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April 16, 2022 Weekly Investor Update

Life Bridge Capital Weekly Investor Update

April 16, 2022

The Latest in Commercial Real Estate (CRE), Economy & Markets





Mortgage Rate (30-Year Fixed): 5.0% (as of 4/14)


Existing Home Sales: -7.2% (February 2022)

New Residential Sales: 11.9% (February 2022)

Median Sales Price for New Houses Sold: $400,600 (February 2022)

Construction Spending: +0.5% MoM (February 2022)

New Residential Housing Starts: 1.7 million (February 2022)

New Residential Housing Completion: 1.3 million (February 2022)


Homeownership Rate: +65.5% (4Q21)

Rental Vacancy Rate: +5.6% (4Q21)


Sources: NAR, BLS, Federal Reserve Bank, MBA

Note: Rates listed are estimates and may not reflect actual rates depending on term, sponsor location, and other factors involved.



10. Real estate investors who buy then rent are home building industry’s favorites

A total of $89 billion in capital was infused by large investors in rental homes this year, according to real-estate research and advisory firm Zelman & Associates. And with the ongoing trend, it is a good indication of better days ahead for the home building industry and construction sector. Reports from The Wall Street Journal indicate that 1 in 4 homes that were sold in 4Q21 were new-construction properties. The National Association of Home Builders (NAHB) also announced that investors are the target market of residential construction companies since these buyers have cash on hand. These new homes that are sold to rental companies make up as much as 9% of single-family home starts.


9. $2 trillion mortgages expected this year

Real estate firm Rocket CEO Jay Farner opined in an interview with CNBC that homeowners are recognizing that home values are close to the peak. In January, verified approvals (pre-approving a home before the buyer finds a property to purchase) hit a record-high, which indicates that mortgage clients want to be viewed as cash buyers and are likely to be very active this spring. He also revealed that the industry is going to have $2 trillion of mortgages, showing signs that the market is going back to normalized levels with a healthy credit risk.


8. More net-zero buildings today than in 2014 but further decarbonization needed

A recent report from the United Nations’ International Panel on Climate Change (IPCC) reveals that compared to eight years ago, there are more net-zero buildings that are built in major metropolitan areas in the United States. However, the IPCC indicates that the rate of decarbonization is still lagging. The group is calling for the real estate and construction sectors to adopt more ways of using sustainable building materials that are cheaper and more competitive. It is also supporting Pres. Joe Biden’s plan of investing in retrofitting commercial buildings to mitigate carbon emissions.

7. Home prices: steady increase then slowdown according to economists

A recent interview by MarketWatch to prominent real estate economists and banking analysts reveals a general consensus that home prices will continue to rise in the coming months but will eventually moderate as inflation and higher mortgage rates continue to surge. The higher home prices will be more prominent during spring as the dearth of homes for sale will most likely swell. Still, it will remain a competitive market since current sales volumes are higher than pre-pandemic months matched by record-low inventory.


6. Google continues to invest in commercial real estate projects

In a blog post by Google CEO Sundar Pichai this week, he announced that the search engine company is planning to invest $9.5 billion in additional offices and data centers in 2022. The move is expected to create 12,000 new full-time jobs in the company excluding the impact it will create to Google’s suppliers and partners. The company is also setting its sights on a carbon-free energy data centers and offices by 2030 as it now tries to certify its buildings in green design.

5. What’s ahead for real estate and cities of the future revealed 

The Wall Street Journal recently released its forecast on the future of real estate. This includes more developers investing in urban senior living in anticipation of Baby Boomers’ impending retirement. Luxury retirement communities, in particular, will be a crucial market bet in major U.S. metros. In addition, there will be interest among architects and builders on using engineered wooden materials that will rival that of steel and concrete, which will be used to construct office buildings.


4. Dallas-Fort Worth leads in U.S. industrial building development

Real estate analysts report that the Dallas-Fort Worth area has only about 6% of unoccupied existing industrial space in the region. This makes it one of the lowest vacancy rates in decades. Furthermore, 20% of the new D-FW warehouse buildings under construction are already rented. Southern Dallas County leads North Texas in warehouse construction, with more than 20 million sq ft of new buildings in development, according to Jones Lang LaSalle.


3. Supply chain problems benefit warehouses

The current global supply chain issues mean reduced production capacities by manufacturers, but the warehouse sector is benefiting actually from it. The Wall Street Journal reports that the surge in stockpiles has caused a rise in demand for warehouse spaces as more companies need buffer stock to meet sales. It is expected that inventories will be higher by 10% to 15% than pre-pandemic values. U.S. warehouse rents rose by 11% in 2021, ahead of the rise in consumer prices. 


2. More U.S. warehouses adopting carbon-reduction strategies

Green leases on U.S. warehouses have started to grow as a response to address retrofitting issues. These leases encourage landlords and tenants to share information on how to make the building more “green.” The New York Times reports that building performance standards, especially those that include carbon reductions, are becoming part of compliance. However, Oxford Economics notes that the country is still lagging behind Europe when it comes to net-zero warehouses and would need to impose a reduction in carbon emissions by implementing requirements such as solar-ready roofs.


1. Cross-border CRE investments at record high 

Cross-regional capital flows into North America totaled $27.3 billion for H2 2021, the highest level since H2 2016 and a 50% increase over the five-year H2 average between 2016 and 2020 according to real estate firm CBRE. Many Singaporean investors were active in North America, putting their money on industrial and logistics properties


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