Top 20 areas real-estate investors are piling into

Read Time ~ 4 Minutes.

Overall Real Estate Market

Berkadia Study Argues CRE Lending Hasn’t Dried Up for Multifamily link

• Despite concerns, multifamily lending in 2023 has remained consistent with 2016 levels, driven primarily by smaller commercial banks rather than the nation's top 25 banks.

• Initial fears of a significant reduction in bank lending were disproven; the second quarter showed less pullback than anticipated.

• While larger banks showed more net negative lending, smaller regional banks have been the main drivers of positive lending activity, holding about 69% of commercial real estate loans originated by banks in the U.S.

Rising Demand Supports Viability of Flexible Office Industry link

• WeWork's challenges stem from pre-pandemic long-term lease commitments and rising interest rates, not a decline in the flexible office market.

• 62% of companies in CBRE’s Spring 2023 survey are seeking flexibility in traditional leases, with U.S. office vacancy at an 18.2% high.

• Demand for flexible office space is growing: 36% of respondents have over 10% of their office portfolios as flexible space, a rise from 19% in 2022.

Higher mortgage rates haven't increased inventory link

• Mortgage rates reached a 21st-century high last week, but housing inventory growth remained sluggish.

• Despite rates hovering near or above 7% in recent months, active listings growth has been slower than expected.

• Purchase application data remained relatively unchanged on a week-to-week basis, with rates shifting from 7.19% to 7.37%.

Opportunities

RV Storage: A Longtime Niche Emerging as its Own Asset Class link

• RV ownership reached a record high in 2022 with over 11 million households owning an RV, marking a 62% increase from 6.9 million households in 2001. This trend is expected to continue growing.

• The surge in RV ownership has led to a heightened demand for storage spaces. Many RV owners can't store their vehicles at home due to space constraints or local regulations, leading to a rise in dedicated RV storage facilities.

• RV storage offers several benefits, including a low risk of market oversaturation, a high-income customer base, and low overhead costs. However, challenges like finding suitable sites and rising development costs exist.

Top 20 areas real-estate investors are piling into for high population growth, increasing rental demand, or price appreciation link

• As of Friday, US 30-year fixed mortgage rates hit 7.15%, more than double from two years prior. Despite this, the real estate market remains stable, with Goldman Sachs revising its house-price forecast to a growth of 1.8% for the year.

• The majority of single-family home buyers are investors, with owner-occupied purchases down 40% from June 2019 levels. In contrast, investor purchases, especially from those owning three or more properties, rose by 10%.

• Investors, both large and small, are targeting areas with high population growth from 2010-2020, expecting high rental demand. Surprisingly, California stands out as a major investment area despite not fitting the typical high-growth profile.

Below are the areas investors make up the most amount of purchases in.

Below are the areas investors make up the least amount of purchases in.