Summary
- Multifamily starts jump in July while permits declined.
- New lease requirements adopted by Freddie Mac and Fannie Mae.
- US home sales fall to new low as buyers await rate cuts.
- Single-family and build-to-rent property deliveries expected to drop 73% in 2025.
- The Bouldin mixed-use development by Seamless Capital is nearing completion.
- Shortage of affordable housing in Austin spurs new development.
- Austin properties ideal for multifamily development head to auction.
- The southern facing Texas triangle sets a new record in economic activity with $415.4 billion in U.S. / Mexico trade from January through June.
- Immense growth in far west San Antonio justifies the construction of another H-E-B
National News
Multifamily Starts Increase in July as Permitting Slows (RealPage)
- Why it matters: Multifamily starts increased suddenly and sharply in July, while multifamily permitting declined.
- In July, there was an 11.7% increase in multifamily construction starts, reaching 363,000 units. However, compared to the previous year, multifamily starts were still down by 21.8%. During the same period, multifamily permitting decreased by 12.4%, totaling 408,000 units, which is also an 18.2% decline in comparison to the previous year.
- Despite the recent growth, multifamily starts and permits are showing signs of slowing down from the peak levels observed in 2022. Permitting activity is starting to level off around the average seen from 2013 to 2020.
- The number of completed multifamily units in July was 473,000, which is a decrease of 24.4% from June but an increase of 49.2% from the previous year. Units under construction experienced a 1.5% decline for the month and a 13.3% decrease compared to the previous year.
- Both single-family construction starts and permits declined, with starts down by 14.1% from the previous month and 14.8% lower year-over-year. However, single-family completions saw a slight increase.
Freddie Mac, Fannie Mae Adopt New Lease Requirements for Multifamily Loans (Costar)
- Why it matters: All multifamily developers would be required to meet heightened standards to obtain government sponsored financing for loans signed after Feb. 28, 2025.?
- Freddie Mac and Fannie Mae have announced their intention to implement new lease standards aimed at safeguarding tenants in multifamily properties that are seeking financing.
- The new regulations encompass several key requirements, such as a five-day grace period for rent payments, a 30-day notice for rent increases, and a 30-day notice for lease expirations.
- It's important to note that the policy excludes certain types of housing, namely manufactured housing, cooperative housing corporations, leases that are less than two months in duration, and loans originated by third parties.
- Non-compliant properties will be given a 30-day period to rectify the situation or else face a penalty equal to 20 basis points of the initial loan amount.
Pending US Home Sales Tumble to New Low as Market Waits on Rate Cut (Costar)
- Why it matters: Pending home sales fell month over month in all four major US regions in July.
- In July, pending home sales experienced a decline on a monthly basis in all four major regions of the United States.
- Despite the positive effects of job growth and increased inventory, these factors were not sufficient to overcome the challenges posed by affordability.
- While recent decreases in mortgage rates are expected to motivate more buyers to enter the market, many potential buyers are holding off in anticipation of an interest rate cut by the Federal Reserve next month.
Slowdown Projected for Single-Family Rental and Build-to-Rent Properties (Costar)
- Why it matters: The combined total of single-family rentals and build-to-rent properties delivered is expected to drop by 73% in 2025.
- The demand for single-family rental and built-to-rent properties is being driven by developments that are strategically located and offer a greater number of available units.
- Despite the growing demand, single-family rental and build-to-rent segments represent only 5% of all newly delivered rental units in the past five years.
- In terms of rental growth, the single-family rental and build-to-rent sectors have been underperforming when compared to traditional multifamily developments. While these segments initially experienced higher rent growth than newly completed traditional developments in 2020 and the first half of 2021, the rent growth has since slowed down, even turning negative over the past four quarters, ending the second quarter at -0.8%.
Austin News
Mixed-use project The Bouldin taking shape on South Lamar (ABJ)
- Why it matters: Seamless Capital is developing the mixed-use property, The Bouldin, and is nearing completion on South Lamar, notable tenants are lined up.
