WEEKLY
Mortgage Rate (30-Year Fixed): 5.30% (as of 7/7)
MONTHLY
Existing Home Sales: -3.4% (May 2022)
New Residential Sales: +10.7% (May 2022)
Median Sales Price for New Houses Sold: $449,000 (May 2022)
Construction Spending: –0.1% MoM (May 2022 2022)
New Residential Housing Starts: 1.49 million (May 2022)
New Residential Housing Completion: 1.47 million (May 2022)
QUARTERLY
Homeownership Rate: +65.4% (1Q22)
Rental Vacancy Rate: +5.8% (1Q22)
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. Nashville’s multifamily market remains solid
Nashville’s multifamily market has sustained its strong 2022 performance, thanks to its stable economy and robust population growth. Asking rents increased 0.8% in April to $1,591. Occupancy rates also surged by 170 basis points in March to 96.4% YoY. Multifamily developers increased their stock by 0.8% to 1,154 units in April, with more than 18,000 units in the pipeline. Unit price was recorded with a 36% hike at $220,468, according to Yardi Matrix
9. Low vacancy rates push North Texas multifamily builders to ramp up construction
As the demand for new rental apartments continue to outpace supply around the country, North Texas apartment developers are speeding up their completions to loosen the tight supply. According to RealPage, more than 56,000 Dallas-Fort Worth multifamily units were reported to be under construction as of June this year, which is higher by 15,000 additional units YoY. Vacancy rates were below 4% at the end of 2Q22 and apartment rents rose by 17.4% YoY. The peak supply is projected to be reached by 2023 at around 33,000 units completing in D-FW, according to RealPage.
8. Phoenix multifamily market moderates but remains stabilized
After its strongest showing in 2021, the Phoenix multifamily market still continues its impressive performance with a slight increase in rents by 0.4% in April, reaching an average of $1,645. The slowdown in increase is attributed to higher apartment deliveries in the previous year and lower in-migration, according to Yardi Matrix. Developers completed 2,772 units through April with more than 38,650 units in the pipeline. On the other hand, transaction volume reached $3 billion, with a price per unit up by 40.4% YoY at $295,789.
7. Construction unemployment slows down in June
The construction industry unemployment rate in June plunged to 3.7%, compared to 7.5% a year ago. This leaves only 385,000 people in the industry unemployed, far below the 730,000 recorded in June 2021. Although the Bureau of Labor Statistics report showed an overall drop of 3,900 jobs tied to the construction of buildings and the residential building subcategory, the real estate industry added 1,900 jobs in June.
6. Bay Area rent rise 17% higher YoY
New research conducted by a Florida International University economist Ken Johnson shows that Florida has one of the highest rents in the entire country, which now averages $2,055 a month in Tampa and $1,808 in Lakeland. Johnson attributes the record-high growth to supply and demand factors as well as the robust growth in the Bay Area population, especially in Polk County. “We have this huge inventory shortage,” he commented after noticing the stiff competition for housing, especially in the multifamily market. The cost of rent in the Bay Area has gone up about 17% YoY.
5. Diversified economy attracting more people to move to Las Vegas
In a gathering of realtor organizations organized by Greystone this week, Wendy DiVecchio, CEO of the Las Vegas Realtors Association announced that thousands of new homes are to be built to accommodate the growth of population in Las Vegas. While a third of the total jobs in the city are tourism-oriented, the economy is already diversifying to attract in-migration, aside from offering no state income tax benefits. Similar to other markets, multifamily development is actually higher in the suburbs rather than in the city, which has since gained considerable attention from workers looking for affordable housing.
4. Multifamily property prices higher: CoStar
Multifamily property prices increased 21.6% YoY in May 2022, according to CoStar. The group’s value-weighted index rose 1.4% MoM, with multifamily property prices having been above 20% since August 2021. Multifamily assets accounted for 43.9% of overall volume and 17.1% of the trades. The market usually has the largest share of overall composite pair volume in the history of the report.
3. Multifamily investors increase their Houston portfolios as rents rise
Apartment developers in Houston are now more than motivated to ramp up their construction after rents across the region still remain high at 9.8% in June, despite the 10.5% increase recorded the previous month. Recently, apartment investment firm Fogelman Properties acquired a 201-unit waterfront apartment community to expand its footprint in the Greater Houston area. Across the country, apartment investments rose 22% in May YoY, according to MSCI Real Assets.
2. Demand for apartments will be strongest in these 3 states
Demand for apartments will be strongest in Texas, Florida and California, according to the soon-to-be released “U.S. Apartment Demand through 2035,” by the National Apartment Association (NAA) and the National Multifamily Housing Council (NMHC). These three states will command 40% of demand to meet 1.5 million new apartments needed by 2035. On the other hand, secondary markets such as Boise, Austin, Las Vegas, Raleigh, Orlando and Phoenix will also earn a large share of the demand that will grow by 1.1% yearly. Salt Lake City, Denver, Austin and Raleigh are most likely to attract younger markets (those in their 20s and 30s) for rentals in the multifamily sector.
1. Multifamily rental demand grows YoY
Multifamily rental demand is up 9.2% QoQ, according to CoStar’s 2Q22 report on rent growth in the United States. In Q122, rental demand reached 11.4%. Of all the metros surveyed, Orlando topped the list with the highest rent growth at 18.7%, followed by Palm Beach (16.8%), Miami (16.7%), Fort Lauderdale (16.2%) and Charlotte (15.1%). The report also found that the vacancy rate is up 10 basis points, rising to 5% nationally, but still remaining low considering the stiff competition in the market. Freddie Mac, on the other hand, expects the vacancy rate to remain at 4.8% throughout the year, according to its 2022 Multifamily Outlook report.
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