- Vincent - Real Estate Report
- February 6th, 2024 - This Week in Real Estate
February 6th, 2024 - This Week in Real Estate
This issue is brought to you by 10 East, where sophisticated investors access private markets.
What’s new in the world of Real Estate
Mortgage rates jumped above 7%
Commercial real estate’s struggles could bring down regional banks
Santa Barbara is the country’s top emerging market
Farmland values are staying steady
Plus: Adam Neumann is back, a $15 billion commercial real estate fund, and more.
Listing of the week: A runway as a backyard.
Mortgage News Daily Survey
Dow Jones Real Estate Index
S&P U.S. REIT
FHFA House Price Index - Nov.
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The average 30-year fixed mortgage rate topped 7% this week. After steadily decreasing the past few months, the benchmark rate saw the biggest single-day jump in nearly a year. This came after the Federal Reserve kept interest rates steady, and also indicated that a rate cut was unlikely to come in March. Prospective buyers and real estate investors will have to wait longer for mortgage rates to drop, and as a result, the real estate market is going to take longer to heat back up.
The falling value of commercial properties is hurting smaller banks. Shares in New York Community Bancorp fell almost 40% after a reported loss of over $250 million last quarter, driven in part by losses on office property loans. While all banks stand to lose money if borrowers cannot repay their loans, smaller and regional banks are at greater risk than their bigger rivals. Commercial real estate loans account for 13% of total exposure for banks with over $100 billion of assets, but that number balloons to 44% for smaller banks. With an estimated $1.2 trillion of commercial mortgages maturing in the next two years, a reckoning is coming as higher interest rates and falling property values are likely to lead to defaults. Fed chair Jerome Powell said that some small banks will close or merge as a result of the downturn, but that it is a “manageable problem” and there is not much risk of a 2008-style market crash.
The Wall Street Journal and Realtor.com released their rankings of the top emerging housing markets in the country. The list of the top 300 metro areas looks at the health of the real estate market as well as economic and quality of life measures. Ranking first is Santa Barbara, California, despite the median home price being nearly four times the national average, as demand for housing there far outstrips supply. Nearly all the other cities in the top ten are in the Midwest, and they all have median home prices below $370,000, with affordability as a main factor driving their ranking. The second-ranked city is Jefferson City, MO, followed by Canton, OH, Racine, WI, and Oshkosh, WI. Anyone considering buying a home, either for their own use or to rent, should peruse the rankings and use it as one data point of many in considering where to buy property.
Multiple recent sales are showing that farmland values are holding strong. Even with high interest rates and falling commodity prices, recent sales have been exceeding expectations, and overall, farmland prices were down just 1% from 2022 to 2023. Currently, Iowa’s market has remained the strongest, with Illinois and Indiana also showing promising sales numbers. However, across the country, there have been more price reductions and lots that don’t sell at auction, which may point towards a small correction coming in 2024.
Listing of the Week
A property that caught our eye
If you’ve ever wanted to get off a flight and immediately be home, now’s your chance. Located right next to the runaway at Propwash airport in Texas, 30 miles north of Fort Worth and less than an hour’s drive from Dallas, this $1.7 million, 3 bedroom, 2.5 bathroom, newly renovated house also comes with a 3,600 square-foot hangar. It’s been on the market for four months, so maybe the idea of having planes take off and land just outside your house isn’t appealing to most people.
More stories worth checking out
Former WeWork CEO Adam Neumann, who received a $445 million payout after being fired, wants to buy the bankrupt company back at an undisclosed price.
Asset manager Brookfield has raised half of a $15 billion fund targeting commercial real estate, as it believes that there are opportunities to buy during this downturn.
The median listing price is up 1.3% so far in 2024, according to Realtor.com’s latest weekly report, with active listings also up 8.2% year-over-year.
5% of Americans who bought or sold a home in the last three years were victims of some type of real estate fraud - always be extremely aware of this possibility and be hyper-vigilant in any real estate transaction.
New houses made up 32% of all home listings in the fourth quarter of 2023 - nearly an all-time high and reflective of increased home construction and decreased existing-home inventory.
Invest in an American leader in the global energy transition - EnergyX is an innovator in lithium extraction and is closing a round now.**
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