There’s A Surprising Top City For 2024 Apartment Investment

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2023 Poverty Rate By State, Per The Latest Census Data link

• The latest census data reveals significant fluctuations in poverty rates across the U.S. states. New Hampshire boasts the lowest poverty rate at 7.2%, while Mississippi has the highest at 19.1%.

• Over the past decade, some states have seen dramatic declines in poverty rates. Utah leads with a nearly 36% decrease, while others like Maryland experienced minimal reductions.

• A concerning trend is the rising poverty rate among seniors. In Alaska, the rate for those 65 and older soared by 131.8% over the past decade, highlighting a growing economic challenge for the elderly.

Rent Trends in November ’23 link

• National median rent experienced a 0.7% decrease, reaching $1,354, marking the third consecutive month of negative rent growth. Year-over-year, rent growth remains negative at -1.2%, indicating a slight reduction in average apartment costs compared to last year.

• The seasonal pattern of rent growth has altered this year, with the usual fall and winter price dip starting a month earlier than typical. This shift suggests a change in the traditional rental market dynamics.

• Despite the recent downturn, the broader context of the rental market shows a complex interplay of factors influencing rent prices, including seasonal trends and broader economic conditions.

There’s A Surprising Top City For 2024 Apartment Investment link

• Jersey City, New Jersey, has emerged as the top city for apartment investment in 2024, surpassing Brooklyn, New York. This shift reflects changing attitudes among real estate investors, with rent growth slowing in Sunbelt markets and rising vacancy rates.

• The Northeast and Midwest metro areas are now leading the country in rent growth, attracting investor interest. Factors like lower apartment construction rates and increasing demand are contributing to higher rents and lower vacancies in these regions.

• Despite a population decline in New York City, the apartment market remains robust due to low vacancy rates and strong rent growth. The tight market is pushing renters to New Jersey, which is experiencing some of the strongest rent growth in the country.

Net-lease investment volume in the U.S. plummeted by 54% link

• Net-lease investment volume in the U.S. plummeted by 54% year-over-year in Q3 2023, reaching $8.5 billion. This decline is part of a broader trend in commercial real estate, where total investment volume fell by 49%.

• The industrial and logistics sector increased its share of net-lease investments to 52%, while retail rose to 28%. In contrast, the office sector's share dropped to 20%.

• Average net-lease capitalization (cap) rates surged by 60 basis points to 6.2% due to economic uncertainty and rising interest rates. The 10-year Treasury yield hit its highest quarterly average since 2007 at 4.4%.

Waves of Maturing Office Loans Are Coming in Top Metros link

• Despite expectations of resilience, primary metro markets with high concentrations of business and Class-A office spaces are facing potential distress due to maturing office mortgage loans.

• Yardi’s report indicates that these maturing loans are heavily concentrated in primary markets, Class A properties, and urban areas, signaling upcoming challenges.

• The situation contrasts with earlier predictions that these areas would remain robust due to their quality and business density, suggesting a shift in the office real estate landscape.

Even More Apartments Enter the Pipeline for 2024, 2025 link

• Multifamily construction starts remained strong in the first half of the year, leading to an increase in under-construction units not yet in lease-up, as reported by Yardi Matrix's Q4 Multifamily Supply Forecast Report.

• The under-construction pipeline saw a 7.6% increase in the third quarter, with forecasts showing a 5.8% rise in completions for 2024 and a 6.2% increase for 2025

• The report indicates robust growth in the multifamily housing sector, suggesting a significant expansion in apartment availability in the coming years.

Investor Home Purchases Are Down Over 40% in Sun Belt Pandemic Boomtowns link

• Nationwide, investor home purchases plummeted by 29.7% year over year in Q3 2023, marking the lowest level for any third quarter since 2016. This significant drop is attributed to rising mortgage rates, high home prices, and a sluggish rental market.

• The Sun Belt region experienced the sharpest decline, with cities like Atlanta, Charlotte, and Jacksonville seeing investor purchases fall by nearly 50%. This downturn reflects a cooling appetite for homes in these areas, partly due to many buyers being priced out.

• Despite the overall decline, investors still bought 15.9% of U.S. homes sold in Q3 2023. However, their market share has decreased, indicating a retreat from the housing market more rapidly than regular homebuyers.