US multifamily housing completions surging

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September numbers to watch

• The Fed cut its overnight borrowing rate for the first time since March 2020, reducing rates by 50 basis points, and sees more cuts coming.

• Household debt rose 4.3% over the past year to a record $17.8 trillion, per the New York Fed. Credit cards and HELOCs have grown more quickly, up 10.8% and 11.8%.

• Car repossessions increased 14% in the first half of the year compared to the same period in 2019, per Cox Automotive.

• Synergy Research Group notes that hyperscalers account for 41% of global data center capacity and estimates that this figure will top 60% by 2029.

• The spread between the 2-year and 10-year Treasury flipped from inversion earlier this month.

• Bloomberg reports that private credit has grown into a $1.7 trillion asset class.

• There were 7.7 million open jobs in the U.S. economy as of July, 1.1 million less than one year ago, per BLS data. This translates into 0.9 jobs per unemployed individual, similar to pre-pandemic averages.

• TSA screenings remain on an upward trajectory, with an average of 5% more passengers over the past 30 days than at this time last year.

• Trepp reported the special servicing rate for CMBS rose in August. Multifamily has hit 5.71%, the highest since December 2015.

• The Wall Street Journal reports Gen Z will make up a larger share of the workforce than Baby Boomers this year.

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Weekly housing trends —data for week ending Sept. 21, 2024 link

• The median listing price dropped 1% year-over-year, marking the 17th consecutive week of price stagnation or decline. Sellers are responding with price cuts, increasing by 30% from the previous year.

• New home listings rose by 8% compared to a year ago, driven by falling mortgage rates encouraging more sellers to enter the market. Rates are at their lowest in nearly two years.

• Active inventory climbed 33.2% over the previous year, maintaining a trend of increased supply. Homes are sitting on the market six days longer compared to 2023.

Fix and flip loans enter securitization market with recent deals link

• Fix-and-flip loans are now being bundled into securitized products, marking a new phase in real estate finance. This gives investors new opportunities to buy into a market driven by home renovation and quick resales.

• Two major securitizations were recently completed, showing growing confidence in this market. The deals involved nearly $1 billion worth of loans, primarily in cities like Phoenix, Las Vegas, and Atlanta.

• This development signals that fix-and-flip loans are becoming more mainstream. With steady housing demand, this market is expected to continue growing despite concerns about rising interest rates.

US multifamily housing completions surge in good sign for rents: Bloomberg link

• Multifamily housing completions are expected to hit the highest levels since the 1980s, helping ease rent pressures across the U.S. Cities like New York, Dallas, and Miami are seeing significant increases in apartment supply.

• This surge in completions may lead to rent stabilization or slight decreases, especially in cities where demand has been outpacing supply for years. Analysts expect rent growth to slow down by 2% or more in 2024 in major urban centers.

• The increase in housing supply is crucial to alleviating affordability issues. Rising construction has helped narrow the gap between demand and available units in cities like Austin and Charlotte.

Multifamily investment conditions mixed as market works to stabilize link

• Multifamily investments are seeing a slowdown in transaction volumes, driven by higher interest rates and tighter lending conditions. This has led to a cautious outlook from investors across both primary and secondary markets.

• Some markets, like Atlanta and Phoenix, still show signs of resilience, particularly in demand and rent growth. However, these cities face challenges due to supply pressures and fluctuating cap rates.

• While developers and investors remain uncertain, the overall expectation is for market stabilization in late 2024. The path forward depends heavily on potential changes in interest rates and economic conditions.

Typical swing state renter earns 17% less than needed to afford typical apartment link

• Swing state renters earn $50,267 annually, which is 17.1% less than the $60,633 needed for a median-priced apartment. This marks an improvement from 20.6% in 2020 and 22.1% last year.

• Arizona saw the largest affordability improvement, with incomes rising 32.2% since 2020 and rents growing just 18.9%. The median renter household in Arizona now faces only a 2.6% shortfall.

• Pennsylvania renters face the worst situation, earning 29.6% less than required for the median rent of $1,747. Renters there spend 42.6% of their income on housing, the highest among swing states.

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These factors continue to impact multifamily project timelines link

Renters are looking for these perks over gyms and pools now 

10 Metros with Largest+Smallest Discount on “Priced to Sell” Homes

Mapped: U.S. States That Work the Hardest

A bridge? A house? Wait, it’s both!

(It's cool, but is it $10M cool?)

Link to the listing

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Vidit

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