Office conversions reach record levels

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Top 10 markets where military households have the biggest advantage link

• In Myrtle Beach, SC, military households hold a notable advantage, with a homeownership rate of 92.9%, the highest among the top 100 U.S. metros. This rate reflects the strong impact of VA loans and favorable terms for military buyers in specific markets.

• Stockton, CA, leads with a military homeownership rate 18.8% higher than non-military peers, highlighting a strong regional difference in accessibility. Meanwhile, Des Moines, IA, shows similar advantages, with military households owning homes at a rate 18.4% above their non-military counterparts.

• New York, NY, presents a unique contrast, where military homeownership is 14.7 percentage points higher despite high property prices averaging $968,000. This indicates that VA loan benefits help bridge the affordability gap in some of the nation’s priciest markets.

• See the rest of the list by clicking the link.

Multifamily vacancy falls to 5.3% link

• The national multifamily vacancy rate dropped to 5.3% as demand outpaced new supply, with the lowest vacancy in Providence (2.7%) and New York (3%). CBRE projects vacancy will reach its long-run average of 5% soon.

• Rent growth slowed overall, with a 0.3% year-over-year increase, though Class C units saw the highest growth rate as more renters opted for affordable options. The Midwest led in rent growth at 2.7%, while the Southeast and Mountain regions experienced declines.

• Net absorption was robust, with 153,300 units absorbed—an 84% year-over-year increase, driven by demand in New York, Washington, D.C., and Houston. Multifamily completions rose to 124,300 units, marking the second consecutive quarter where demand outpaced supply.

Office conversions in the U.S. have reached record levels link

• Office conversions in the U.S. have reached record levels, with 73 completed projects in 2024 and 30 more expected by year-end. High office vacancy rates and public-private incentives are driving this trend, especially for older buildings.

• Office-to-multifamily conversions comprised nearly 75% of ongoing projects in Q3 2024, up from 63% in Q1, adding 28,000 housing units since 2016 with another 38,000 planned. Multifamily demand is particularly strong downtown, where vacancy is 5.3% compared to 19.6% for office space.

  

• Cleveland leads in office conversion, with nearly 12% of its office inventory undergoing transformation, influenced by high construction costs and limited land. Chicago's LaSalle Street Reimagined initiative is creating a dense cluster of conversion projects, supported by city incentives.

States are making ADUs easier to build link

• In 2024, states like Colorado, Arizona, Massachusetts, and Hawaii enacted legislation to simplify the construction of accessory dwelling units (ADUs), aiming to alleviate housing shortages. These laws typically legalize ADUs by right, reduce parking requirements, and ease design and owner-occupancy restrictions.

• Despite state-level reforms, local governments often maintain stringent regulations that hinder ADU development. Municipalities are encouraged to align with state policies to effectively address housing needs.

• ADUs offer a cost-effective solution to increase housing density without extensive new infrastructure. They can provide affordable housing options and generate additional income for homeowners.

Zillow’s mortgage business is growing link

• Zillow Home Loans saw mortgage revenue grow 63% year-over-year in Q3, reaching $39 million, driven by an 80% jump in purchase loan originations totaling $812 million. This expansion positions Zillow to potentially rank among the top 50 U.S. mortgage lenders.

• Zillow’s Enhanced Markets initiative, active in 43 locations, integrates Zillow Home Loans with real estate services to increase conversions, especially in Dallas, Los Angeles, Atlanta, Raleigh, and Portland. Agents in the program must meet engagement metrics to retain access and face a 40% commission fee if Zillow closes their leads.

• CEO Jeremy Wacksman highlighted that 40% of buyers start with mortgage inquiries and over 80% lack an agent, creating a large opportunity. Zillow’s collaboration with agents aims to keep mortgage referrals in-house, increasing conversions for Zillow Home Loans in existing Enhanced Markets.

Florida’s crumbling home prices haven’t been this bad since 2011 link

• Florida’s southwest coast saw significant home price declines, with Punta Gorda dropping 6.5% to a median price of $350,000. North Port-Sarasota-Bradenton also fell by 5.8%, bringing the median to $485,000.

• Cape Coral-Fort Myers recorded a 3.7% dip in home prices, pressured by a combination of increasing housing supply and rising insurance costs. Multiple hurricanes in recent months further dampened buyer confidence and slowed the market.

• National home prices rose 3.1% on average, reaching a median of $418,700, but affordability remains a concern. Meanwhile, Florida and select markets in Texas and North Carolina are facing price corrections following years of rapid growth.

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