WEEKLY
Mortgage Rate (30-Year Fixed): 6.92% (as of 10/13)
MONTHLY
Existing Home Sales: -0.4% (August 2022)
New Residential Sales: +28.8% (August 2022)
Median Sales Price for New Houses Sold: $436,800 (August 2022)
Construction Spending: +1.0% MoM (August 2022)
New Residential Housing Starts: 1.52 million (August 2022)
New Residential Housing Completion: 1.34 million (August 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. ‘Gray Tsunami’ will drive real estate demand
There’s been an observed uptick in the demand for ‘active adult’ development environments, according to John Hauber, CEO of Haven Senior Investments. Developers are now responding to the Baby Boomer generation’s demand for senior housing as more than 73 million people are turning 76 this year. Senior living facilities range from residential care homes to retirement communities. However, the highest demand is focused on ‘active adult’ communities, which is a hybrid between senior housing and multifamily units. Colorado Senior Care owner Rick Bloeman announced to CoBizMag that the industry is already bouncing back from its slow pace during the start of the pandemic.
9. More renters compete for apartments in Queens and Brooklyn
The high cost of renting in Manhattan has forced many renters to set their sights on Brooklyn and Queens. However, there’s one problem: a bidding war that’s tough to win. Potential renters spoke to NY1 and admitted that it has become more difficult to find a place in these areas after rents hiked by 15.5% in the West Village and Chelsea, forcing them to look elsewhere. The competition amongst fellow renters is a burden since many others are willing to pay higher rents to secure the rental unit for themselves.
8. Los Angeles has the highest apartments in the pipeline in CA
Before 2022 ends, Los Angeles expects to add a total of 11,500 apartments to its existing supply. However, this is not enough to cater to the growing demand as the housing shortage continues to persist not just in the city but across the country. However, compared to its pace in 2021, construction completions have progressed and are likely to hit target this year.
7. High interest rates are not a concern among apartment investors
If you think that the high cost of a mortgage will result in massive defaults in the apartment industry, think again. Dave Borsos, vice president of capital markets for the National Multifamily Housing Council, believes that high interest rates are not going to discourage apartment investors, whose interest rates for new fixed-rate loans are now higher than 5% for the first time in a decade. CBRE also believes that the strong performance of multifamily properties will keep investors committed to their portfolio.
6. BOMA: More tenants prefer remote work even after COVID
A survey by BOMA International about the effects of COVID-19 on commercial real estate found out that 71% of tenants prefer to keep investing in remote work even after the COVID pandemic. The findings support previous studies on the need for larger spaces and amenities that support remote work culture such as co-working facilities, especially in multifamily properties.
5. Freddie Mac to increase financing for multifamily housing
Freddie Mac announced that newly constructed or heavily rehabbed multifamily housing will receive higher funding, so developers and lenders will have limited risks when dealing with multifamily projects in volatile markets. During high inflation, the construction industry is exposed to soaring costs. Freddie Mac aims to close the housing gap by ensuring that multifamily projects proceed forward.
4. North Dallas multifamily sector remains hot
The northern DFW suburbs continue to attract a huge inflow of residents as for the past five years since job growth and quality of employment have improved. According to Kevin Leamy or Northmarq, “Multifamily developers have seized on the growing demand, and they are following the Dallas North Tollway and U.S. Highway 75 north in pursuit of new projects.” In addition, lending agencies have been very active in providing financing to multifamily developers in the area.
3. Shortage of multifamily properties in Chicago fuel high rents
According to Tyler Hague of Colliers, demand for rental housing in Chicago has grown increasingly, fueling the rise of monthly rent. The average price for a one-bedroom apartment in the central business district is $2,478 per month, rising 9.5% in 2021, which is equal to a $235.41 YoY rental increase, according to a report by Yardi Matrix.
2. Multifamily is still a favored asset class
During Bisnow’s Multifamily Annual Conference in Chicago last week, panelists have noted that despite the cooling market, multifamily still remains a favored asset class among banks and life insurers. KeyBank Senior Vice President Todd Linehan added that multifamily is in a unique position of easily adapting to an inflationary environment because of its constantly evolving rents and leasing that can move with the market.
1. Queens multifamily market remain strong
A recent report from Yardi Matrix revealed that rental rates in Queens grew 0.2% on a trailing three-month basis through July, to $2,820. The occupancy rate, on the other hand, increased by 10 basis points YoY, to 98.3%, higher than the national value of 96.0%. As of July, 8,798 units were under construction. Today, it has 23,700 units in the planning and permitting phases.
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