Multifamily completions reach 50-year high

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Where is the slowdown? link

• The US economy showed a robust 3.0% GDP growth in Q2, with the Atlanta Fed projecting a 3.1% growth for Q3. These numbers suggest strong economic resilience despite concerns about a slowdown.

• Jobless claims remain relatively low at 218,000, indicating stability in the labor market. This contrasts with earlier predictions of rising unemployment amid economic headwinds.

• Despite uncertainties, key economic indicators such as GDP and employment figures continue to outperform expectations. The data challenges the notion of an imminent economic slowdown.

13 largest homeowners insurers denied nearly half of claims last year link

• The top 13 U.S. homeowners insurers denied 47.5% of claims in 2023, a significant rise from 37.4% across all insurers. Insurers in disaster-prone states like California and Florida saw the highest denial rates.

• Farm Bureau Property & Casualty Insurance Co. had the highest denial rate at 70.5%, followed by American Bankers Insurance Co. of Florida at 51.2%. Overall, nearly 3.9 million claims were processed by the 13 insurers.

• Rising climate risks are leading insurers to cut coverage or deny more claims. This is making it harder for homeowners to secure insurance, especially in high-risk areas.

Hotel revenue growth steadies despite softening consumer sector link

• Hotel revenues are stabilizing even as consumer spending weakens and household savings dry up, with higher room rates driving the revenue more than increased occupancy. RevPAR showed growth from January 2023, but the overall recovery remains uneven.

• The top three markets for RevPAR growth between December 2019 and August 2024 were Las Vegas (14.8% CAGR), West Palm Beach (9.8% CAGR), and Knoxville (9.0% CAGR). In contrast, San Francisco, Oakland, and San Jose were the weakest, with declines of -7.9%, -5.8%, and -5.2%.

• Moody’s reported average hotel occupancy at 64.5%, about 1.5% lower than 2019 levels. Performance is expected to stay flat through 2024 if consumer spending patterns persist.

Household real estate value and equity hit new high in 2024Q2 link

• The total value of owner-occupied real estate reached $48.2 trillion in 2024Q2, an increase of $1.8 trillion from the previous quarter and $3.5 trillion from the previous year. This is more than double the value from 10 years ago, when it was between $20 trillion and $22 trillion.

• Mortgage debt grew to $13.1 trillion, but its annual growth rate of 2.6% was one of the lowest in recent years. Despite slower growth, the debt increase of $339.2 billion from 2023 outpaced figures from 2017 to 2019.

• Homeowner equity hit $35.1 trillion, the highest level on record, with an equity-to-real-estate-value ratio of 72.7%. Even if home values dropped 20%, equity would still remain above 65%, comparable to levels from 2019.

Multifamily completions reach 50-year high link

• Annualized multifamily completions surged to 740,000 units, marking the highest level since April 1974. This represents a sharp 36.5% increase from July's seasonally adjusted 542,000 units and 79.2% higher than last August.

• Multifamily permitting jumped 8.4% from July to 451,000 units, but it was still down nearly 17% from the previous year. Construction delays due to backlogs and rising costs are keeping multifamily building elevated despite declining permits and starts.

• New York led the nation in multifamily permitting with 30,129 units, a 23% rise from last year. Major declines in other cities like Dallas, Houston, and Los Angeles signal a broader slowdown in the multifamily market outside of New York.

Energy code requirements could impact multifamily development, rents link

• New energy codes will require HUD-financed multifamily buildings to meet the 2021 IECC or ASHRAE 90.1-2019 standards. Developers fear this will raise construction costs and push up rents.

• More than 50% of developers surveyed believe these requirements will discourage new projects, while 44% say they will need to increase rents to cover additional costs. Only 11% of builders already work in areas that use the 2021 energy code.

• Fannie Mae and Freddie Mac are considering adopting the new rules as well, which could reduce project sizes and amenities. Over 60% of developers think this will decrease affordable and market-rate housing options.

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