These 10 cities will be the biggest winners as Rates Continue To Drop

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Rates Markets Are Pricing in a Recession

(Despite surveys showing that the consensus is expecting a soft landing, rates markets are pricing in a full-blown recession, see chart below.)

The opportunity in retail link

• Since the heyday of the housing boom of the mid-2000s, retail construction has been relatively restrained.  

• Overall, the amount of space per capita has decreased since 2006, per data from CoStar.  

• Six markets have seen their SF/capita numbers shrink by at least 10 SF over that period.  

• Two of the six are major markets, with space/capita numbers below the national average.  

• Identifying markets with strong population growth and limited development could yield strong development potential.  

Office leasing activity expected to continue upward climb into next year link

• Office lease activity is picking up, with 3,166 leases signed in the first half of this year, slightly surpassing pre-pandemic levels. However, lease sizes have dropped 27%, reflecting the ongoing shift to hybrid work and economic caution.

• Renewals have surged, making up 42% of office transactions this year, compared to 31% before the pandemic. Lease sizes for renewals are down 21%, as companies prefer to stay put and renegotiate rather than relocate.

• Prime office spaces in cities like Philadelphia and San Francisco are more in demand, representing a bigger share of leases despite their small market portion. These premium leases also last longer, with average terms of 107 months compared to 86 months for non-prime buildings.

New construction insights: newly-built homes becoming smaller, more affordable link

• Median size of new homes dropped from 2,128 square feet in 2022 to 1,965 square feet in 2024. Builders are prioritizing affordability, aligning with the demand for more accessible homes.

• New home inventory grew 30.3% by August 2024 compared to January 2020, while existing home listings fell by 25.2%. This surge in new builds helps counter the housing shortage.

• South Carolina, North Carolina, and Idaho lead in new construction activity and affordability. Homes in these states are often priced lower per square foot than existing homes.

Weekly mortgage demand surges 14% higher as interest rates hit the two-year low - link

• The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $766,550 or less decreased to 6.15% from 6.29%

• Applications to refinance a home loan jumped 24% from the previous week and were 127% higher than the same week one year ago.

• Applications for a mortgage to purchase a home increased 5% for the week but were still 0.4% lower than the same week one year ago.

These 10 cities will be the biggest winners as Rates Continue To Drop link

Top 10 U.S. Metros with Highest Annual Percentage Increases in Home Flipping Returns in Q2 2024

The latest builder trend

Where are America’s most expensive towns? - NY Times

2024 top markets for investors - new list

Rent burden by city: where residents spend the highest share of income on rent

List of Proptech Startups That Just Got Funded

Visualizing S&P 500 Returns After Interest Rate Cuts

Can’t get better!

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