WEEKLY
Mortgage Rate (30-Year Fixed): 5.23% (as of 6/9)
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: +0.2% MoM (April 2022)
New Residential Housing Starts: 1.72 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. Twin Cities multifamily market rent rates rise in Q122
Rent growth across Minneapolis and St. Paul has been sustained at a healthy level compared to pre-pandemic values, as Yardi Matrix reports it increased by 0.2% in Q122 and by 5.1% YoY in March. The report also adds that multifamily transactions reached $452 million in Q122, higher than the $434 million total in the same period the previous year. In terms of multifamily developments, only 1,018 units were reported, significantly lower last year’s value because of supply chain issues and rising inflation. Yardi Matrix projects the Twin Cities’ rent growth to reach 3.7% for this year.
9. Dallas-Fort Worth cities rank high in top apartment construction spots
Some of the country’s biggest increases in planned apartment construction were registered in five Texas cities, according to a ranking report by Lattice Publishing. In the small cities category, Lewisville ranked fifth, with a 1,469% rise in building permits for apartments from 2020 to 2021. In the midsize cities category, Irving secured the 13th spot with a 363.7% surge in multifamily permits during the same period. Finally, in the large cities group, Dallas ranked 3rd (250.6%), Fort Worth 12th (90.1%), and Arlington 14th (73.1%).
8. Rent growth in Chicago up in the past 5 months
Real estate platform Zumper reports that Chicago’s rent growth is now up 25% YoY based on the group’s May 2022 report. Chicago has now overtaken the Midwest in terms of the median rent for a one-bedroom apartment, which is already up 10.7% since January. Monthly rent for such a property is currently at about $1,800 a month.
7. Apartment buyers resort to off-market transactions
Real estate firm Archer found out in its recent survey that two out of three private multifamily transactions are completed off-market, while about half of sub-institutional deals and a third of institutional deals are transacted in the same manner. Most of the off-market deals, according to CEO Thomas Foley, are done in smaller transactions since these offer higher larger fee percentages and do not have lengthy marketing processes. In addition, many investors pursue off-market transactions due to increased competition from large investors, Foley added.
6. Philadelphia multifamily market remains strong
Yardi Matrix reports that the occupancy rate in Philadelphia rose by 70 basis points in 12 months, reaching 96.9% as of February. Multifamily developers successfully completed 7,206 apartments in 2021 then added 655 more in Q122. A total of 12,796 units are yet to be completed as of March. Between February 2021 and February 2022, the majority of jobs added were in leisure and hospitality; professional and business services; and trade, transportation and utilities.
5. Government regulations account for 40.6% of multifamily development costs
Research by the National Association of Home Builders (NAHB) and the National Multifamily Housing Council (NHMC) reveal that regulations imposed by the government account for an average of 40.6% of multifamily development costs. Some of the largest costs come from changes to building codes in the last decade (11.1%), costs associated when site work commences (8.5%), and development requirements (5.4%). The results of the survey, according to NAHB, indicate that the government must reduce excessive regulatory costs to encourage more multifamily developers to increase apartment supply.
4. Rents rise above $2,000 a month for the first time
Redfin recently released a report showing nationally listed rents for available apartments increased 15% YoY. The median listed rent rose above $2,000 a month for the first time. Austin, Seattle, and Cincinnati had rents rising by more than 30%. Daryl Fairweather, the company’s chief economist, stated that rents are going up just as fast as home prices are. As more people decide to rent instead of buying homes, demand and prices remain higher in the rental market.
3. Sacramento multifamily properties gain support from carbon-free program
As part of the Sacramento Municipal Utilities District (SMUD) goal to contribute to the 2030 Zero Carbon Plan, the group will continue to offer incentives to local multifamily residential properties that adopt “lower carbon emissions, increased environmental benefits and improved safety.” The Multifamily Program’s goal is to modernize buildings for optimal energy savings. It will include upgrades to electric heating and electric vehicles. An advisor will visit the property and assess all the equipment installed in order to verify its qualification to the program.
2. Renters stay in apartments longer, willing to pay more
The number of renters remaining in their apartments rose by 3.5 percentage points YoY in April to 57%, according to RealPage. When compared to pre-pandemic levels, the apartment retention between 2010 to 2019 averaged only 51.5%. Apartment renters renewing leases in April paid 10.7% more compared to their previous lease, which was considered high by the group. Meanwhile, renewal rent surged at a more rapid pace at 11% to 12% in the more expensive Class A and Class B segments, respectively. On the other hand, the lower-cost Class C segment had renewal rents increased 7.1%/
1. Multifamily construction spiked in Q122
Results of the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) indicate that multifamily construction has outpaced single-family homes in Q122. Small metro areas in outlying counties have registered the highest YoY growth rate at 52.1% for multifamily homes. On the other hand, multifamily homes in large metros in core counties had a 17.4% YoY growth rate vs. single-family homes with only 8.8%. The HBGI is conducted to measure multifamily construction using single- and multifamily permits.
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