WEEKLY
Mortgage Rate (30-Year Fixed): 5.70% (as of 6/30)
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. San Diego multifamily properties continue strong performance
The San Diego multifamily market recorded $731 million in volume traded in Q122, continuing its strong showing from a 2021 record-high of $3.7 billion. Supply, however, cannot keep with the demand as only 911 units were delivered across metro San Diego as of April. Expected supply for 2Q22 is at more than 8,000 apartments. Multifamily occupancy rate increased 90 basis points YoY with rent surging 20.8%, higher than the national average. The drop in unemployment rate to 3.4% in March is expected to continue and fuel multifamily demand.
9. National average apartment rent increased in June
The national average apartment rent recorded a 1.3% increase MoM in June and 14.1% YoY, according to a report released this week from Apartment List. However, it is worth noting that this is the lowest rate of rent growth since August 2021. Miami topped the list of the metros with the largest annual rent percentage increases at 24.8% with rent reaching $2,059. This was followed by Orlando (23.9% at $1,688), Tucson (20.9% at $1,349) and Tampa (20.5% at $1,702). On the other hand, Minneapolis had the lowest YoY rent increase at 5.3% with average rent only at $1,232.
8. More Wall Street offices converted into apartments
The largest office-to-apartment conversion project to be launched during the pandemic has been announced this week, according to The Wall Street Journal. The venture between Silverstein Properties and Metro Loft will convert a 30-story building into 571 market-rate apartments after the firms paid $180 million for the building that first opened in 1967. It will offer studios to three-bedroom units. Data from RentCafe indicates that from 2020 and 2021, offices that were converted produced 13,000 apartments across the country, especially in cities like Arlington, VA; Washington and Chicago. WSJ also adds that because of the remote-working trend, office space vacancies have soared throughout the country while some businesses with hybrid setups are leasing to newer buildings with modern designs and amenities. Analysts are expecting more obsolete buildings to be converted to multifamily units in the coming months.
7. Multifamily rent growth still outpaces inflation
From 2010 to Q122, the national average rent growth for Class A multi-housing properties has already surpassed inflationary growth by 198 basis points, according to a recent report by Jones Lang LaSalle (JLL). In Q122, multifamily housing rents across the country rose 15%, fueled by rising inflation, according to the real estate firm. It also added that Class A multifamily housing will command continued rent growth from renters with higher incomes, but that the same cannot be said for Class B or C types. Additional data from Yardi Matrix indicates that multifamily asking rents hit a record high in April, reaching $1,659 in major metropolitan areas.
6. Investor demand for multifamily properties surged in the past year
According to Yardi Matrix, 4,500 multifamily properties located in the U.S. – or about 5.3% of all U.S. apartment properties – were sold at least three times in the last 10 years. The company also found out that more than $215 billion worth of U.S. multifamily property sales were made in 2021, trading an average of $192,100 per unit. After transactions fell to $95.5 million at the start of the pandemic in 2020, the volume rebounded to $215.3 billion a year after, increasing 67.3%. The group added that most investors focus on smaller apartment properties for working-class renters because these have the potential for higher rent growth.
5. Austin developers invest in multifamily live-work-play communities
More developers in Austin have turned their attention to multifamily properties that are part of master planned communities in live-work-play areas. According to Jim Young of Sabot Development, project partners are now under one development group to make it more efficient. Notable multifamily projects are located in EastVillage, where mixed-use developments are underway. According to RentCafe, apartments that are situated in live-work-play buildings are rapidly rising in popularity, multiplying four times compared to a decade ago. Developers are catering to residents whose hybrid work model demands that they be closer to amenities, transit and entertainment facilities.
4. Multifamily investments in Texas remain robust
Developers and investors continue to pour their money into Texas as purchases of multifamily properties rose 136% to $57 billion in Q122, according to a report by The Real Deal. Carl Whitaker, director of research and analysis at RealPage, announced that the multifamily building appetite in the state continues to be robust with many property constructions being permitted. Building permits for multifamily properties in Texas’ five biggest markets rose 26% in Q122. The demand for properties rose as interest rates surged and hit first-time homebuyers who have since become renters instead, boosting multifamily construction in Houston, Austin and Dallas.
3. Multifamily development in New Jersey still strong
A recent report from The Real Deal indicates that multifamily brokers in New Jersey continue its strong appetite for trades even without a discount. Marcus & Millichap recently announced that its $76 million Hudson County listing in Jersey City is asking about $238,000 per unit, which is 6% higher than the average sale price in late 2021. As of mid-June the median rent for a one-bedroom in Jersey City was recorded at $3,225, rising 79% YoY, according to Zumper.
2. Rising interest rates, better for real estate investors
“The more the rates go up, the better it is for this business,” according to Bruce McNeilage, CEO of Kinloch Partners, in a Wall Street Journal interview. According to the paper, landlords are now in a better position since more potential homebuyers have no choice but to rent due to record-high house prices that reached a record median of $407,600 in May. The U.S. multifamily sector recorded sales worth $21.5 billion in May, rising 22% YoY, according to MSCI Real Assets (formerly Real Capital Analytics).
1. 14 renters compete for one apartment in the U.S. to secure a lease
Apartment rental demand has become more competitive in the first half of the year, with recent data from RentCafe indicating that 14 renters compete for one apartment to secure a lease. A total of 95.5% rentals were occupied as 2/3 of renters renewed their leases rather than move into a new unit. Among the largest metros, Miami-Dade County is the most competitive market with apartment supply rising by 2% in the first half of the year, but not enough to meet rental demand. Most renters come from New York and other metros that take advantage of the city’s low taxes, good weather and presence of tech and finance companies.
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.
