WEEKLY
Mortgage Rate (30-Year Fixed): 5.81% (as of 6/23)
MONTHLY
Existing Home Sales: -3.4% (May 2022)
New Residential Sales: +10.7% (May 2022)
Median Sales Price for New Houses Sold: $449,000 (May 2022)
Construction Spending: +0.2% MoM (April 2022)
New Residential Housing Starts: 1.49 million (May 2022)
New Residential Housing Completion: 1.47 million (May 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. Baton Rouge apartment demand surges
Baton Rouge reported a steep drop in its apartment vacancy rate to 4.9% from 9.2% YoY during the spring season, based on a survey of 252 apartment complexes by different real estate organizations. Louisiana’s capital has had a historical average of only 6% to 7%. Additional data reveals that although local costs haven’t kept with national increases, rents surged 10% YoY after recording flat trends in 2021.
9. Apartment buildings multiply at an accelerated pace
Bloomberg reports that U.S. apartment builders have completed more large multifamily units in 2021 than any other year in history. With more than 214,000 housing units completed in buildings of 50 units or more, the Census Bureau’s Characteristics of New Housing report indicates that the large leap in construction can be attributed to the impact of a longer processing time to secure permits down until the completion of multifamily properties, which was estimated at 19 months in 2021. The report also adds that even small metros have experienced a rise in multifamily properties including Napa, California; Missoula, Montana; and Santa Fe, New Mexico.
8. Multifamily developers expected to focus more on ESG
The National Multifamily Housing Council’s associate vice president of program strategy, Alison Johnson, has announced that more multifamily companies will adopt best practices that align with ESG concepts since consumer trend research points to ESG’s importance to the industry. For years, developers in the commercial real estate sector have taken environmental, social and governance (ESG) considerations into their development projects. However, there will now be even more emphasis on it since the current demand towards dealing with eco-conscious companies is mainly driven by millennials and Gen Z buyers, who make up much of the market. Johnson also reminded that developers that disregard such expectations will likely risk their reputation.
7. Multifamily originations reached 57% in Q122
Mortgage loan originations for multifamily properties increased to 57% in Q122, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. The MBA observed that the continued growth in lending activity is a result of stronger demand for multifamily and industrial properties. Despite the higher interest rates, the group is confident that the market will be supported by strong market fundamentals and higher property values.
6. Job growth and household formation drags Fort Worth’s multifamily vacancy
Fort Worth’s average effective rent for multifamily increased more than 15% in 2021 to $1,276 per month, according to Marcus & Millichap. The multifamily segment is expected to continue its strong showing as the metro’s vacancy rate slid down to 3.1%, the lowest in 10 years. The low supply of affordable housing on the local market together with higher interest rates will sustain robust demand for the sector.
5. Texas tops list of metros with highest new residents
Texas gained more than 310,000 new residents between 2020 and 2021, according to research insights company TransUnion. This comes after record-high cross-state migration to the Southern Atlantic and Mountain states plus Arizona and Texas. On the other hand, New York lost more than 319,000 residents, making it the top metro with the highest drop in residents. TransUnion also noticed more growth in rural areas (+28%) compared to urban (+10%), mainly attributed to rising housing prices and the rise in remote work opportunities.
4. Rents outpaced by housing costs in April
Owning a home is already more expensive compared to the cost of renting as of April this year, according to advisory company John Burns Real Estate Consulting. Having a mortgage that costs $839+ per month more than paying a lease makes this difference $200 higher than at any time in the past two decades. The group observed that in just less than 12 months, the difference between owning and renting was very minimal.
3. Multifamily delinquency rate continues decline
The Trepp CMBS delinquency rate for multifamily properties shows another decline in May, indicating a strong shift in trends since the pandemic began in 2020. Data from the advisory firm reveals that multifamily delinquencies dropped by 18 basis points to only 1.0% from April’s 1.2%. The overall delinquency rate was recorded at only 3.1%, a decline of 37 basis points from April, which was its largest decline since January 2022.
2. Apartment construction growth higher in small metro areas
The National Association of Home Builders (NAHB) recorded higher multifamily construction growth in small metro area core counties at 33.7% in Q122 compared to large metro area core counties at only 17.4%. In addition, apartment construction was faster than single-family home building in all regional geographies. Despite the rise in the cost of construction materials and the ongoing supply chain issues, multifamily developers have continued their construction activities due to lower rental vacancy rates and rising rents.
1. Multifamily prices rise
Multifamily property prices rose 23.3% YoY in May and 1.5% MoM, according to Real Capital Analytics (RCA). This is also an all-time high rate of growth for the sector. The annual pace in May was equal to April’s numbers. On the other hand, the All-Property Index reached 18.6% YoY, which is slightly lower than the record annual growth of 19.3% in January.
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