WEEKLY
Mortgage Rate (30-Year Fixed): 5.11% (as of 8/11)
MONTHLY
Existing Home Sales: -5.4% (June 2022)
New Residential Sales: +17.4% (June 2022)
Median Sales Price for New Houses Sold: $402,400 (June 2022)
Construction Spending: -1.1% MoM (June 2022)
New Residential Housing Starts: 1.59 million (June 2022)
New Residential Housing Completion: 1.34 million (June 2022)
QUARTERLY
Homeownership Rate: +65.4% (2Q22)
Rental Vacancy Rate: +4.5% (2Q22)
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. Nashville 1H22 multifamily transactions remain healthy
Construction volume and multifamily investment transaction velocity remained strong in Nashville in 1H22, with median sales already reaching $264,900 per unit, up by 50%. According to Northmarq, absorption rates managed to hit 3,200 units. Average asking rents surged in the same period to 7.6% or $1,718 per month. The YoY rent growth, on the other hand, was higher at 13.9%. Total transaction volume was also higher in 1H22 compared to the same period a year ago.
9. Chicago CRE developers forecast stronger multifamily housing market
CBRE revealed that Chicago’s 2Q22 multifamily vacancies dropped to 3.1% from 6.2% in the previous quarter. The occupancy rate has already reached 97% in 1Q22, with the vacancy rate expected to bottom at 2.8% by the end of 2023. Current rental rates on average amount to $1,760.67 but are also expected to rise to $1,989.40 by next year. Analysts have observed that long-term homeowners are transitioning to living in apartments where self-maintenance is very low, while young people are also postponing their home buying plans in lieu of renting apartments for now.
8. Positive outlook for Memphis economy benefits multifamily market
Memphis is poised to exhibit stronger growth in the multifamily market despite the interest rate hikes, according to Bryan Sisk, senior associate at Marcus & Millichap. The average market sales price of multifamily assets reached $90,700 in 2Q22, increasing 10% QoQ. Sisk cites the strong job development in the area, which contributed to the growth in rental demand and rates in 2021. The multifamily market remains healthy with high occupancy rates and tight market supply. Memphis’ location makes it a convenient destination for investors, and has been dubbed as America’s top distribution center.
7. Survey reveals what amenities multifamily renters are willing to pay for
Results from the 2022 NMHC/Grace Hill Renter Preferences Survey Report revealed that multifamily renters are looking into amenities that improve their well-being and make their daily living easier. More than 250,000 renters were surveyed on how much they are willing to pay for extra amenities. On top of the list is an air-conditioning system at $55 per month. Other amenities include washer/dryer, faster internet connection, childcare, dishwasher, soundproof walls, pool, and fitness center. The survey concluded that anything that allows renters to take care of their families better and improve their daily lives are things they are willing to pay top dollar for.
6. Multifamily rent hike in July is best in past decade
According to RealPage, effective asking rents further inched up in July at 0.8%, making it the best performing July in the past 10 years except in 2021. The group also highlighted that 2022 remains strong when compared to the previous year. Effective asking rent growth was recorded at 12.2% YoY, which is only slightly lower than the 13.8% in June. The group also believes that 2021’s strong performance will be sustained in the coming years as the 8% YoY increase in rental incomes can match the growth in rental rates.
5. Washington, D.C. has one of the country’s largest multifamily pipelines
While the rest of the country is experiencing a tight supply of multifamily properties, Washington, D.C.’s 37,345 units currently under construction is on track to meet the high demand for rental properties. Rental assets traded at an average of $289,545 per unit from January to May, bringing the total value to $1.9 billion. YoY rent growth was registered at 10% in May, which is still higher than pre-pandemic figures.
4. Garden apartments gaining traction from investors
There’s been a growing investor preference for garden apartments this year, according to Jim Costello, chief economist at MSCI-Real Assets (formerly Real Capital Analytics). In particular, investors spent $57.4 billion in 2Q22, with 31% of the value allotted for portfolio acquisitions. Capitalization rates for garden apartments dropped to only 4.3% in the same period, indicating low risk for such asset types. RealPage research director Carl Whitaker announced that Sun Belt states continue to attract more investors than any other markets since the mid-rise and high-rise apartments are ideal for urban appeal. He also noted that garden apartments in the suburbs of the West Coast have also performed well during the pandemic, and expects them to continue to have strong demand from buyers who prefer developments that are less dense.
3. Multifamily jobs rise in 2Q22
A total of 41,600 multifamily openings in 2Q22 was recorded according to The National Apartment Association’s Education Institute Apartment Jobs Snapshot report. The strong employment performance of the market is indicative of the sustained high demand for apartments across the country. Despite property management jobs falling by 1.1 percentage points, leasing and maintenance employment rebounded by 0.7 and 0.1 percentage points, respectively. The group expects job growth to reach 1.3% at the end of the year, with its impact being felt mostly in Phoenix, Denver, Seattle, Los Angeles and Dallas.
2. New apartment leases across the U.S. averaged higher in June
New leases signed by renters across the country averaged a 19% rise in rental rates in June MoM, according to data from RealPage. It noted a record high in lease trade-outs across major metros, including Miami, which was the top city in terms of new-lease trade-outs across the nation, with a 32.6% rent hike compared to what past occupants paid in the same unit. New York also rebounded with 30.5% from 21.5% two years ago, driven by the rise in demand and a 98.6% occupancy rate.
1. Manhattan rents surpass past record again
The average rent in Manhattan reached a record-breaking $5,113 in July, while median rents also rose to $4,150, according to Douglas Elliman’s report. For the first time, the median rent has surpassed $4,000, rising 4.5% MoM. On the other hand, Brooklyn rents went up by 1.6% MoM, averaging $3,883, while Queens was a bit lower at $3,246 but up by 2.2% MoM. Sheharyar Bokhari, an economist at Redfin, opined that the supply shortage is good for investors who can better bet on higher-priced properties, driven by higher demand.
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