Good Morning. In today’s edition:
- KKR bets on multi-family
- Supply for Existing Homes and New Homes increases
- A closer look at the CPI’s Shelter Index
I might be a little late to the game on this term, but I would emphatically say better late than never. This ‘vibecession’ is exactly what we have been tracking since we started the newsletter over a year ago, and now we have a word to sum it all up. The market is up, the inflation numbers look better, but there is still something holding us back. Consumer sentiment is still shaky, small business owners remain pessimistic, we keep hearing about impending doom for the office real estate sector, and more.?
The authors of the Small Business Optimism report from the NFIB summed it up nicely: “The inflation rate appears to be headed toward 2%, but the price level (based on the CPI) is 20% higher than it was four years ago. Overall, the net impact is that real incomes fell about 2.5% over that period.” So while inflation numbers seemingly have improved, they are still increasing over the massive increase we had very recently, and wage growth isn’t keeping pace. Subdued vibes.
- KKR Capital buys 18 apartment buildings for $2.1 billion, marking its largest purchase of apartment buildings. The deal will include 5,200 units in markets ranging from California to Texas to New Jersey. This acquisition indicates there is some optimism in apartment prices reaching or nearing their bottom, as they were down more than 20% in May from their July 2022 peak. Multi-family starts are slowing which should mean supply will moderate, which may allow rent prices to pick back up in the multi-family sector.?
- Starwood Capital CEO, Barry Sternlicht, talks about the economy and the Fed in a recent interview with CNBC. Sternlicht offered interesting insights into the employment market, highlighting the strength of jobs in health care, government, education, and construction sectors over the last 4 years - in spite of the interest rate increase. He also offered the notion that high interest rates themselves could be playing a role in keeping inflation up but acknowledged the challenge that lays ahead for the Fed, and finally they discussed what might ‘break’ as a result of the elevated interest rates - namely the office sector and regional banks.?
- CBS News ran a two-part feature on the issue of squatters, first outlining the problem and then highlighting some solutions being put forward. This issue continues to grow throughout the country and it now appears to be getting the attention it deserves. A number of states have passed legislation providing more legal tools to the property owner to take back their property, and according to the CBS News report there are even small businesses that have sprouted up trying to help combat the issue.?
- In 2024, Single Family Rentals represent 9.9% of all housing units in America, down from 11.5% in 2015, according to a mid-year report from AMH. Within the key housing trends highlighted in the report, it showed that homeownership rates have remained steady for almost 50 years - staying between 62%-69%, and that single family builds and starts have dropped by almost 50% in the last decade. It also stated that the median home price is now nearly 6x the median household income - the highest ratio of home price to income in the past 5 decades.?
- Build-for-Rent homes are up 20% over last year, according to a report by the National Association of Home Builders. Supply is often blamed as a core component of the housing affordability issues around the country, and we see the response to that with 18,000 new single-family build-for-rent starts in Q1 of this year. Additionally, last year saw 97,000 completed build-for-rent homes - an increase of 45% over the previous year. While build-for-rent on its own won’t solve the supply-demand imbalance, it will only help - and it will be interesting to monitor the staying power of the BFR concept once interest rates are reduced and mortgage rates moderate.
Proprietary insights into the SFR industry from our research and consulting team
The Shelter Index from the most recent CPI report showed a 5.4% increase in the last 12 months… but what do the biggest data providers in housing say about the price of rent over that time period? We were curious, so we looked at the data.
Check out what we found in the full blog post here.
For other industry insights from PlanOlabs, visit our blog here.
All the relevant data releases from the past month
- The index excluding Food & Energy (“Core Inflation”) increased 3.4% over the last 12 months ending in May, down from 3.6% in the 12 months ending in April.
- A seasonally adjusted net 18% of small business owners plan to raise compensation in the next three months, down 3 points from April and the lowest reading since March 2021.
- Months’ Supply of New Homes increased 15% MoM in May on a seasonally adjusted basis reaching its highest level since November 2022, and supply for Existing Homes reached its highest level since June 2020.?
For the rest of the housing and economic indicators we track, check out the full blog post here.
Everyone knows this stuff and you should too
Unlock growth & efficiency, scale your teams & processes. Streamline training & reduce onboarding time. Transform your business operations by partnering with a veteran with experience at NATO, Wells Fargo, Ford, Charter.
2 个月Very interesting how multifamily starts are adjusting. I've noticed similar sentiments among my clients in the real estate sector. I also recently attended the AgeTech Colorado panel for Denver Startup Week. Curious if you've seen data that points towards certain generations moving into assisted living facilities and how that might contribute towards the potential long-term impact on multifamily starts.
Real Estate Media Pro ?? | Creative People Ops Expert | Stategic, Inclusive, Tech Enthusiast |
4 个月subdued vibes ?? awesome insight, Tim
Sr. Marketing Manager @ PlanOmatic
4 个月I, too, had not heard of a "vibecession," but can't wait to use it in conversations now.