November 26, 2022 Weekly Investor Update

Life Bridge Capital Weekly Investor Update

November 26, 2022

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





Mortgage Rate (30-Year Fixed): 6.58% (as of 11/23)


Existing Home Sales: -5.9% (October 2022)

New Residential Sales: +7.5% (October 2022)

Median Sales Price for New Houses Sold: $493,000 (October 2022)

Construction Spending: 10.9% YoY (September 2022)

New Residential Housing Starts: 1.425 million (October 2022)

New Residential Housing Completion: 1.339 million (October 2022)


Homeownership Rate: +66.0% (3Q22)

Rental Vacancy Rate: +6.0% (3Q22)


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. Northwest, D.C. office building to be converted into luxury residential apartments

An office building in 1735 K Street is set for repurposing into luxury apartments through the initiative of D.C. developers Bernstein Management Corporation and Maryland-based developer Urban Atlantic, together with hospitality platform Placemakr. Around 106 flexible multifamily residential units will be produced that will also include commercial spaces at the ground floor. 1735 K Street is just a couple of blocks away from the White House and has been the local headquarters of the Financial Industry Regulatory Authority (FINRA) since 2007. Repurposing of office buildings has grown in D.C. as of late. In 2020 and 2021, developers converted seven buildings into residential spaces, producing more than 1,500 apartment units.


9. NYC total multifamily sales jump 37% in 3Q22

New York City multifamily sales rose 37% YoY to $3.57 billion in 3Q22. The total is higher by 71% compared to the quarterly average of $2.085 billion in the last five quarters, according to Ariel Property Advisors’ Q3 Multifamily Quarter in Review report. Victor Sozio of APA said in an interview that institutional investors are now targeting free market buildings, which account for about 89% of the total multifamily dollar volume across the city.


8. Economic growth will rebound in 2024, according to Fannie Mae

According to the November 2022 commentary from the Economic and Strategic Research (ESR) Group of Fannie Mae, economic growth in 2024 is projected to improve 2.0% on a QoQ basis. The group also forecasts the Federal Open Market Committee (FOMC) to further raise interest rates given the strong labor market that will pressure wages. In 3Q22, net exports lifted real gross GDP to 2.6%.


7. St. Louis multifamily rents surpass national rate

In the October 2022 Yardi Matrix report, St. Louis’ multifamily rent gains reached 0.8% on a trailing three-month basis as of August, outpacing the national rate for the first time in 20 months. The occupancy rate was recorded at 95.6% while a total of 858 units were delivered. Around 6,111 units are still in the pipeline. Unit price sales, on the other hand, reached $171,661, rising 26.7% MoM.


6. Apartment returns reach 3.9% in 2Q22

According to the National Council of Real Estate Investment Fiduciaries (NCREIF), apartment returns reached 3.9% in 2Q22, with the sector returning 24.4% over the 12-month trailing period. Appreciation was recorded at 82% over the trailing year, with net operating income contributing the most to the upsurge. McKinsey, on the other hand, reports that rental housing costs continue to appreciate because of new household formation, lower home ownership rates, more expensive replacement costs, low supply elasticity, and better affordability for those who transferred to lower-cost metros.


5. Workforce housing remains a resilient investment

OneWall Communities CIO Nate Kline said in an interview that workforce housing investments have been growing in popularity due to the demand for more affordable spaces. The resiliency of such a real estate asset across market cycles makes it appealing to investors because of lower default rates, more consistent cash flows and lower cap rate volatility when compared to others. Kline adds that Washington, D.C. and Philadelphia are some of the best markets in the Northeast and Mid-Atlantic regions for workforce housing investment.


4. SDCERS invest in multifamily assets

Retirement pension administrator San Diego City Employees Retirement System (SDCERS) invested in the multifamily sector by committing $25 million to Waterton Residential Property Venture XV, a real estate investment and property management company. Waterton is also in the senior housing and hospitality sectors. SDCERS’ exposure to multifamily investments is now at 28%.


3. Greenville, S.C. is top city for freelance work

 RentCafe’s list of top metros for freelancers ranked Greenville, S.C. on top, citing its numerous choices for rental properties and charm. On the other hand, Raleigh, N.C. ranked second, commended for its many job opportunities and highly educated residents. Other cities that made the top 10 include West Palm Beach and Tampa in Florida; Durham, N.C.; Alpharetta and Columbus in Georgia; Huntsville, AL; College Station, TX, and Rockville, MD.


2. Most expensive zip codes have an uptick in property prices

A total of 86% of the country’s priciest zip codes have had property price surges in 2022, according to PropertyShark. The five most expensive zip codes, namely, Atherton, CA; Sagaponack, NY; Ross, CA; Miami Beach, FL; and Beverly Hills, CA, all registered median prices of $5 million or more. In particular, Atherton, CA recorded a $7.9 million median price. Of the 128 areas in the list, only 27 had medians within the $1.7-$2 million range.


1. Most multifamily renovations are in larger metros

According to Fannie Mae, most multifamily renovations have occurred in older and larger metros, even though these cities are known to have higher barriers to entry for new multifamily developments. The New York Metro area leads in terms of the number of renovations, reaching 5,000 projects since 2010. Fannie Mae also observed that apart from NY, other metros with a high number of renovations include Boston, San Francisco, Washington, D.C., Philadelphia and Chicago. Miami and Houston also made the list although the reasons for most projects are due to the impact of hurricanes.


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