Net Lease Investment Sales Decline 54% in Q2

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Macro Intel

Talking about inflation 👀

Vehicles Sales at 15.74 million SAAR in July; Up 18% YoY link

• Light vehicle sales in July marked the 11th consecutive increase, according to Wards Auto.

• Battery-electric-vehicle deliveries saw a significant surge, increasing by 51% year-over-year and accounting for a record-high 7.5% of the market.

• Despite the impact of COVID-19 and supply issues, vehicle sales are on track to reach the forecast of 15.4 million units for the year.

Real Estate Market Intel

Apartments are renting for less than they did a year ago link

• The national rental market has hit a milestone with negative year-over-year growth, indicating that apartments are renting for less than they did a year ago.

• The vacancy index has reached 7.3%, surpassing the peak measured during the COVID-19 pandemic, due to a record number of multi-family apartment units under construction.

• Despite a modest increase in rents in July, prices are down year-over-year in 67 of the 100 largest cities in the U.S.

Most U.S. Office Buildings More than 90% Leased link

• Two-thirds of all U.S. office buildings were more than 90% leased as of Q2 2023, a slight decrease from the pre-pandemic level of 71% in Q1 2020.

• Despite a 30-year-high overall U.S. office vacancy rate of 18.2% in Q2 2023, only 10% of all U.S. office buildings account for 80% of the occupancy losses between Q1 2020 and Q4 2022.

• Secondary and tertiary Sun Belt markets have a higher share of near fully leased buildings than the national average, with most of these markets seeing their office inventories increase by less than the 2.4% national average since the pandemic.

Multifamily Permits Decreased by more than 33.1% link

• Multifamily permitting rate dropped 13.5% from May to 467,000 units in June, a 33.1% decrease from last year.

• Multifamily starts in June were at a pace of 482,000 units, 11.6% below May's revised rate and down 11.3% year-over-year.

• The annual rate for multifamily permitting decreased in three of the four Census regions, with the Northeast experiencing the largest decrease of 55.4% to 36,000 units.

CoreLogic: US Annual Home Price Growth Inches Up in June link

• U.S. home prices hit new highs in June, now 41% above pre-pandemic levels.

• Annual U.S. single-family home price growth rose by 1.6% in June, marking the 137th consecutive month of year-over-year gains.

• CoreLogic projects that annual U.S. home price appreciation will accelerate to reach 6.8% year over year in January 2024, then slow to 4.3% by June 2024.

Foreigners bought $53B in US existing home sales, a 10% drop link

• Foreign buyers purchased $53.3 billion worth of U.S. existing homes from April 2022 through March 2023, marking a 9.6% decrease from the previous year.

• The number of properties closed by foreign buyers fell by 14.2% to 84,600, the lowest since 2009.

• The median purchase price for foreign buyers hit a record high at $396,400, reflecting the overall increase in U.S. home prices.

Administration Announces Updates for Housing Supply and Multifamily Housing link

• The White House has launched an $85 million grant program to help communities identify barriers to affordable housing production. Communities actively addressing affordable housing issues can receive up to $10 million in grant funding.

• The Department of Housing and Urban Development (HUD) has streamlined financing, allowing larger loans to participate in the Low Income Housing Tax Credit program. HUD also released new guidance for the Rental Assistance Demonstration (RAD) program, providing additional resources for affordable housing rehabilitation.

• Federal agencies have released guidance to housing providers on tenant screening reports, outlining expectations on communication regarding application denial. Additionally, $10 million in funding has been allocated for tenant education and outreach in supported properties.

Many Americans feel trapped in their homes by their low-rate mortgages link

• Low mortgage rates have created a 'golden handcuff' effect, discouraging homeowners from selling and moving to a new home at a higher rate.

• Nearly 82% of home shoppers feel 'locked-in' by their existing low-rate mortgage, contributing to a critical shortage of homes for sale.

• The average rate for a 30-year, fixed-rate mortgage is near 7%, a significant increase from the record lows during the Covid pandemic.

Risks

Net Lease Investment Sales Decline 54% in Q2 link

• Investment sales in the single-tenant net lease sector dropped for the sixth consecutive quarter, reaching a low of $9.4 billion in Q2.

• This figure represents a "modest decline" from the $10.9 billion sold in Q1, but a significant 54% slump year-over-year.

• Retail was the hardest hit sector, with sales amounting to only $1.9 billion.