Headlines

What’s new in the world of Real Estate

• The U.S. is losing farmland

• Real estate trusts struggled with fundraising in 2023

• Price cuts are becoming more common

• The pace of new housing construction is falling

Plus: Mortgage rates shot up, new listings are down, Trump’s real estate fraud, and more.

Listing of the week: A house with a 10,000 square-foot doomsday bunker.

Performance

Market Updates

The U.S. has lost 142,000 farms and 20 million acres of farmland since 2017. This data comes from the Census of Agriculture, which came out last week and is released every five years. USDA secretary Tom Vilsack called the report “a wakeup call” and is “concerned about the state of agriculture and food production in this country,” as more farmland is being converted to other uses. Policymakers are looking into ways to help farmers produce more income, which in turn could make farmland investing more attractive. With the amount of farmland decreasing for both climate-related and economic reasons, it could lead to prices rising as supply diminishes.

Major commercial real estate investors saw their fundraising drop to the lowest levels in 11 years. Both private equity firms and private real estate trusts saw their fundraising numbers decline significantly in 2023, with the former raising $138.83 billion (compared to $236.04 billion in 2021) and the latter raising $10.2 billion (compared to $33.2 billion in 2022). This led to reduced transaction volume, as private equity firms acquired just $20.9 billion in real estate last year compared to $87.3 billion the year before. Volumes are not expected to increase this year, and this reduced acquisition demand is just another blow to the struggling commercial real estate market.

Around one in five houses on Zillow saw a price cut in January. While this is similar to what is was last January, both years posted higher numbers than any of the five years prior. According to the report, “[a]ttractive, well-priced homes are being snapped up quickly,” selling in an average of just 29 days. Inventory is still low, with new listings 25% below pre-pandemic levels and the total supply down 37%, though both those numbers are improvements over last year. Pending sales were down 3.8% year-over-year, as market activity has slowed due in part to higher mortgage rates.

New home construction fell by 14.8% in January, the biggest drop since 2020. Not including that pandemic-induced drop, this monthly decline would be the biggest since 2015, and the data fell short of Wall Street’s expectations. This drop has been attributed to poor weather, but building permits, an indicator of future construction, also fell by 1.5%, so economic conditions likely played a part as well. Given that a persistent lack of supply has played a large role in propping up home values, this is good news for current homeowners and sellers, but bad news for potential buyers.