U.S. Apartment Demand at Five-Quarter High

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The Typical U.S. Asking Rent Is Only $24 Below Its Record High link

• Cooling Rents: Despite a slowdown in rent growth, the median asking rent in the U.S. is just $24 below its record high, standing at $2,029 in June 2023.

• Inflation Impact: The deceleration in rent growth is contributing to a significant reduction in inflation, with consumer prices up by only 3% this year through June, down from 4% in May.

• Supply Surge: Completed residential projects in buildings with five or more units rose 23.9% year over year, leading to more vacancies and less room for landlords to raise prices.

Remote Work Estimated To Wipe Out $800 Billion in Office Value in These Nine Global Cities link

• Global Impact: Remote work could erase approximately $800 billion in office value worldwide by 2030, with nine major cities bearing the brunt of this shift.

• City Exodus: Urban cores like New York and San Francisco have seen population decreases of 5% and 6% respectively from mid-2020 to mid-2022, impacting office and retail spaces.

• Hybrid Work Trends: Despite improvements in office utilization rates, office attendance remains 30% below pre-pandemic norms, with employees visiting offices about 3.5 days per week on average.

• Full list: New York, San Francisco, Houston(the black sheep), London, Paris, Munich, Tokyo, Beijing, Shanghai

College Housing Continues To Outshine Other CRE Sectors In 2023 link

• Resilient Sector: Despite pandemic-induced remote learning, student housing has shown remarkable resilience. Vacancy rates dropped and rents rose by nearly 5% in 2022, defying expectations.

• Big Bets: Investment giant Blackstone Inc. acquired American Campus Communities Inc., the largest student housing company in the U.S., for $13 billion, signaling strong faith in the sector's future.

• Record Sales: Despite rising mortgage rates, student housing property sales hit a record high of just under $23 billion in 2022. Rent growth for student housing in 2023 is projected at nearly 9%.

In these housing markets, refis are still (kinda) happening link

• Record High: Purchase loans made up a record 88.4% of the market mix in June, indicating a shift from refinancing to purchasing.

• Dipping Refis: Refinancing share of lock volume dipped to a new low of 11.6% in this cycle, reflecting the dwindling opportunities for refinancing.

• Price Surge: The average purchase price rose for the seventh consecutive month to $457,000, even as demand for ARM loans slightly dipped.

U.S. Apartment Demand at Five-Quarter High link

• Rebounding Demand: Apartment demand in the US has hit a five-quarter high in Q2 2023, with net absorption nearly matching the surge in new supply levels. This has helped stabilize occupancy rates after a significant decline in 2022.

• Construction Peak: The 50-year high in apartment construction is beginning to result in peak completions. More than 107,000 apartment units were completed in Q2 2023, and over 1 million additional units are under construction as of end June.

• Rent Growth Slowing: Despite the rebound in demand, rent growth continues to slow. Year-over-year effective asking rent growth was at 1.5%, the lowest since early 2021. The number of metro areas with year-over-year rent cuts grew in June, reaching 35 of the nation’s 150 largest markets.

Florida Regains Top Spot in Apartment Market link

• Sunshine State Triumphs: Florida, with its diverse economy and status as the fastest-growing state, has once again become the most competitive apartment market in the U.S. Six of the nation’s top 20 competitive rental hubs are located in Florida.

• New Jersey's Momentary Spotlight: For a brief period, New Jersey, part of the Northeast region, stole the show due to its strong job market in sectors like tech, finance, health care, and education.

• Click the link for some more awesome nuanced knowledge of othe local markets.

Current State of the Housing Market; Overview for mid-July link

• Inventory Insight: New home inventory is nearing a record percentage of total inventory, with new homes making up close to 23% of total for-sale inventory.

• Pandemic Impact: The pandemic has led to a collapse in existing home inventory, which has been a positive for homebuilders due to fewer distressed sales.

• Economist's Observation: Mark Fleming, Chief Economist at First American, highlighted the shift in inventory composition back in March.

West and Midwest Markets Achieve Apt Occupancy Growth in 2023 link

• Silicon Valley Surge: San Jose leads the pack with a 40 basis points (bps) increase in occupancy growth, rebounding to 95.8% as of June 2023.

• Coastal Comeback: West Coast markets including San Diego, San Francisco, and Seattle have seen their occupancy rates rebound in 2023.

• Midwest Momentum: Chicago, Milwaukee, and Minneapolis have also experienced occupancy upturns, ranging from 10 to 30 bps in 2023.

U.S. Employers Add Fewer Jobs Than Expected in June link

• Slowdown Surprise: U.S. employers added approximately 209,000 jobs in June 2023, falling short of economists' projections of 225,000 to 240,000 jobs. This was the weakest month-over-month gain since December 2020.

• Rate Hike Impact: The Federal Reserve's 10 rate hikes since March 2022 have led to a 16-year high federal funds rate of over 5%. Despite this, job growth remains resilient and above pre-pandemic levels.

• Industry Insights: Job growth was seen across most major industry sectors, with notable gains in Education and Health Services (+73,000 jobs) and Government (+60,000 jobs). However, the Trade, Transportation and Utilities sector saw a loss of 22,000 jobs.

Home value hits all-time high in June, owners keep low rates link

• Skyrocketing Value: The typical home value breached the $350,000 mark for the first time in June, setting a new record in home values.

• Clinging to Low Rates: Nearly 92% of homeowners are holding onto their properties and their sub-6% mortgage rates, despite the rising demand in the housing market.

• Listings Drought: The housing market is experiencing a 28% decrease in new listings compared to June 2022, with homeowners possibly waiting for prices to climb even higher before listing their homes.

Suburban shopping is hip again link

(including a rare chart below because I just love CBRE🙂)

• Shift in Trends: For the first time since 2006, the retail availability rate in America's central business districts (CBD) is higher than in the suburbs, indicating a shift in shopping trends.

• Remote Work Impact: The rise of remote work has led to a redirection of spending to retail districts closer to where people live, causing an increase in CBD retail availability.

• Urban Resilience: Despite the shift, urban retail is not out. Weekend spending in CBDs has increased, likely due to sporting and cultural events, and consumer activity is picking up in many urban neighborhoods adjacent to CBDs.