Weekly Housing Trends, Building Material Prices Continue to Rise

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“Retirement starts when you stop sacrificing today for some imaginary tomorrow”

- Naval Ravikant

Economic Watch: Slower GDP Growth + Inflation Concerns link

• U.S. GDP grew by only 1.6% annually in Q1 2024, significantly below the expected 2.4%. This lower growth is tied directly to high federal interest rates and weak trade and inventory figures.

• Inflation remains stubbornly high at 3.7%, despite the Federal Reserve's target of 2%. The persistence of inflation pressures the Fed to postpone any rate cuts, expected not before July.

• The forecast for the U.S. economy points to a slowdown but not a recession. A "soft landing" is anticipated, with slow growth and moderating inflation through the year.

• Interest rates are predicted to ease by the end of 2024, aiding a recovery in real estate investment. This shift could lead to increased leasing activity in both industrial and office sectors as conditions improve.

Weekly Housing Trends View—Data Week Ending April 20, 2024 link

• Home prices softened last week, decreasing by 1.1% from the previous year. This drop, the largest in 14 weeks, may indicate a change driven by an increase in smaller, less expensive homes entering the market, particularly in the South.

• New home listings spiked, showing a 13.5% increase from the same week last year. This ongoing trend, marked by more homes hitting the market, suggests sellers are adjusting expectations amidst changing market conditions.

• Active inventory is significantly up, with a 31.7% increase over last year's figures. Despite higher mortgage rates, the boost in inventory provides more options for buyers, maintaining steady market activity compared to previous years.

Building Material Prices Continue to Rise link

• Construction material costs have surged, marking the fifth consecutive month of increases. The non-seasonally adjusted index for residential construction materials rose by 0.21% in March, following a 0.54% increase in February and a significant 1.25% increase in January 2024.

• This trend impacts both housing affordability and the pace of new constructions. Higher material costs are likely to slow down new housing projects and could contribute to higher prices in the real estate market.

• The repeated price hikes are largely due to persistent supply chain disruptions. These disruptions, along with inflationary pressures, are major contributors to the ongoing rise in material costs, affecting the overall stability of the real estate investment landscape.

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Gateway Markets Losing Population in 2023 link

• San Francisco led the largest population decline among major U.S. gateway cities from 2020 to 2023. The city experienced a 3.7% drop in population, combined with Oakland, based on the latest U.S. Census Bureau estimates.

• Other significant gateway markets like Los Angeles, San Jose, and New York also saw notable declines. These cities recorded population decreases ranging between 2.5% and 2.9% during the same period.

• In contrast, some markets showed resilience or marginal growth. Washington, DC, grew by 0.7%, aligning closely with the U.S. average, while Seattle's population increased by 0.4% between 2020 and 2023.

Minimum Staffing Rule Will Squeeze Nursing Home Margins link

• New regulations require nursing homes to provide at least 3.48 hours of care per resident per day. This rule could significantly increase operational costs as facilities struggle to meet these minimum staffing levels.

• The Biden Administration's final rule on staffing will impact an estimated 79% of nursing homes nationwide. These facilities will face expenses ranging from $1.5 billion to $6.8 billion to comply with the new standards.

• Despite recovering occupancy levels over the past two years, the added financial pressure from this rule could narrow profit margins for many operators. Nursing homes are already grappling with rising costs and a persistent nursing shortage, complicating compliance efforts.

Oracle Plans to Move Global HQ to Nashville link

• Oracle is relocating its global headquarters to Nashville, situating itself in the center of America's fastest-growing healthcare sector. Larry Ellison announced the move at the Oracle Health Summit, highlighting the strategic advantage of Nashville's vibrant healthcare industry.

• The company is investing $1.2 billion in a new campus on 60 acres of riverfront property in Nashville. This campus is set to become Oracle's world headquarters, signaling a significant commitment to the city and its development potential.

• This move is indicative of a broader trend of tech giants diversifying into healthcare and seeking strategic locations that support growth in this sector. Oracle's decision reflects its long-term strategic planning and adaptation to industry trends.

Getting Creative To Estimate Cap Rates 

Foreclosure Numbers Are Nothing Like the 2008 Crash

Charted: Which City Has the Most Billionaires in 2024?

That's all, folks.

Cheers,

Vidit

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