Where People Want To Retire?

Read Time ~ 5 Minutes. Today is a long one but all good stuff. Enjoy!

Macro Trends

CPI rises as inflation inches up for first time in 13 months link

• Consumer Price Index (CPI) increased by 0.2% in July, marking a 3.2% annual rise, the first significant inflation bump in 13 months.

• Core inflation at 4.7% annually, below the 4.8% expectation; Fed likely to hold interest rates at 5.25% to 5.50%.

• The index for shelter was the biggest contributor to inflation, rising 0.4% for the month, accounting for over 90% of the increase, with an annual increase of 7.7%.

• Moderate recession expected around year-end; commercial real estate markets may rebound in the first half of next year.

Where People Want to Retire(No, it’s not Florida) link

• Iowa Tops the List: Ranked as the best state for retirement, Iowa shines with third in affordability and 11th in health care.

• Affordability Weighs Heavily: The study gave a 40% weight to affordability, making it the most influential factor. West Virginia, the most affordable U.S. state, ranked third.

• New York's Surprising Well-Being: Despite ranking lowest for affordability, New York secured a fourth place in well-being, suggesting that happiness might not always be tied to financial ease.

Overall Real Estate Market

58% Renters Plan To Move link

• Renters' Behavior Shifted: In 2023, renters' needs and desires have changed. Demand is down 7%, 58% of renters plan to leave their current community, and 41% plan to move in 2023. Affordability, lifestyle changes, and safety are key motivators.

• Inflation Holds Renters Back: About half of renters have cited inflation as a reason for delaying their move. In the last six months, 56% delayed plans due to inflation, and 46% say it will affect future plans.

• Search Process Changes: The average search time has reduced to 29 days from 46, and 65% of renters submit only a single lead. Out-of-town searches have risen, and amenities like in-unit laundry, air conditioning, and electric vehicle charging are top considerations.

Multifamily, Industrial Remain Top Choices for Institutional Investors link

• Multifamily and industrial sectors are the top investment choices, with 60% and 50% preference respectively. Retail, hotel, and office sectors are least favored.

• Capital is shifting towards direct deals, with a rating of 3.2 for direct investment in multitenant properties. Non-traded REITs and CMBS are least favorable at 2.6 and 2.5.

• Institutions are expanding residential strategies to include niche sectors like single-family rentals, student housing, and seniors housing, with Mill Creek Residential raising $1.2 billion in equity across various areas.

Report: U.S. CRE Q2 Investment Volume Drops by 64% link

• U.S. commercial real estate investment volume plummeted by 64% YoY in Q2 2023, with total investment at $75 billion.

• Sector breakdown: Multifamily down 71% to $28 billion; Industrial/logistics down 48% to $21 billion; Office down 62% to $11 billion; Retail down 67% to $11 billion.

• Cross-border investors favored the industrial sector with $1.8 billion, and the office sector saw a YoY increase of 25% in cross-border inflows, reaching $1.7 billion.

Why the commercial real estate market is expected to sink $504 billion link

• The US commercial real estate market is facing a $504 billion loss in 2023, a 38% drop from $816 billion last year.

• Multifamily originations are predicted to fall $299 billion, down 38% from $480 billion in 2022.

• Despite the current challenges, there's hope for a rebound in 2024, with commercial borrowing and lending expected to recover to $856 billion.

U.S. Foreclosure Activity Dips In July 2023 While Lender Repossessions Continue To Climb link

• Foreclosure filings down 9% from last month, but up 5% from a year ago. Total U.S. properties with foreclosure filings: 31,877.

• Foreclosure starts on 21,020 U.S. properties in July 2023, down 12% from last month and 2% from a year ago. Largest declines in Salt Lake City, UT (63%); Honolulu, HI (53%); Kansas City, MO (46%).

• Lenders repossessed 3,332 U.S. properties in July 2023, up 4% from last month and 9% from last year. States with the greatest number: Illinois (355 REOs); Pennsylvania (230 REOs); California (217 REOs).

Cities with Most Build-To-Rent Homes Under Construction link

• Build-to-Rent Boom: Over 700 planned and under construction build-to-rent properties across the U.S., accounting for about 86,543 units as of June 2023. A 52% increase in units completed between 2021 and 2022.

• Top Markets: Phoenix, Dallas, and Atlanta lead in build-to-rent properties under construction, with nearly 14,000 units in Phoenix alone, accounting for nearly 20% of the total U.S. figure.

• Future Growth: With 136,000 units planned, under construction, or in lease-up, investor interest in the build-to-rent segment remains strong, despite prevailing economic headwinds.