New Homes Make Up 33% of Homes for Sale, the Largest Share on Record

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Overall Real Estate Market

Private Equity Real Estate Fundraising Was on the Upswing in the Second Quarter link

• Private equity real estate fundraising soared past its five-year quarterly average by nearly 24% in Q2 2023, reaching $57 billion, thanks to the mega-fund Blackstone Real Estate Partners X (BREP X) which raised $30.4 billion.

• The number of funds in the market rose to 2,183 as of June, compared to 1,779 in January, but more funds faced challenges in reaching their close, with only 82 funds reaching their final close in Q2.

• North American real estate funds accounted for 80% of the money raised in Q2, or $46 billion, and investors showed a rising interest in value-add real estate opportunities, with 56% planning to pursue this strategy in the next 12 months.

Construction Starts Post 17% Increase in July - link

• Total construction starts soared by 17% in July, reaching a seasonally adjusted annual rate of $1.2 trillion. Nonbuilding starts were the main driver, rising by 38%.

• Year-to-date, construction starts were 7% lower than 2022, with residential and nonresidential starts down 21% and 7% respectively, but nonbuilding starts up 20%.

• Challenges such as higher interest rates, labor shortages, and material prices are impacting the flow of construction starts, resulting in little forward momentum over the past year.

US Home Investor Share Remained High in Early Summer 2023 link

• Investor Activity Holds Steady: In March 2023, investors accounted for 27% of all single-family home purchases, and by June, that number was almost unchanged at 26%. The investor share has been 8 percentage points higher on average since 2020.

• Smaller Investors on the Rise: Smaller investors (owning three to nine properties) accounted for 47% of investor purchases in June 2023, the highest level since 2011. Mega-investors have seen a drastic decline from 17% in June 2022 to between 8% and 10% in 2023.

• State-wise Concentration: Home investor shares were concentrated in Western, Southern, and lower Midwestern states in Q2 2023, with California (34%), Washington, D.C. (33%), and Georgia (32%) posting the highest investor share. The overall trend shows no sign of regressing to pre-pandemic levels of less than 20%.

People Want Less Expensive Homes – And Builders Are Responding link

• More Affordable New Homes: In June, 65% of newly built home sales were less than $500,000, up from 58% last year. People are buying less expensive newly built homes as affordability remains a challenge.

• Builders Respond with Lower-Cost Options: Builders are offering slightly smaller homes to meet lower price points. The median sales price of newly built homes has dipped down in recent months.

• Creating Opportunities for Homeownership: The trend towards smaller, less expensive homes is creating opportunities for people to afford entry-level homes. Builders focusing on more affordable products are forming pathways to homeownership.

Opportunity Zone Housing Markets Rebound In Second Quarter Of 2023 Along With Rest Of Nation link

• Median single-family home and condo prices increased in 61% of Opportunity Zones in Q2 2023, reversing a brief decline in values in prior quarters.

• Opportunity Zone markets rebounded slightly better than other neighborhoods, with median prices rising more often and at a faster pace both quarterly and annually.

• Median second-quarter prices were less than the U.S. median of $350,000 in 80% of Opportunity Zones analyzed, with prices remaining less than $200,000 in 49% of the zones.

Total CRE Loans From Banks Hit $3T Even as Originations Cool link

• Commercial real estate loans have surpassed $3 trillion, but originations are down 53% year-over-year in Q2 2023.

• Q2 originations did see a rise, up 23% from Q1, showing a mixed picture in the market.

• Community banks hold an outsized share of CRE loans at 28%, or $865 billion, compared to their total loan holdings of 15%.

Net Absorption of Office Space Continues to Shrink in Q2 link

• In Q2, net absorption of office space shrank by 15.9 million square feet, including both direct and sublet space.

• Only 19 of the 51 markets tracked showed positive absorption, mostly in smaller metros.

• Amazon's second headquarters' fully pre-leased delivery saved Northern Virginia from negative territory; otherwise, it would have been in the red.

New Homes Make Up One-Third of Homes for Sale, the Largest Share on Record link

• New construction homes now account for 34% of all homes for sale, a record high, up from 29% last year.

• The median sale price of new homes is $375,700, a 1.7% increase from last year.

• Despite the increase in new construction, the overall housing inventory is still down 28% from a year ago.

Something I found Interesting

What’s Trending in Outdoor Amenities link

• Swimming Pools Reign Supreme: Across various asset classes and climates, swimming pools remain the top outdoor amenity. Nine out of ten times, a pool is considered the most important feature.

• Views and Parks Add Value: Whether it's water views or proximity to parks, these elements are integral to location and quality of life, enhancing the appeal of multifamily spaces.

• Activity-Based Amenities In Demand: From putting greens to walking trails, outdoor spaces that promote activity and community building are gaining traction. These amenities keep residents engaged and more likely to renew their leases.