Investors Purchases Down 45% YOY

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Larger warehouses feeling the pinch from a spirited new construction link

• Logistics occupiers like e-commerce companies and home-improvement retailers are reducing their space commitments, leading to an increase in sublease space for warehouses larger than 300,000 sq. ft.

• Currently, 115 million sq. ft. of space is available for sublease, which is double the amount from the end of 2021. Notably, Southern California and major Midwest logistics hubs like Memphis and Louisville are witnessing this trend.

• Despite these changes, the logistics market remains tight. However, the combination of occupier cutbacks and new construction is causing availability in some areas to revert to historical averages.

Private Equity Investors Raised CRE Allocations in H1 link

• Despite uncertainties in the real estate industry, major private equity entities like pension funds and insurance companies increased their allocations to real estate by an average of 76 basis points in H1 2023.

• Sovereign wealth funds (SWFs) reversed their trend of reducing commitments from 2019 to 2022. In H1 2023, SWF allocations rose to 7.92%, nearly 1% higher than in H1 2022.

• Overall, 47% of SWFs increased their exposure to real estate in the first half of 2023.

More Markets Are Favoring Renters link

• Rent growth is slowing down across the nation, making some markets more favorable for renters based on long-term pricing trends, as per the Waller, Weeks and Johnson Rental Index.

• Western states' rental markets, like Boise, Idaho, are seeing rental premiums decline. Boise offers a 0.04% discount on average rentals compared to its historical trend.

• In contrast, cities like Seattle have a higher premium of 1.98%, while Minneapolis in the Midwest has a 0.83% premium.

Listings fall for the 4th straight month in August link

• US housing inventory saw a 9.2% dip from the previous year, marking the fourth month of consecutive annual declines.

• Despite the annual decline, the total inventory has been increasing monthly, with a 19% rise since January.

• Inventory in the 50 largest US metros is still 45% below pre-pandemic levels, and mortgage rates hover near 7%, making homeowners hesitant to sell and keeping more homes off the market.

Investors Purchases Down 45% YOY link

• Investor home purchases fell 3.4% year over year in Q2 2023, marking the first annual decline since Q2 2022.

• The drop is attributed to rising home prices and mortgage rates, making real estate investments less appealing.

• Despite the decline, investors still bought 1 in 7 homes sold in the U.S., showcasing their significant presence in the market.

No US States Post Annual Mortgage Delinquency Increases in June link

• The U.S. mortgage delinquency rate stayed at a record low of 2.6% in June. No states and only 31 metro areas experienced an increase in year-over-year delinquency rates.

• The U.S. foreclosure rate remained consistent at 0.3% in June, marking the 16th consecutive month at this rate, which is close to an all-time low.

• For June 2023, 2.6% of all U.S. mortgages were delinquent, showing a 0.3 percentage point drop from 2.9% in June 2022.

Apartment Rent Growth Slows Most in Class B and C link

• Apartment rent growth cooled to an annual rate of 0.8% in July. Class A units saw the strongest growth with a 1.4% increase in the last 12 months, but this is a significant drop from the 18.6% high in February 2022.

• Class B units experienced a slowdown in annual rent growth to 0.5% in July, down from a high of 16.4% in March 2022. Class C products, impacted by affordability, recorded a 0.7% year-over-year increase in July, a decrease from 9.9% in June 2022.

• Since the pandemic began, U.S. apartment rents have risen by approximately 27%. Class A rents saw a 21.4% increase, while Class B rents witnessed the steepest growth at 29.4% since February 2020. Class C rents grew in line with the U.S. average.

Sales volume drops 76% YOY to $6B as cap rates hit 5% link

• Apartment sales have been decreasing consistently, with a sharp 76% drop in July, resulting in a transaction volume of $6 billion.

• Cap rates have seen an increase, with a 30 basis point rise year over year, reaching 5% in July. Specifically, for mid- and high-rise apartments, the increase was 40 bps, hitting 4.9%.

• The sales decline in July was not just a deviation from the previous two years; it was also 53% below the $12.7 billion average observed in the five years preceding the COVID-19 pandemic.