Nearly $1 trillion is of CRE Debt is coming due

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Insights from Harvards Housing Report link

1. Rental markets are cooling with new supply outpacing demand.

2. Record-high renter households are cost-burdened.

3. Homelessness has reached a record high.

4. The rental stock is aging, requiring significant investment.

5. High interest rates are depressing market activity.

6. New multifamily construction has slowed.

7. Rental demand is stabilizing post-pandemic.

8. Growth in renter households is shifting, with smaller and lower-income households contributing significantly.

9. A new generation (Gen Z) is driving rental demand.

10. Higher-income households are exerting more influence on the rental market.

11. There's a dwindling supply of low-rent units, exacerbating affordability issues.

12. Rising housing costs are outpacing income gains for renters.

13. The housing safety net is underfunded and overwhelmed.

14. Substantial investments are needed to address aging public housing.

15. Affordability periods for Low-Income Housing Tax Credit (LIHTC) units are expiring.

16. Voucher programs face challenges, including landlord participation.

17. Energy efficiency and climate resilience in rental housing are urgent needs.

18. The threat from natural disasters to rental housing is growing.

19. State and local governments are stepping up efforts in housing assistance and construction.

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Sellers Are Coming Back to the Market. Can Buyers Keep Up? link

• Inventory levels of unsold homes are expanding, with new listings growing compared to last year. This week saw a 0.5% drop in inventory, but it's still up from last year, indicating sellers are re-entering the market.

• Immediate sales, where listings go into contract within days, are still happening but at a slower pace than during the pandemic boom. This suggests a balance between supply and demand, with a 14% increase in new listings over the same week last year.

• The median price of single-family homes remains steady at $425,000, with new listings priced just under $400,000. Despite more sellers and slightly increasing inventory, home prices are showing resilience, hinting at a stable market.

Southern states have some of the country’s highest commission rates link

• Realtor commissions average 5.49% nationwide, but Southern states see higher rates, with variations of up to 189 basis points. For a home sold at the national median price of $431,000, this means a commission of about $23,000.

• The Sitzer-Burnett case highlighted that real estate commission rates are artificially inflated due to practices outlined in the National Association of Realtors’ (NAR) Code of Ethics and the MLS handbook. This has led to a series of lawsuits challenging the status quo.

• Listing agents typically earn commissions ranging from 1% to 4%, averaging 2.83%, while buyers' agents receive slightly less, with an average rate of 2.66%. The five states with the highest commissions are West Virginia, Mississippi, Wyoming, Alaska, and Kentucky.

Nearly $1 trillion of CRE Debt is coming due link

• In 2024, 20% of the $4.7 trillion in outstanding commercial mortgages will mature, marking a 28% increase from 2023. This surge to $929 billion in maturing debt underscores the significant financial shifts expected in the commercial real estate sector.

• The rise in maturing mortgage debt is attributed to the lack of transactions and activity in the previous year, alongside extensions and modifications of loans set to mature in 2023. These adjustments have increased the volume of commercial real estate (CRE) mortgages maturing this year.