Passive Investor? Fan of the podcast? Looking to learn about syndication? Welcome to Life Bridge Capital!

May 7, 2022 Weekly Investor Update

Life Bridge Capital Weekly Investor Update

May 7, 2022

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

 

MARKET INDICATORS SNAPSHOT

 

WEEKLY

Mortgage Rate (30-Year Fixed): 5.27% (as of 5/5)

MONTHLY

Existing Home Sales: -2.7% (March 2022)

New Residential Sales: -8.6% (March 2022)

Median Sales Price for New Houses Sold: $436,700 (March 2022)

Construction Spending: +0.5% MoM (March 2022)

New Residential Housing Starts: 1.79 million (March 2022)

New Residential Housing Completion: 1.3 million (March 2022)

QUARTERLY

Homeownership Rate: +65.4% (1Q22)

Rental Vacancy Rate: +5.8% (1Q22)

 

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.

 

TOP 10 STORIES OF THE WEEK

10. Real estate investments among preferred assets to deal with inflation

A nationwide survey conducted by Gold IRA Guide revealed that 5.3% of respondents have diversified their portfolio with real estate to combat inflation. The results, which were released in the first week of May, also highlight women (4.5%) preferring real estate diversification while men (7.9%) opt for gold as the most popular form of inflation hedge. The report emphasized the value of diversifying holdings by investing in hard assets such as real estate.

 

9. Portland multifamily market: low inventory, but high demand

Multifamily NW’s biannual apartment report for spring 2022 revealed that rental housing, particularly multifamily properties, is currently low in inventory due to the influx of demand in Portland and nearby areas. The median price per unit is at $187,900. Portland recorded 315 sales totaling $4.42 billion, which is 50% above the previous peak in 2015.

 

8. NMHC: Nationwide apartment demand continues to rise

The National Multifamily Housing Council’s (NMHC) April 2022 Quarterly Survey of Apartment Market Conditions revealed that Market Tightness Index (MTI) has broken the 50 breakeven level. MTI measures the liquidity of the apartment market where a reading higher than 50 means tighter conditions. A majority of those surveyed (59%) found apartment market conditions unchanged, however. NMCH announced that demand remains very strong for apartments despite challenges in supply chain, labor and material costs.

 

7. Apartment rent growth continues in April, though with slight dip

Research firm CoStar Group reported that the YoY rent growth in end-April 2022 slightly fell to 15.6%, especially in major rental markets. Four cities in Florida topped the list with Palm Beach registering a 24.05% increase in rent costs, followed by Orlando (23.0%), Fort Lauderdale ((21.3%) and Tampa (19.9%). The other Sunbelt markets also dominated the top 10 with Charlotte and Las Vegas. It should also be noted that MoM growth has Midwest metros such as Columbus, Ohio, and Indianapolis, and gateway cities like Boston and Seattle showing higher rent growth over the past 30 days. 

 

6. California built more multifamily housing in 2021

The latest Department of Finance report found out that out of the 112,886 newly constructed properties in California, a majority of the real estate were multifamily units (52%). This was followed by single-family homes (46%) and mobile homes (2%). The report also emphasized the movement towards more affordable inland communities, especially by those relocating due to remote work opportunities. Los Angeles, San Diego and San Francisco built the most new housing. Atherton in San Mateo County experienced an 80% growth of multifamily housing stock, the highest percentage of any city.

5. NYC multifamily market records robust growth in Q122

New York City recorded a total of $2.87 billion of multifamily property deals in Q122, according to Ariel Property Advisors. Manhattan earned over half of all closings with a total of $1.5 billion in dollar volume across 49 buildings. The average cost per sq ft of multifamily buildings in the area increased by 8% from $668 to $720. Likewise, Brooklyn recorded significant growth, rising 113% in transaction volume with 34 closings.

 

4. Minnesota suburb apartments see higher demand 

Higher mortgage rates have influenced many residents in the Twin Cities (Minneapolis and St. Paul) to consider renting multifamily properties as a more viable option, according to Marquette Advisors. Many have moved into suburbs that saw the highest annual rent growth of 5.4%, compared with 4.5% in Minneapolis and 2.6% in St. Paul. When mortgage interest rates started climbing in Q122, lower-income homebuyers decided to look into renting opportunities instead, according to the report. 

 

3. Hottest rental markets include Sunbelt areas

American Landmark Apartments named Sunbelt metros as some of the top rental markets this year. This includes Charlotte, Tampa and Richmond. In particular, Charlotte was cited for attracting a huge number of millennials who want to relocate because of its opportunities in banking, technology and energy. Tampa, on the other hand, had apartment rents increase 24.6% YoY in December 2021 due to the influx of relocating professionals in the hospitality and healthcare sector. Richmond has also recorded a strong multifamily market growth at 14.68% YoY.

 

2. U.S. job growth remained strong in April

The U.S. jobs report that was released this week showed a total of 428,000 non-farm payroll jobs being added in April. In addition, the construction industry workforce has grown to 21,000 jobs above its pre-pandemic level after more than 2,000 jobs were added. The unemployment rate was sustained at 3.6%. The Mortgage Bankers Association has observed that job growth has accelerated faster in the last three months. In a survey among economists conducted by Bloomberg, the experts agree that the unemployment rate should decline to 3.5% as job openings are now back at record highs.

 

1. Apartment real estate market to remain stronger

The commercial real estate sector will continue to grow despite the recent interest hikes, according to National Association of Realtors chief economist Lawrence Yun. During the 2022 Legislative Meetings’ Commercial Economic Issues and Trends Forum, Yun announced that apartment rents are expected to keep rising by more than 10% this year. In addition, real estate firm CBRE added that the volume of multifamily investment in 2021 set a new record in asset class history, with $352 billion of investments. Yun also called for commercial investors to consider land development to address the shortage in housing.

 

All content within the Life Bridge Capital newsletters is the property of Life Bridge Capital LLC unless otherwise stated. All rights reserved. No part of the content may be reproduced, transmitted or copied in any form or by any means without the prior written consent of Life Bridge Capital LLC.

Related Posts