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September 3, 2022 Weekly Investor Update

Life Bridge Capital Weekly Investor Update

September 3, 2022

The Latest in Commercial Real Estate (CRE), Economy & Markets





Mortgage Rate (30-Year Fixed): 5.66% (as of 9/1)


Existing Home Sales: -5.9% (July 2022)

New Residential Sales: +12.6% (July 2022)

Median Sales Price for New Houses Sold: $439,400 (July 2022)

Construction Spending: 0.4% MoM (July 2022)

New Residential Housing Starts: 1.45 million (July 2022)

New Residential Housing Completion: 1.42 million (July 2022)


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.



10. No signs of slowing down in Texas multifamily construction

According to Rob Dietz, chief economist at the National Association of Home Builders (NAHB), the current renter backlog can be attributed to the large number of households seeking out rental homes, which in turn is causing rents to surge higher. This has impacted the rise in new apartment projects, which is mostly profitable in areas where people have migrated to during the peak of the pandemic, especially Texas, according to Caitlin Sugrue Walter of the National Multifamily Housing Council (NMHC). Just last week, three Texas-based property firms, JPI, WayMaker and Madera Residential estimated the project to be worth around $1 billion.


9. Memphis apartment construction trends higher

CoStar reported that apartment construction in Memphis is surging, with 2,700 more units in the pipeline until the end of summer. This represents 3.2% of total inventory that is yet to be delivered, which is the highest rate that the city has achieved since 2002. Although the past two quarters have shown a slowdown in construction, analysts are still positive about the future health of the multifamily market in the metro.


8. Manhattan leads cities for live-work-play apartments, according to survey

RentCafe reports that Manhattan is the top city with the most number of live-work-play apartments. The city hosts 89,500 apartments in mixed-use buildings, which is one-fifth of the total number of apartments in the country. This is still larger than the combined total of the next four cities in the ranking namely, Brooklyn, Washington, D.C., Chicago and Los Angeles. RentCafe has observed that live-work-play communities are most appealing to millennials, who make up 40% of the area population.


7. Nashville poised to have the highest number of new apartment deliveries in history

Nashville is set to surpass its previous record of newly constructed apartment deliveries. RentCafe estimates that a total of 9,620 new units are expected to be completed before the year ends. The sharp increase in demand has brought rents to grow as high as 25% YoY, significantly higher than the 3% to 4% increase it has experienced before. Apartment Insiders CEO Joel Sanders opined that despite the rent growth slowing down, it doesn’t mean that rents will be dropping to its pre-pandemic levels anytime soon. He expects new apartment communities to open every week until the beginning of next year.


6. Professor: Convert SFR to multifamily units

An academic is proposing the conversion of single-family detached residences into multifamily buildings to address the housing shortage in Boise, ID. Chris Nelson, an emeritus professor of urban planning at University of Arizona announced during the Idaho Smart Growth 2022 Summit last week that repurposing the current housing stock can help meet the projected growth in housing demand in the coming years. In particular, Boise needs to construct 83% of its current housing stock to meet future demand. Nelson also forecasts that by 2030, more seniors will be wanting to sell their homes in Idaho but may find fewer interested buyers by such time. 


5. High rents bring investors back to NYC apartments

New York City’s multifamily market is now back in full swing as investor activity has since rebounded, with sales reaching $4.7 billion in 2Q22, 270% higher YoY, according to data from Victor Sozio of Ariel Property Advisors. With rents hitting all-time high, more investors are attracted to putting their money in the market without ‘having to worry about annual increases,’ added Sozio. He also noted that investors have a preference for non-stabilized property stock.


4. NYC apartment average rent increases 4.7%

Average rents in NYC apartments are now at $5,593 per month, increasing 4.7% MoM, according to Rent Betta. The average rent for a one bedroom apartment reached $4,607 in August. On the other hand, a four bedroom unit is at $9,825 or $2,457 per bedroom, which makes splitting units more affordable during this period.  


3. Inflation impact millennials and Gen Z renters more than the average American

A Redfin report reveals that millennials and Generation Z are the groups being impacted the most by the current higher inflation rates in the country compared to the average American. Renters that belong in these generations have to contend with asking rents that surged 13.5% in July. The personal inflation rate for Gen Z, in particular, is being pushed by new leases registering at 11.3%. Redfin also noted that 48.5% of millennials do not own their home and are bound to pay such soaring rental costs.


2. American economic confidence now improving

Americans are slowly feeling less pessimistic about the country’s economy, according to the latest Gallup’s Economic Confidence. The index is now at -39, improving from last month’s -51. It is now equal to the level registered in March and April. In June, it hit a 13-year low with -58. In July, only 14% of the survey respondents said that the existing economic conditions are excellent or good. This has since recovered to 16% in August. Gallup said that the confidence has improved because of the lower gas prices and stronger jobs report.


1. Survey reveals healthier multifamily market

Commercial real estate (CRE) will survive the current adverse economic conditions, according to the Trepp 2022 CRE Sentiment Survey. By a ratio of 10:1, respondents in the survey believe that CRE will improve over the next six months. In particular, a majority believes that more multifamily transactions will take place, as net effective rents will also surge in this property type.



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