Weekly Real Estate Roundup & Week Ahead: July 1 - July 7, 2024
Welcome to the Weekly Real Estate Roundup & Week Ahead, your go-to source for the latest news, regulatory events, and economic and political developments in the real estate sector. This week, we delve into significant trends and updates across commercial real estate (CRE), multifamily housing, residential markets, mortgage rates, REITs, and CMBS. Let’s dive into the highlights of the past week and what to expect in the coming days.
Commercial Real Estate (CRE)
Money Flowing Out of Private Real-Estate Trusts
- $16.5 billion is projected to be redeemed from non-traded REITs this year, a substantial sum for a $90 billion market. This trend is driven by investors seeking liquidity amid economic uncertainties. According to the Wall Street Journal
, "investors are pulling money out of private real-estate trusts at a record pace."
Construction Spending Decline
- U.S. construction spending fell to a seasonally adjusted annual rate of $2.14 trillion in May, surprising economists who had expected an increase. This decline reflects broader economic challenges and potential slowdowns in new projects. The Wall Street Journal
reported, "construction spending slowed in May, marking a significant shift from previous months."
Amazon's Expansion
- Amazon announced plans to open 10 new fulfillment centers across the U.S., adding over 15 million square feet of industrial space. This expansion is expected to create thousands of jobs and boost local economies. The National Association of Realtors
highlights, "Amazon's expansion will significantly impact local real estate markets and economies."
Multifamily Housing
Key Factors for Investors
- The Matrix Multifamily National Report indicates healthy absorption with nearly 300,000 units absorbed nationally in 2024. Rent growth varies by region, but overall demand remains strong, driven by young renters who prefer flexibility. As noted by Forbes
, "multifamily investors must consider regional variations in rent growth and demand."
Impact of Elections
- The upcoming 2024 elections are causing uncertainty among investors, leading to a short-term dip in market activity. However, the long-term fundamentals of multifamily investments remain robust, with strong demand and barriers to homeownership sustaining the market. Forbes
highlights, "election-year uncertainties are temporarily affecting investor confidence."
Residential Real Estate
Home Price Insights
- According to CoreLogic, home prices nationwide increased by 4.9% year-over-year in May 2024. The forecast indicates a further rise of 0.7% from May to June 2024 and a 3% increase from May 2024 to May 2025. The Northeast continues to lead in annual appreciation, with New Hampshire posting a 12% increase. CoreLogic
states, "home prices are expected to continue their upward trajectory."
Manhattan Market Trends
- Manhattan is becoming a buyer’s market as apartment prices fell and inventory rose in Q2 2024. The average sales price in Manhattan fell 3% to just over $2 million, with a 9.8-month supply of apartments for sale, indicating an oversupply. According to CNBC
, "Manhattan's real estate market is shifting in favor of buyers."
Mortgage Rates
Rate Increases
- The 30-year fixed mortgage rate from Freddie Mac increased to 6.95% over the last week from 6.86%. This marks the first weekly increase since May 30, with a monthly mortgage payment on a $400,000 home now at $2,118. The National Association of Realtors
reports, "mortgage rates have seen a slight uptick, impacting affordability."
Market Reactions
- Despite the rise in rates, there is slightly more existing inventory coming onto the market. Higher-income buyers may find opportunities as moderate-income buyers are sidelined by affordability challenges. The National Association of Realtors
notes, "the market is seeing a shift in buyer demographics due to rising rates."
Looking Ahead
Economic and Political Developments
- The upcoming presidential elections are expected to create further market volatility. Investors and buyers are likely to remain cautious until the political landscape becomes clearer. Historical data suggests that post-election periods often see a rebound in market activity.
Regulatory Changes
- The National Association of REALTORS? (NAR) has agreed to a settlement that includes significant changes to MLS practices, such as prohibiting offers of compensation on an MLS and requiring written agreements for MLS participants acting for buyers. These changes will take effect on August 17, 2024. NAR
explains, "the settlement will bring about major changes in MLS operations."
Market Predictions
- Experts predict that mortgage rates will remain elevated through most of 2024, with potential rate cuts by the Federal Reserve possibly easing rates slightly by the end of the year. However, rates are expected to stay above 6.5%. Forbes
forecasts, "mortgage rates are likely to remain high, with slight relief possible towards year-end."
Upcoming Senate Hearing on Housing Markets
- The Senate is scheduled to hold a hearing on the state of the housing markets on July 10, 2024. This hearing will address issues such as housing affordability, supply constraints, and the impact of rising mortgage rates. Stakeholders from various sectors, including real estate, finance, and housing advocacy, are expected to provide testimony. This hearing could lead to new legislative measures aimed at stabilizing the housing market.
Closing Statement
As we move into the second week of July, the real estate market continues to navigate through economic uncertainties, regulatory changes, and political developments. Stay tuned for next week’s edition of the Weekly Real Estate Roundup & Week Ahead as we keep you informed on the latest trends and insights shaping the real estate landscape.
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