WEEKLY
Mortgage Rate (30-Year Fixed): 3.25% (as of 3/8)
MONTHLY
Existing Home Sales: 6.7% (January 2022)
New Residential Sales: 16.2% (January 2022)
Median Sales Price for New Houses Sold: $423,300 (January 2022)
Construction Spending: +1.3% MoM (January 2022)
New Residential Housing Starts: 1.6 million (January 2022)
New Residential Housing Completion: 1.2 million (January 2022)
QUARTERLY
Homeownership Rate: +65.4% (3Q21)
Rental Vacancy Rate: +6.4% (4Q21)
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.
More new agents, fewer properties to sell
The National Association of Realtors (NAR) reports that a record number of real estate agents tried to sell only 376,000 active listings in February. Since the beginning of the pandemic, the number of new real estate agents surged by 156,000, bringing the total number of current agents to 1.5 million, according to the NAR. This is 60% larger than the two years since pre-pandemic. The industry needs to get the level of listings up to five times the current number in order to return to normal levels, according to analysts.
Millennials storm high-end RE markets
The number of homebuyer millennials (those born from 1981 to 1996) reached 37%, according to the National Association of Realtors (NAR). The group has since taken over baby boomers in the share of buyers, according to housing experts. Young professionals representing the tech sector in Boston and Seattle are pushing home values higher in once affordable markets such as Nashville, Orlando and Providence. The Washington Post, in an interview with NAR, reports that millennials are wanting to purchase larger homes that are more expensive since they are at the peak of their careers.
Houston office market’s resurgence has begun
Almost 85% of Houston office employees are already back at their desks or are planning to resume in-office setups. The rate is one of the highest rates in the country, according to an interview by The Wall Street Journal of Central Houston Inc. The firm attributes the rise to hybrid strategies that combine in-office and remote work agreements, pushing office reporting to 10.7 days monthly. The pre-pandemic average was 17 days. This is expected to revive the business districts where thousands of restaurants, bars, stores and other small businesses depend heavily on foot traffic and office workers.
Existing-home sales drop in February
Existing-home sales dropped to a seasonally adjusted annual rate of 6.02 million or 7.2% MoM and 2.4% YoY. This pushed the number of unsold existing homes to rise to 870,000 in February, which is equal to 1.7 months of supply at the current monthly sales trend. Median existing-home sales price was up 15.0% YoY at $357,300. NAR indicated that this is the 120th consecutive monthly YoY of price increases. The group also added that the Southern states’ faster pace of job growth contributed to a positive sales gain YoY unlike in other regions.
Interest rate hikes expected to impact CRE
Marcus & Millichap President & CEO Hessam Nadji announced that he is expecting a 25 basis-point hike in interest rates after the Federal Reserve announced its quarterly plans to Congress. Nadji also noted that this can go as high as 50 basis points by the end of 2022 should the surge in inflation not be tamed. However, the company’s investor sentiment survey revealed that it would take another 100 basis points from a low of around 2% to 2.9 or 3% on the 10-year Treasury before the investment community would start to discontinue its acquisition plans.
California leads in the most number of LEED certifications for multifamily communities
The U.S. Green Building Council (USGBC) has awarded LEED certifications to 196 multifamily communities across the country in 2021. California topped the rankings with 47 communities, followed by Washington, D.C., New York, Massachusetts and Maryland. The state’s multifamily communities offer sustainable features, which include rooftop photovoltaic panels and daylight sensors for lighting control. A total of 196 communities across the country received LEED certification in the previous year.
Rents further increased at 15.4% in February
The average U.S. asking rent rose to $1,628, up by $10 in February, according to the Yardi Matrix index. Of the top 30 metros in the study, 90% had double-digit rent surge YoY. Miami ranks first in terms of YoY rent growth with 27%. Demand, however, is not showing signs of tapering as average occupancy rates rose 120 basis points YoY in January.
Homebuilding material costs increased 20.4%
The Producer Price Index (PPI) report released by the Bureau of Labor Statistics revealed that building material prices jumped 20.4% YoY in January and 31.3% compared to two years ago. Materials that gained prices were ready-mix concrete (8.2%), paint (30.3%) and softwood lumber (28.9%). On the other hand, steel products and gypsum prices decreased by 9% and 1.9%, respectively.
Home values jumped more than median salaries in 25 metros
Zillow reports that home value growth has outpaced higher median salaries the previous year in 25 out of 38 metropolitan areas in the United States. San Jose, California, had the highest median income at $93,000, but the city also experienced home value growth at $229,277. Detroit and St. Louis were among the cities with the lowest home value growth-to-income ratio.
Multifamily production at two-year high
Multifamily sector construction increased 9.3% to an annualized 554,000 pace in February, according to the National Association of Home Builders (NAHB). Multifamily permits, however, decreased 4.4% YoY to 652,000. According to NAHB, builders are continuing to start homes in response to the demand for new construction because the inventory of previously owned homes has gone lower than expected. MoM single-family and multifamily starts all increased with 28.7% in the Northeast, 15.3% in the Midwest, 11.4% in the South and 11.4% in the West.
Listen to our Podcast: The Real Estate Syndication Show
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.
