Top 10 U.S. Cities Everyone Wants To Move To Right Now

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Macro Trends

U.S. Job Growth Stubbornly High in July link

• Despite 11 rate hikes by the Federal Reserve since March 2022, the U.S. labor market remains resilient with about 187,000 jobs added in July 2023, keeping pace with pre-pandemic levels.

• The U.S. economy has recovered all the net jobs lost during the COVID-19 pandemic with nearly 4 million more jobs (+2.6%) compared to the pre-pandemic employment level from February 2020.

• The unemployment rate in July was 3.5%, just above the lowest level since 1969, and average hourly earnings among employees on private nonfarm payrolls rose to $33.74, a 4.4% increase year-over-year.

Overall Real Estate Market

Multifamily’s Rent Growth Slowdown Shows Signs of Leveling Off link

• Rent growth dipped below 1% last month, marking only the second time since the 2010 Great Recession.

• Despite the slowdown, asking rents have risen every month this year so far.

• Year-over-year rent growth is at its lowest since July 2010, at 0.78%, a stark contrast to the 12.25% growth seen in July 2022.

This is How Bad Retail and Office Valuation Drops Have Gotten link

• Office and retail valuation drops are becoming a spectacle, with CMBS-office backed loans valuations reported at 52% to 60% in January.

• A review of 190 appraisals of major properties across all asset classes revealed an average 41.2% valuation decline in $10 billion in assets.

• Retail took the hardest hit with a 57% decline, closely followed by office spaces at 48.7%.

Top 10 U.S. States Posting Mid-Year Declines in Foreclosure Filings link

• Foreclosure activity in the first half of 2023 increased in several states, with Maryland, Oregon, Alaska, West Virginia, and Arkansas seeing the most significant rises, all above 70%.

• On the flip side, states like Maine, Missouri, Alabama, Colorado, and Wisconsin saw a decline in foreclosure activity, with Maine leading the pack with a 21.16% decrease.

• Nationwide, there were a total of 97,608 U.S. properties with foreclosure filings in Q2 2023, up 2% from Q1 2023 and 8% from Q2 2022. However, this figure is still 65% below the pre-recession average.

Opportunities

Demand Outpaced Supply in These Markets in 2Q23 link

• Among the largest 50 apartment markets, only 14 saw apartment demand outpace supply in 2023's 2nd quarter.

• The U.S. absorbed over 83,400 units from April to June, but couldn't keep up with the new completion volumes of over 107,400 units.

• Chicago led the way with demand for over 4,000 units, exceeding completions by nearly 1,600 units. Other markets where demand surpassed supply by about 500 units include Virginia Beach, San Diego, and Milwaukee.

Top 10 U.S. Cities Everyone Wants To Move To Right Now - link

• In 2021, an estimated 7.9 million people moved from one U.S. state to another, with certain cities attracting a particularly high level of interest.

• The trend of seeking homes outside one's current living area is growing, with buyers grappling with high home prices, rising mortgage rates, and inflation.

• The top 10 cities attracting out-of-town home shoppers are Phoenix, AZ; Chicago, IL; Atlanta, GA; Dallas, TX; Myrtle Beach, SC; Minneapolis, MN; St. Louis, MO; Tampa, FL; Memphis, TN; and Charlotte, NC.

Risks

Home Prices are going down again link

• The median list price for homes declined by -1.1% in July 2023, signaling a shift back to more favorable buying conditions.

• Sellers cut the price on 21% of all listings in July 2023, indicating an increase in seller desperation as buyer demand dissipates.

• Housing markets across the South and parts of the Mountain region, particularly in states like Florida, Georgia, Tennessee, and Texas, are at risk of significant home price declines in the second half of 2023.

Multifamily Insurance Rates Are Up as Much as 28% link

• Operating expenses for multifamily real estate have sharply risen, and they're not expected to decrease even with inflation receding.

• The increase in expenses is eroding net operating income, which in turn is pressuring the debt service coverage ratio.

• This financial strain is making lenders uneasy and could potentially hinder refinancing efforts.