US Households in Great Shape

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US Households in Great Shape link

• US households have seen strong growth in both stock and home prices over the past 15 years, significantly boosting their financial standing. Fed rate hikes have also contributed by generating solid cash flows for those holding fixed income.

• Credit card debt in the US is at historically low levels and continues to decline, improving the overall financial health of households. This contrasts sharply with other countries like Canada and Australia, where debt-to-income ratios remain higher.

• With strong job and wage growth, and the potential for the Fed to cut rates soon, the outlook remains positive. The balance sheets of US households are robust, suggesting no immediate risk of a recession.

Weekly Housing Trends

What this week’s data means:

The median listing price stabilized at year-ago levels after falling annually for the last 16 weeks. In general, the housing market has carried on without any major shifts in recent months, despite falling mortgage rates. Though lower rates mean progress in the right direction for buyers, the vast majority of outstanding mortgages have a rate of 6% or lower, which could limit homeowners’ willingness to sell.

Office submarkets bucking the trend through mid-year link

• Knoxville, TN saw the largest increase in effective revenue at 8.7%, outpacing Albuquerque, NM by 208 basis points. San Francisco, CA posted the largest decline, with a 4.4% drop in revenue.

• The Southwestern Region outperformed other regions, with revenue increasing by 53 basis points from March to June 2024. The Northeast lagged, reporting a decline of 42 basis points over the same period.

• Four Raleigh-Durham submarkets defied the downward trend, collectively averaging a 506-basis-point increase. However, the overall Raleigh-Durham metro declined by 348 basis points.

Retail sector logs 11th quarter of sub-5% vacancy link

• Retail vacancy nationwide has remained below 5% for 11 straight quarters, with an even tighter market outside California. The vacancy rate dropped to 4.3% in 42 major markets, with 32 million square feet absorbed in the past year.

• The September rate cut could boost consumer spending and tenant demand, potentially leading to increased retail foot traffic. This could soften the impact of tightening household budgets and labor market softness.

• Retail accounted for over 40% of trades in the $1 million to $10 million price range in the past year, driven by private investors in 1031 exchange deals. Fast food-related properties saw a 10% increase in sales in Q2 2024, highlighting competition for net-leased assets.

RealPage Forecast Indicates Strong Demand, More Mild Rent Growth link

• Employment surged in September with 254,000 jobs added, bringing the total to 1.8 million for the year, which is 24% lower than the same period in 2023. Average hourly earnings also increased by 4%, signaling real wage growth.

• Apartment demand was strong in Q3 2024 with 192,000 units absorbed, pushing the total absorption for 2024 to over 488,000 units. RealPage predicts demand will rise by about 5% in 2025.

• Rent cuts impacted 68% of the top 50 markets in 2024, with only 18% seeing rent forecasts upgraded. For 2025, over 35% of the top markets are expected to experience rent growth above 3%.

Limited Supply Drives Stable Vacancy Rates and Rising Rents | U.S. Retail Q3 2024 link

• National retail vacancy rates stayed steady at 4.1% for the third quarter, with available space down 26% from the pandemic peak. Freestanding retail spaces face the tightest availability, just 3.2%.

• Leasing discussions are happening as early as three years ahead of vacancies, with new tenants filling spaces within 8.5 months, the fastest in over two decades. Leasing activity slowed by 4%, with 41.3 million square feet leased in Q3 2024.

• Retail rents rose by 0.9% to an average of $34.44 per square foot in the third quarter, while mall rents went up 1.1%. Construction remains historically low, with only 5.4 million square feet delivered in Q3.

33% of homeowners would hire a ‘questionable’ contractor to save money, report finds link

• One-third of homeowners are willing to hire contractors with poor reputations to save money. This can result in costlier problems later, such as unfinished or low-quality work.

• Homeowners prioritize reputation (25%) and experience (23%) when hiring contractors, but 19% still focus mainly on cost. Clever Real Estate surveyed 1,000 U.S. homeowners in mid-August for this data.

• Experts warn that after natural disasters, contractor fraud rises sharply. Florida is currently bracing for Hurricane Milton, and homeowners are urged to vet contractors to avoid being scammed.

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