?? Is the Sun Belt boom finally cooling off?
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???Hello, Best Ever Community!
In this week’s newsletter, the Sun Belt cools off, passive investors ask questions, and one investor adds $5 million in value to a mixed-use property in just 33 months.
Let’s CRE!
???NO-FLUFF NEWS: CRE HEADLINES
???Near-Record Absorption: According to RealPage, year-ending Q2 2024 apartment demand pushed absorption to one of its highest points in 24 years, with the 390,000 units absorbed representing the eighth-largest figure since 2000.
???State Farm Distress Signal: State Farm has requested significant home insurance rate hikes in California, seeking increases of 30% for homeowners, 36% for condo owners, and 52% for renters, citing the need to avoid potential insolvency.
??♂? Fraud Crackdown: Recent drops in property values and rising defaults have exposed a wave of commercial mortgage fraud, as landlords and brokers have been inflating property values and income to secure larger loans. Fannie Mae, Freddie Mac, and U.S. prosecutors are taking action.
???TOP STORY: IS THE SUN BELT BOOM FINALLY COOLING OFF?
Sun Belt markets have been the darlings of multifamily for nearly a decade. But at this week’s Midyear Economic Update hosted by the Best Ever Conference, our panel of experts discussed why the migration trend to the Sun Belt may be slowing down, and what it could mean for investors moving forward.
?? The Sun Belt Boom: Primarily driven by a higher quality of life including lower taxes, affordable housing, and good weather—and fueled by the remote work movement—the Sun Belt has been a migration magnet. Over the past decade, domestic relocations to the Sun Belt totaled nearly five million, largely driven by outflows from the Northeast and Midwest, and many projections indicate another decade of the same.
???Not So Fast: Texas, Florida, and Arizona have been forecasted to grow by 3.5, 2.6, and 1.1 million, respectively, by 2033. But John Chang, senior vice president and national director of research and advisory sales at Marcus & Millichap, said this week that current data shows that the pattern of migration to the Sun Belt has slowed, even with the oversupply in some key Sun Belt markets....