- The Bouldin development will consist of 309 residential units, 75,000 square feet of office space, and two levels of underground parking.
- The apartments are expected to be open towards the end of the year. Lease representation for Seamless Capital is being handled by Endeavor Real Estate Group.
- Initially, the plan was for one building to be exclusively used for office space. However, Life Time Fitness has leased 50% of the space, resulting in 75,000 square feet of shell office space that will be delivered in the upcoming weeks.
Shortage of affordable housing in Travis County needs solutions, SHFC head says (ABJ)
- Why it matters: A third of households in Travis County are considered cost-burdened, so there is high demand for affordable housing developments. 15% of Central Texans put more than half their income toward rent / mortgage.
- In Travis County, the median home price is $525,000, and the average rent stands at $1,707.
- The Strategic Housing Finance Corp. (SHFC), a nonprofit organization, is collaborating with developers to enhance the availability of affordable housing. As part of their efforts, SHFC is currently developing Sky Mountain, a multifamily development comprising 281 units. These units will have income restrictions that range from 20% to 120% of the median income in the area.
- In 2022, a total of 315,000 households in Austin were identified as requiring affordable housing.
Three Prime Properties for Residential Development in Austin Head to Auction (Costar)
- Why it matters: With a population surge and the popularity of UT Austin, these properties are positioned to address needs for student and residential housing.
- Two of the properties are located near UT Austin and are designated for multifamily development, while the third property is a single-family house near Lady Bird Lake.
- The auction for these properties is being conducted by Hilco Real Estate Sales, with the bid deadline set for October 7th.
- The property located at 2312-2515 San Gabriel St. is zoned for 252 residential units and has a minimum bid requirement of $6.5 million. Similarly, the property at 2103 Nueces is zoned for 390 residential units and has a minimum bid set at $4.5 million.
San Antonio News
US-Mexico trade relations enter “uncharted territory,” expert says (Yahoo)
- Why it matters: The southern facing Texas triangle (San Antonio / Laredo / Monterrey, Mexico / Corpus Christi) sets a new record in economic activity.
- According to the latest data from the Census Bureau, Mexico's trade with the United States reached a record high of $415.4 billion from January to June, making it the highest total ever recorded for this time period.
- Gutierrez emphasized that Mexico has now become the United States' top trading partner, surpassing China, Canada, and even the entirety of Europe. He highlighted the immense value of the daily trade exchanges, which amount to billions of dollars.
- Canavati highlighted the success story of the Toyota manufacturing plant in San Antonio, which opened in 2006. Currently, the plant employs over 3,800 individuals who assemble Tundras and Sequoias, and it also hosts more than 20 on-site suppliers that provide employment opportunities for an additional 5,600 people. Moreover, the Toyota plant in San Antonio is an integral part of a logistics chain that includes Tier 1 suppliers located in Mexico.
- Matta-Barrera emphasized that the increased trade and commerce between Mexico and the U.S. contribute to the creation of more jobs. Greater:SATX is an economic and workforce development initiative focused on the San Antonio region. Matta-Barrera leads the workforce, local business engagement, and advocacy and influence efforts for this organization.
New Far West Side developments include new H-E-B, apartments (SABJ)
- Why it matters: Immense growth in far west San Antonio justifies the construction of another H-E-B.
- H-E-B is in the process of gaining entitlements for a 30-acre parcel at the intersection of Culebra Road and State Highway 211, where they plan to build a grocery store with an estimated cost of $29 million. The development is expected to encompass 127,000 square feet and is targeted for completion in late 2025.
- Palladium USA, a Dallas-based developer, is also working on an apartment complex off Culebra Road. The projected cost for this development is approximately $43 million. Previously, the developer collaborated with the San Antonio Housing Trust on Palladium Crestway, a $65 million apartment complex situated at the junction of Loop 410 and Interstate 35.
