This fortnight in Styldod’s news digest, we give updates about the rising popularity of multifamily housing and how it could cool down market pressure, the increasing number of sale-leaseback deals, and more. Read on to stay informed about the latest real estate news.
Real Estate News This Fortnight
Here is the hottest real estate news this fortnight.
1. The Influx of Apartments Could Relieve Market Pressure
As apartment construction ramps up, more than 330,000 new rental units are expected to arrive on the market in 2021, keeping up with a 4-year high in multifamily construction, says RentCafe's latest Apartment Construction Report. The Dallas–Fort Worth metro is expected to deliver the newest units for the fourth consecutive year. “Lack of entry-level housing supply and rising home prices will show the multifamily rental market demand increasing as new renters enter the market and millennials extend their rental commitments”, said Doug Ressler, manager of business intelligence at Yardi Matrix, a real estate data provider.
2. Fed is Stoking Another Real Estate Price Bubble That Will Sweep Out Home Equity
Investor Peter Boockvar warns about a housing price bubble brought on by the Federal Reserve’s Covid pandemic policies. He says first-time homebuyers are most sensitive to dramatic losses. Boockvar refers to people who put down 5% amid historically low mortgage rates and think the situation will be bad if home prices correct by 10%. “I feel bad for the people who bought homes over the past year because they’re the ones that paid the very elevated prices,” the chief investment officer at Bleakley Advisory Group told CNBC on Thursday.
3. Lesser First-Time Homebuyers Are Competing These Days
According to a report published by NAR, existing home sales grew by 2% from June to July. The completed sales agreements for single-family homes, condominiums, townhomes, and co-ops, represented an annual rate of 6 million in July compared to 5.90 million same time last year. The real estate news report found that the inventory of unsold homes rose by 7.3% to 1.32 million from June to July. Lawrence Yun, the chief economist at NAR, said that as inventory starts to increase, the intensity of multiple offers will lessen, leading to a more balanced housing market for homebuyers.
4. White-Hot Real-Estate Market Fuels Sale-Leaseback Deals
Companies are turning to sale-leaseback deals to raise capital in a booming real estate market. They are looking for willing buyers in real estate-focused funds who are flushed with cash to buy buildings and immediately lease them back. Private-equity firms are among the organizations putting more significant amounts of capital into this type of transaction.
Source: Wall Street Journal
5. Homebuyers Sign Fewer Contracts in July, As High Prices Cool Down the Summer Market
According to the NAR, the number of contracts signed to purchase previously owned homes fell by 1.8% from June to July. Housing affordability was seen dropping in the last few months due to soaring home prices. In addition, mortgage rates fell sharply in July, with the average 30-year fixed starting the month at 3.18% and ending at 2.84%, giving buyers more purchasing power. “The market may be starting to cool slightly, but at the moment, there is not enough supply to match the demand from would-be buyers,” said Realtors chief economist Lawrence Yun.
As the popularity of multifamily housing grows, the real estate market is expected to cool further in the coming weeks. However, first-time homebuyers should watch out for an impending real estate price bubble and high competition.
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