Landlords face a $1.5 trillion CRE maturity wall

-

New here? Join the newsletter (it's free).

This is a soft landing link

• The unemployment rate declined in August, with no clear signs of a slowdown in job creation. Both the establishment and household surveys back this trend, indicating a steady labor market.

• Wage growth reached 3.8% in August, maintaining levels well above pre-pandemic averages. This persistent growth highlights the ongoing inflationary pressure in wages.

  

• Consumer spending, particularly in clothing, food services, sporting goods, and motor vehicle sectors, has been picking up according to debit card transaction data. Retail sales have also remained solid, further indicating resilient consumer activity.

Landlords face a $1.5 trillion commercial real estate maturity wall link

• Landlords have $1.5 trillion in commercial real estate debt due by the end of 2025, with about 25% of that potentially difficult to refinance. Higher interest rates have lowered property values, making refinancing more challenging.

• Apartment buildings represent 40% of the debt coming due, with many owners facing rising insurance costs and reduced income due to floating-rate loans. About $95 billion of US multifamily properties are currently distressed or at risk.

• Commercial real estate lenders are trying to modify loans, hoping to keep borrowers afloat until rates drop or new equity can be injected. Despite challenges, many experts believe large-scale market distress can be avoided.

Self Storage National Report – August 2024 link

• Street rates for self storage units fell by 4.1% year-over-year, with the average per square foot rate now at $16.40. This drop is seen across all top 30 metro areas.

• Seattle was the only city with a monthly increase in rates, rising 0.7%, while most other cities saw declines or flat rates. Las Vegas and Houston remained unchanged.

• New supply is slowing down, with 3,404 self storage properties in development stages. Under-construction projects now make up just 3.5% of total stock, down 10 basis points from the previous month.

Condo sales seriously lag behind single-family homes as buyers seek more ‘bang for their buck’ link

• Condo sales fell 12% nationwide in July compared to a 1% drop for single-family homes. Buyers are moving away from condos due to factors like high prices per square foot and rising HOA fees.

• In July, the median condo price was $392,500, compared to $449,900 for single-family homes. However, the price-per-square-foot for condos was still 36% higher, making them less appealing to price-sensitive buyers.

• Condos are spending more time on the market, with an average of 58 days in July, eight days longer than single-family homes. This slowdown is linked to factors like high mortgage rates, rising maintenance costs, and increasing insurance premiums.

10 things to know about the mortgage and housing market right now – August 2024 link

• The share of first-time homebuyers remained stable at 37% in July 2024, matching last year’s figure. Fewer move-up buyers are participating in the market due to being locked in with low mortgage rates.

• Housing inventory grew by 15% year-over-year in July 2024, showing more homes are available, but there are still more buyers than sellers. About 31% of homes sold in July were above the listing price, down from pandemic peaks but still higher than pre-pandemic levels.

• Mortgage delinquencies rose to 3% in June, the highest since December 2023, with increases seen across 97% of U.S. metro areas. However, this is still lower than historical averages like 4% in 2019.

Top universities for student housing transactions 

Chart: Do federal elections have any impact on real estate investment activity? Here is what the data says. ↓

Top 10 most vulnerable U.S. housing markets in Q2 2024 ↓

Demand for Multifamily deals on the rise in these areas

Best 10 cities near Dallas to live in↓

You can buy mansions in these Mediterranean countries for the price of a studio in New York

Mapped: U.S. States With the Most Million-Dollar Homes

That’s $30k/acre

(this part of the US is beautiful)

Link to the listing

That's all folks. Let me know what you think of the email. Quite a lot went into it. If these emails aren't for you anymore, you can unsubscribe here.

Cheers,

Vidit

Linkedin | Instagram

P.S - Read past newsletters here