- Vincent - Real Estate Report
- January 16th, 2024 - This Week in Real Estate
January 16th, 2024 - This Week in Real Estate
What’s new in the world of Real Estate
Investment funds are bullish on real estate in 2024
Cities are looking to convert unused office space into apartments
Fractional platform Here.co shut down
Mortgage purchase applications are up
Plus: Yet another real estate commission lawsuit, more evidence that rents are falling, and more.
Listing of the week: A former church in Philadelphia.
Freddie Mac 30 Year Fixed
Dow Jones Real Estate Index
S&P U.S. REIT
Zillow Observed Rent Index
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Real estate investments by top investment funds hit a 12-month high. The Bank of America Global Fund Manager Survey showed that these funds - with a combined $256 billion of assets under management - are anticipating lower interest rates and lower bond yields this year and are acting accordingly by investing in real estate, cash and commodities. Conversely, they are cutting their investments into bonds, banks and insurance companies. A record 91% of the fund managers are expecting a drop in short-term interest rates, which will likely be a boon to the real estate market.
As offices remains vacant, cities want to convert them to apartments. Major cities like New York, San Francisco and Washington D.C. are seeing high vacancy rates in office buildings and are now incentivizing developers to convert unused space into apartments to stem the current housing shortages each city faces. However, only around 10-15% of office buildings nationwide are realistic candidates for conversion due to many factors, including the lack of windows and plumbing for interior units. The cost can also be prohibitive and only makes sense if the conversion can result in luxury units that may still need generous amenities to attract tenants. Still, with hybrid work seeming like it’s here to stay, finding a use for vacant office buildings benefits everyone.
Fractional real estate investment platform Here.co shut down operations. The company allowed investors to buy shares in short-term properties and raised over $10 million from investors to purchase 13 properties in the past two years. They also raised a $3.5 million seed round in July 2022, but reported a net loss of $56,374 on their properties for the six months ending July 2023. Considering the additional cost of operating the company, it is not a surprise they have chosen to shutter their platform, though apparently the company is continuing in an unknown form. Their statement blamed the “current interest rate environment and economic conditions” and are aiming to sell all their properties and return net proceeds to investors within the next six months. This news followed the shutdown last week of short-term rental management company Frontdesk, highlighting the struggles of startups in the short-term rental industry.
Both homebuyer demand (+5%) and mortgage applications (+3%) are up this month. According to Redfin’s Housing Market Update, as mortgage rates have held steady, more buyers are entering the market, though both metrics are still down from this time last year. New listings rose by 9%, but pending sales were still down 2.5%, though that is the smallest monthly decline since January 2022. The median sale price rose by 4.1% year-over-year, with the biggest increases in West Palm Beach, FL, Newark, NJ and Anaheim, CA.
Listing of the Week
A property that caught our eye
Built in 1913, the former Moore’s Memorial Baptist Church in Philadelphia is a 7,420 square foot property waiting for a transformation. The pictures show pews, high ceilings, stained glass windows, and even a pipe organ still inside. Located within walking distance of Temple University, the building is listed for $425,000, but the sellers have accepted an offer and a contract is pending.
More stories worth checking out
A class-action lawsuit was filed in Arizona over real estate commissions, following the successful lawsuit over the same issues in Missouri last year.
Rents declined 0.2% last month nationwide according to Zillow’s Rental Market Report, the third straight month they have fallen - but rents are still up 3.3% year-over-year.
Canadian housing prices were up 4.3% year-over-year in Q4, and are expected to rise further in 2024, as experts expect their Central Bank to cut interest rates this year, mirroring expectations in the U.S.
A Chinese billionaire’s 2015 purchase of 200,000 acres of Oregon farmland just became public and renewed calls from members of Congress to restrict foreign ownership of U.S. farmland.
Global firm Atlas Holdings launched a $1 billion real estate investment vehicle focusing primarily on industrial real estate, and have already acquired 23 properties for $300 million.
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