

• The Federal Reserve's efforts to slow down the economy might exacerbate the situation. Higher vacancy rates could rise quickly if economic deceleration occurs.

• The steep maturity wall for commercial real estate (CRE) adds to the sector's challenges. This situation impacts office, apartment, and industrial real estate markets significantly.

Household Real Estate Value and Equity Hit New High in 2024Q1 link

• The total value of owner-occupied real estate reached $45.8 trillion in 2024Q1, a record high, increasing by $933.8 billion from the previous quarter and $3.3 trillion over the past year. This value is more than double what it was 10 years ago when the current streak of home price gains began.

• Mortgage debt in Q1 2024 totaled $13.1 trillion, up by $38 billion from the previous quarter and $343.2 billion year-over-year. This quarter experienced the lowest annual growth in mortgage liabilities compared to the rapid increases between 2020 and 2022.

• Homeowners' equity hit a new peak at $32.8 trillion, an increase of $895.8 billion from the previous quarter and $3 trillion from the previous year. Home equity as a proportion of real estate value stands at 71.5%, the third highest level since 1961, significantly higher than the lows of 2012 (46%).

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Housing Markets on Florida’s West Coast Are Cooling Faster Than Anywhere Else in the U.S. link

• The housing market in North Port, Tampa, and Cape Coral is cooling rapidly, with North Port's supply of homes for sale up 68% year over year. In Cape Coral, inventory is up 64%, and 37.5% of sellers are dropping their prices.

• Natural disasters and rising insurance costs are major factors driving this cooling trend. For instance, Hurricane Ian in 2022 significantly impacted Cape Coral by destroying 5,000 homes.

• High home prices and mortgage rates are also discouraging buyers, especially in areas where prices soared during the pandemic. North Port and Tampa have seen home prices rise by 60% and 70%, respectively, since 2019.

Fayetteville’s Apartment Market Fundamentals Outperform U.S. Norms link

• Fayetteville's apartment market, with about 41,000 units, maintains higher occupancy and rent growth than the national average. Despite recent softening, April 2024 occupancy was 94.8%, consistently above the U.S. average for nearly 12 years.

• Population in Fayetteville grew 7.3% from 2020 to 2023, significantly outpacing the national average of 1%. This growth rate is the 10th fastest among the nation's core 150 apartment markets.

• Class C apartments had the highest occupancy at 97.9% in April, while Class A had the weakest at 91.9%. The Fayetteville submarket, home to the University of Arkansas, consistently leads with high occupancy rates.

• Rent growth slowed from double-digit annual increases in 2022 to 2.8% in April 2024, still above the national average of 0.1%. Average rents in Fayetteville were $1,148 per month, compared to the national average of $1,819.

• Fayetteville's job market expanded by 3% with 9,300 new jobs in the year ending April 2024. The area’s unemployment rate is 2.3%, the 10th lowest among the largest U.S. apartment markets.

• Upcoming supply includes a record high of 2,362 units, representing 5.8% of existing stock, expected to be completed next year. The majority of new supply is concentrated in the Springdale/Rogers/Bentonville submarket.

Adaptive Reuse Surges As Older Buildings Are Rebirthed Into New Uses 

There's More Large Industrial Spaces Near Major Seaports Than in Decades 

U.S. Life Sciences Real Estate: Surprising Investment Trends.

U.S. Senior Housing & Care Investor Survey H1 2024 

Charted: Top 10 Nature Destinations in the US

That's all, folks.

Cheers,

Vidit

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