- Vincent - Real Estate Report
- December 12th, 2023 - This Week in Real Estate
December 12th, 2023 - This Week in Real Estate
What’s new in the world of Real Estate
A prominent Wall Street short seller took aim at Blackstone’s Mortgage Trust
Mortgage rates dropped to their lowest point in four months
Zillow’s November Housing Market Report tilted towards buyers
J.P. Morgan released their 2024 commercial real estate outlook
Plus: A look back at 2023’s housing market, Adam Neumann is back, and more
Listing of the week: A Pennsylvania B&B from the early 1700s
Freddie Mac 30 Year Fixed
Dow Jones Real Estate Index
S&P U.S. REIT
Zillow Home Value Index
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Research and Insights from the Vincent team
Short-selling hedge fund Muddy Waters took out a large bet against the Blackstone Mortgage Trust (BXMT). The fund’s CEO, Carson Block, explained that he believes that the trust’s exposure to office building debt has led to a lot of “rot in its book”. He also believes that many of the borrowers whose loans make up the trust won’t be able to make full payments and the underlying buildings are now worth less than the loan value. Essentially, Block is betting against large borrowers of office properties and that Blackstone is heavily exposed to them. Blackstone, predictably, pushed back on those assertions, saying that they have a record amount of liquid reserves and had no problem covering its latest dividend. Shares in the publicly traded trust immediately fell 8%, but have rebounded slightly since, and are now trading around 3% lower than they had been prior to the short.
30 year fixed mortgage rates fell to their lowest range since August. With inflation rates staying steady and the Federal Reserve expected to keep rates where they are when they meet this week, there is some optimism that mortgage rates will finally fall back to a more affordable range. Redfin found that the median housing payment has fallen to $2,561 - a decrease of $177 since the all-time high in October. Additionally, mortgage applications have increased by 15% and new listings are up by 7%, and you can draw a pretty clear line between rates decreasing and market activity heating up.
Zillow’s Home Value Index fell for the third consecutive month. The falling prices along with lower mortgage rates and more plentiful price cuts have made the market for affordable for buyers than it has been in quite some time. Housing inventory is still low but trending towards more normal levels, though there is still strong competition for desirable listings. The largest monthly, and yearly, drops in housing prices have come in New Orleans, Austin and San Antonio, which are giving back their pandemic-era gains.
J.P. Morgan’s 2024 outlook for commercial real estate sees strength in multifamily and neighborhood retail. It also shares the near-universal outlook that office buildings face an uncertain future as vacancy rates rise and interest rates remain high. It notes that while industrial real estate has continued to perform well, there are some signs that the performance is softening. Investors into all sectors of commercial real estate need to take into account rising costs, particularly for property insurance as well as labor and materials for maintenance and renovation. Finally, as with all downturns in markets, there will be opportunities available and savvy investors with access to cash could take advantage.
Listing of the Week
A property that caught our eye
Located right on the Delaware River, 90 minutes north of Philadelphia and two hours west of New York City, this week’s property is nearly 300 years old. Riverstone 1730 has been operating as a luxury B&B but has been a trading post and Colonial tavern in its past lives. The 5 bed, 2.5 bath, 4094 square-foot house has five fireplaces, two kitchens, a three bay carport and a private dock across the street. The asking price is $1,325,000 and the B&B has a perfect 5-star rating on TripAdvisor and a 9.8/10 on Vrbo.
More stories worth checking out
Realtor.com is calling 2023 “The Year the Housing Market Froze Over” - pointing to a lack of sales due to low inventory, stalled construction, high mortgage rates and high prices.
Disgraced WeWork founder Adam Neumann is back with a new venture, Flow, an apartment building startup that got $350 million in funding from VC firm a16z and just kind of sounds like, well, WeWork for apartment buildings?
Macy’s received a $5.8 billion takeover offer, with the bidders, including a real estate investing firm, likely eyeing the department store’s $6 billion real estate portfolio.
Bankrupt trucking company Yellow sold its real estate portfolio for $1.88 billion - well above the $1.1 billion appraised value - showing the market for specialized industrial property is still robust.
BlackRock (not to be confused with Blackstone) raised a $844 million fund to invest in European properties, its sixth overall and first since 2018, calling now the best time to invest since 2008.
The Jeff Bezos-backed real estate platform Arrived just launched their Single Family Residential Fund. Open to all U.S. investors.*
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