This Is The Only Thing Republicans And Democrats Can Agree On ??

This Is The Only Thing Republicans And Democrats Can Agree On ??

30k of you have been getting my weekly email sharing the top 5 stories in regards to money and real estate for a few years now... But the same people reading my emails may not be the same people reading my LinkedIn.

Here are my latest Top 5 #TLDR stories from last week. Enjoy reading these while you prep your upcoming Halloween outfit.

  1. Top 5 Zipcodes For Multifamily Construction ??
  2. Which Real Estate Markets Will Face The Toughest Blows? ??
  3. A Crystal Ball On Interest Rates ??
  4. Why Are Class B Assets Getting Hurt The Most? ??
  5. The Only Thing That Democrats And Republicans Can Agree On ??


Top 5 Zipcodes for Multifamily Construction ??

Hint, this is one of the top 5 cities.

There have been 1.2 million new rental units that have hit the market since 2018. The zipcodes winning the most in new construction are directly correlated with lively social scenes, good amenities, and prime cities.?

Philippa Maister shares the top 5 zip codes that are benefiting the most from multifamily construction. Are any of these a surprise to you?


Which real estate markets will face the toughest blows? ??

Great breakdown of cities sitting in different categories of growth.

Jay Parsons , the Chief Economist at RealPage Investment Management , has provided a comprehensive analysis of the real estate markets that are expected to face significant challenges in the coming years due to the influx of new supply.

RealPage has categorized these markets into five groups based on the level of supply: those with a large supply, those with lots of supply but not excessive, those with more supply than initially advertised, those with less supply than expected, and those with minimal supply.

Depending on which category real estate owners find themselves in, they will need to devise a strategic plan to counter the downward pressure on rental prices caused by the attractive move-in specials offered by new buildings to fully lease their properties.

?If you happen to be an investor in any of the cities listed, it would be wise to discuss with yourself or your investment team the appropriate strategy for the future.


A Crystal Ball on Interest Rates ??

Have you ever tried to make sense of interest rates??

I know I sure have sometimes with success and sometimes with failure. I think we can all agree that interest rates were going to go up for the past couple of years, but the bigger question is where will interest rates be once things stabilize?

Erik Sherman had an interesting take on where he sees future interest rates being once the market hits stabilization in a few years.?

The TLDR version is in a sustainable inflationary world, Treasury notes should be between 300 and 350 basis points above consumer inflation. Private market rates should require a further premium of 250 — 400 basis points, depending on the risk profile of the assets.

If you are doing quick math then you are looking at home mortgages above 6% and commercial properties with reasonable leverage trading at 7%-7.5% cap rates.?


Why Are Class B Assets Getting Hurt The Most? ??

Breakdown on impact on rents across A, B, & C class communities.

It's truly surprising to discover that Class B assets are the ones facing the most pricing pressure and vacancy compared to older Class A assets, especially with the influx of new construction in the above-mentioned markets. The reason behind this phenomenon can be traced back to the fundamentals of economics - supply and demand.

?In these rapidly growing multifamily markets, there is a significant increase in pricing pressure and attractive concessions offered to potential renters. Some markets are even going as far as providing 2-3 months of free rent. This means that renters have the opportunity to upgrade their quality of life with minimal cost.

However, there's a word of caution for these renters. What will they do once their lease expires? Property owners might very well raise the rental rates to align with the market comps at that point in time. It's something worth considering for those looking to trade up in their living situation.


The Only Thing That Democrats And Republicans Can Agree On! ??

This is not a typo.

?Both Republicans and Democrats agree on something!

?They both concur that it is imperative to address the US Housing crisis and are united in their support for the Affordable Housing Credit Improvement Act (AHCIA). This represents an exceptional display of bipartisan backing for any tax bill presently under consideration by Congress.

Housing advocates are holding onto hope that the act will be included in an end-of-year tax reform package. This act is specifically designed to fortify the Low-Income Housing Tax Credit (LIHTC), a fundamental tool for constructing affordable housing. Since its implementation in 1996, LIHTC has provided funding for the development of an impressive 3.7 million affordable rental homes, benefiting an estimated 8 million low-income households, as per the bill's advocates.


That's all for this week, let me know in the comments which story was the best.

Check back on Sunday for our entertaining blog.

Erik Sherman

Freelance Journalist, Writer, and Author

1 年

I want to point out that Integra Realty Resources was the one that did the interest rate analysis. I was reporting on their take. Personally, I do think that we're due for a regression to the mean. Having a 4.9% annualized GDP growth suggests to me ongoing tightening, with rising Treasury yields keeping interest rates elevated with or without Fed action.

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