Headlines

What’s new in the world of Real Estate

• Home prices continue to tick up, according to two major indicators

• There might be an upcoming shortage in top-tier office space

• As inventory falls, the number of home sale scams are on the rise

• Millennials are increasingly being priced out of homeownership

Plus: Canada’s struggling real estate market, empty Bed, Bath and Beyond stores, and more.

Listing of the week: A private island in the San Francisco Bay.

Market Updates

The FHFA House Price Index and Case-Shiller U.S. National Home Price Index both showed housing prices rising. The FHFA numbers showed a 5.5% increase year-over-year, a 2.1% gain in Q3 versus Q2 and a 0.6% gain in September. The index has seen positive gains every quarter since the start of 2012. The Case-Shiller index showed a 3.9% gain year-over-year and a 0.7% gain in September, which marked the eighth straight month of gains as the index hit another all-time high. These numbers are showing that even as housing affordability has fallen and mortgage rates have risen, prices have stayed high largely due to historically low inventory. While prices on new homes have fallen recently, for existing homes, it is still a sellers’ market and potential buyers may still need to be patient until something changes.

There may be a shortage of top-tier office space in the coming years. The prediction from real estate intelligence company CoStar seems counterintuitive with the rise of remote work, but it comes from looking at leasing and construction trends. There has actually been increasing demand for new, modern, Class-A office buildings - the number of office space lease transactions is up compared to 2015-2019. However, construction activity is at its lowest level since 2011, and it’s projected that office space in buildings 3 years old or less will represent just 1% of inventory by 2027. This shows again that in any sector of real estate, investing in Class A properties is always the safest bet, even in down markets.

With housing supply tight, home sale scams have risen 86% since 2020. As buyers and realtors become increasingly desperate for inventory, scammers are taking advantage by trying to sell property they don’t own. Real-estate related complaints to the FBI resulted in losses of $396 million in 2022, and it has only become a bigger issue this year. Vacant properties and undeveloped land are particularly ripe targets, as owners may not be aware of fraudulent transactions until it’s too late. As always, buyers need to be vigilant and do their due diligence, especially if a deal seems too good to be true.

Inventory shortages and housing prices have hit Millennials particularly hard. The average age of a homebuyer has risen from 39 to 49 as the convergence of high mortgage rates, high demand and low supply has upped the barrier for entry for young professionals. According to Freddie Mac, the U.S. is short 3.8 million units of housing, and it may take years and changes in housing construction policy to bridge that gap. Until that happens, and interest rates fall, many Millennials (and Gen Zers) will have to wait from the sidelines and the average age of homebuyers will only increase.