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These are the average of the top competitive rates from the eXp Commercial's National Capital Markets Partner CommLoan from a database of 700+ commercial lenders as of 5/16/23.
*Actual rates are dependent on property and sponsor and are provided for comparison purposes only.
[/col] [/row] https://www.creconsult.net/market-trends/commercial-real-estate-financing-rates-update-may-16th-2023/
Source: Aurora self-storage market soon to change; projected to add 243,000 square feet in 2023
https://www.creconsult.net/market-trends/aurora-self-storage-market-soon-to-change-projected-to-add-243000-square-feet-in-2023/
The Supply Shortfall
Since 2017, the shortage of housing in the U.S. has been growing at an alarming rate, with estimates now ranging from 3.8 to 6.8 million units. The lack of supply, particularly in the workforce housing sector, has resulted in historically low vacancy rates and record-high rent and home prices.
Between 2010 and 2021, household formation exceeded net housing deliveries by nearly 4.8 million units leading to a decrease in vacancy rates, making housing less affordable and hindering household formation.
To close the housing gap, at least 3.4 million units are needed within five years, and the rate of new unit delivery needs to increase by approximately 71%. This shortage is evident in the downward trend of the ratio of total housing inventory to the total number of households, which has been below 1 (meaning there is at least one household unit for every household) since Q4 2017.
The shortage also disproportionately affects younger generations, as the median age of household heads has increased from 49.0 in 2008 to 52.1 in 2021.
The current combined vacancy rate for all for-sale and for-rent housing in the US is just 2.5%, with rent and home prices growing annually by an average of 11.1% and 18.9%, respectively.
The Growth and Impact of Zoning, Land Use, and Environmental Regulations on Housing Production
Strict local zoning and environmental laws limit affordable housing by increasing development costs by 32% for multifamily projects. This reduces supply, forcing developers to charge higher prices.
Increasing regulations worsen the housing shortfall, as evidenced by a negative correlation between regulatory cases and permits issued per state. From 2006 to 2018, 49% of U.S. metropolitan areas increased land use regulations. Each regulation in a California city raises the cost of owner-occupied and rental housing by an estimated 4.5% and 2.3%, respectively.
The Workforce Rental Cohort
The shortage of new workforce housing is hurting those earning between $45,000 and $75,000 annually the hardest, as developers typically focus on either luxury apartments or affordable housing. This underserved segment has higher rents and reduced vacancies, making it an attractive investment opportunity.
Private real estate funds focused on workforce rental housing have historically returned an average net IRR of 16.4% between 2009 to 2019, outperforming luxury housing-focused funds’ average net IRR of just 10.7%. While past performance is not indicative of future results, the favorable demographic and supply/demand fundamentals make the workforce multifamily sector a positive outlook for investors.
The chronic underproduction of housing in the U.S. has made workforce rental housing an attractive and sustainable target for investment. As demand goes unmet, prices rise, and this is a trend that is set to continue in the coming years. Investors looking for opportunities in the U.S. housing market should consider investing in the workforce rental segment for durable cash distributions and sustainable capital value appreciation.
Steep competition in the housing market and low supply are heating up home prices again.
Nationally, home prices in March were 0.7% higher than March 2022, S&P CoreLogic Case-Shiller Indices said Tuesday.
"The modest increases in home prices we saw a month ago accelerated in March 2023," said Craig J. Lazzara, managing director at S&P DJI, in a release. "Two months of increasing prices do not a definitive recovery make, but March's results suggest that the decline in home prices that began in June 2022 may have come to an end."
The 10-city composite, which includes the Los Angeles and New York metropolitan areas, dropped 0.8% year over year, compared with a 0.5% increase in the previous month. The 20-city composite, which includes Dallas-Fort Worth and the Detroit area, fell 1.1%, down from a 0.4% annual gain in the previous month.
Home prices are rising again month to month, however. After seasonal adjustment, prices increased nationally 0.4% in March compared with February. The 10-city composite gained 0.6% and 20-city composite rose 0.5%.
Lazzara also noted that the price acceleration nationally was also apparent at a more granular level. Before seasonal adjustment, prices rose in all 20 cities in March (versus in 12 in February), and in all 20 price gains accelerated between February and March.
Miami, Tampa, Florida, and Charlotte, North Carolina, saw the highest year-over-year gains among the 20 cities in March. Charlotte replaced Atlanta in third place. Compared with a year ago, 19 of 20 cities reported lower prices with only Chicago showing an increase at 0.4%.
"One of the most interesting aspects of our report continues to lie in its stark regional differences," added Lazzara. "The farther west we look, the weaker prices are, with Seattle (-12.4%) now leading San Francisco (-11.2%) at the bottom of the league table. It's unsurprising that the Southeast (+5.4%) remains the country's strongest region, while the West (-6.2%) remains the weakest."
Source: Home price declines may be over, S&P Case-Shiller says
https://www.creconsult.net/market-trends/home-price-declines-may-be-over-sp-case-shiller-says/
