WEEKLY
Mortgage Rate (30-Year Fixed): 5.10% (as of 5/26)
MONTHLY
Existing Home Sales: -2.4% (April 2022)
New Residential Sales: -16.6% (April 2022)
Median Sales Price for New Houses Sold: $450,600 (April 2022)
Construction Spending: +0.1% MoM (April 2022)
New Residential Housing Starts: 1.724 million (April 2022)
New Residential Housing Completion: 1.3 million (April 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.
10. Multifamily prices rise at record-pace
Real Capital Analytics released a report this week, which highlights that multifamily property prices increased 23% percent YoY in April and 1.3% MoM. The average annual appreciation in multifamily property prices since January 2012 is 10.9%, while the average annual appreciation rate for all commercial property as a single asset class is 8.3%.
9. Multifamily lending to hold steady in 2022
Jamie Woodwell, VP of commercial real estate research at Mortgage Bankers Association (MBA), stated in a published report that multifamily lending will remain robust for the rest of 2022. However, it will still not be enough to match 2021’s record-high volumes as it is expected to drop to $418 billion from last year’s $470 billion. Total mortgage borrowing and lending is projected to remain at $895 billion this year, roughly in line with 2021’s $891 billion. The MBA anticipates borrowing and lending to rise in 2023, supported by multifamily lending borrowing worth $442 billion.
8. Houston multifamily market to remain strong
Northmarq’s Q122 Houston multifamily market report revealed strong gains for the Space City. Renter demand is supported by a growing economy, pushing rents higher and keeping vacancies sustained at 5.7% for three straight quarters. Asking rents accelerated at a faster pace with the level of activity sustained from the end of 2021. Rents increased 2.9% to $1,210 per month in Q122. The median price in Q122 was recorded at $184,000 per unit.
7. Tulsa multifamily rent growth outpaces Oklahoma City
Annual multifamily rent growth in Tulsa, Oklahoma reached 11.8% in April, according to Costar. The value has pushed market rents to $905 per month. On the other hand, rent growth has mostly remained the same in Oklahoma City with $906, rising 8.8%. Meanwhile, real estate firm Berkadia’s 2022 forecast report also predicts apartment effective rent in Tulsa to rise to $871, up 4.6% YoY. Occupancy will dip slightly to 95.9% but only by 50 basis points from last year.
6. Housing market is now in correction according to economist
Moody’s Analytics chief economist Mark Zandi announced this week in an interview with Fortune that the U.S. housing market has already entered the softening phase following a new home sales decline by 19% in April. Zandi stated that the housing market will finally return to normal in the coming months. Among the nation’s largest 392 housing markets where 96% are “overvalued” when compared to local incomes, the stabilization will result in more affordability among buyers.
5. Median rent prices rose faster than overall income
National median rent prices rose 149% in the last 35 years, while overall income only increased by just 35%, according to a study by Clever Real Estate. The group added that the rent-to-income ratio nearly doubled in a 35-year period ending in 2020. This means that Americans must spend significantly more of their earnings on rent compared to several decades ago. Young professionals that plan to migrate to urban areas in the 50 largest US cities must be prepared for higher rent-to-income ratio including San Diego (40%), San Francisco (49%) and Miami (33%).
4. Apartment demand driven mostly by Gen Z buyers
The number of applications for apartments from renters across all demographic groups reached 3.2 million in 2021, up by 10% YoY, according to RentCafe. It was driven primarily by Gen Z buyers who numbered about 220,000 more than other groups. Gen Z was only the group that registered an increase in renting activity as well. They flocked to San Francisco, Jersey City and Manhattan to search and compete for apartments.
3. Las Vegas multifamily market continues strong showing
Although demand has dipped slightly, Yardi Matrix reports that the overall health of Las Vegas multifamily market remains strong. In particular, asking rents rose 0.7% for three months to $1,493. Occupancy rate, on the other hand, was 95.6%. Developers reported 5,948 units under construction as of March. Finally, transaction activity rose 144% YoY, indicating healthier numbers for the city.
2. National apartment market condition eases in terms of tightness
The National Multifamily Housing Council’s (NMHC) Quarterly Survey of Apartment Conditions for April reports that market tightness (or those markets with low vacancies and high rent increases) continues to stabilize. Based on survey responses, the April 2022 Market Tightness Index is now at 60, down from 69 in January, and 82 in October. An MTI that is above 50 indicates that market conditions are getting looser, according to NMHC. When asked about their concerns regarding the impact of inflation and rising interest rates, the majority of respondents (55%) – which included CEOs and other senior executives of apartment-related firms nationwide – indicated that they are only somewhat concerned, while the rest (42%) are very concerned.
1. Multifamily properties will remain the hottest property type this year
Property executives who sat at the panel at the 17th annual Global Real Estate Summit revealed that together with industrial real estate, multifamily properties are going to have higher supply in Chicago and across the nation despite the downturn in the U.S. stock market. Loop Capital Markets CEO Jim Reynolds announced that both types of properties will remain “safe investments” throughout the year. The other executives also highlighted the importance of public infrastructure to support investments in commercial real estate.
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