Headlines

What’s new in the world of Real Estate

• Housing prices are up…

• …or are they down?

• A Chinese property giant goes bust

• Regenerative agriculture could be the future of farmland

Plus: A disappointing $88.5 million sale, more 2024 predictions, a new real estate association, and more.

Listing of the week: A Beverly Hills mansion with a squatter problem.

Performance

Market Updates

The FHFA House Price Index rose 0.3% in November to another all-time high. The result narrowly outpaced the projection of 0.2% and represents the fifteenth straight month of positive growth. Overall, the index was up 6.6% yearly between November 2022 and November 2023, sightly above the historical average. All nine regions showed positive growth, with New England (+9.8%) leading the way, and West South Central (+3.1%) bringing up the rear. However, five of the nine regions showed lower appreciation rates compared with the previous year, as the market slowed relative to 2022.

However, the Case-Shiller Home Price Index had its first monthly drop since January 2023. Overall, the index fell 0.2% in November, while twelve of the twenty top cities saw monthly price declines, with Seattle (-1.4%) and San Francisco (-1.3%) leading the way. However, prices were still up 5.1% yearly, with Detroit (+8.2%) and San Diego (+8%) leading the way, with only Portland (-0.7%) showing a yearly decline. Keep in mind, though, that the November data coincided with mortgage rates nearing 8%, so there is an expectation that December and January numbers will be stronger overall.

A Hong Kong court ordered bankrupt Chinese developer Evergrande to liquidate. The real estate company, which was the largest developer in the world in 2018 with a market cap over $40 billion, defaulted on its debt in December 2021 and is now over $300 billion in the red. Its decline highlights the risks that come with overexpansion and when housing supply outpaces demand. However, it is unclear how the order will be enforced, as over 90% of Evergrande’s assets are in mainland China. While there is not likely to be a direct effect on the U.S. market, it seems likely that it is going to have a significant effect on China’s economy, which in turn is sure to ripple out to the global economy.

Regenerative agriculture continues to rise in popularity. Over the last three years, venture capital firms have invested $1.4 billion into startups in the space, a 46% increase compared to the previous three years. Regenerative agriculture focuses on enhancing farmland while utilizing it, by improving the topsoil quality, water cycle and biodiversity of the land, making agriculture more sustainable. It can benefit both investors in the land itself and in companies and operations that engage in the practice, particularly as governments look to “greener” solutions in the face of climate change.