Headlines

What’s new in the world of Real Estate

• Renting v. Buying

• Malls are back

• A big raise for a furnished rental startup

• The urban doom loop

Plus: January’s Case Shiller and FHFA reports, deed fraud on the rise, advice for multifamily investors, and more.

Listing of the week: Real estate for the afterlife.

Performance

Market Updates

Renting is cheaper than buying in all top 50 metro areas in the U.S. This is according to a new report from Realtor.com, which found that the monthly cost of buying a starter home was $1,027, or 60% higher, than renting one. This is due to higher mortgage rates raising the cost of buying, and a nationwide decline in rents, with the median 2-bedroom 3.3% lower than its August 2022 peak. The top five rent-favoring markets were Austin, Seattle, Phoenix, San Francisco and Los Angeles, all desirable cities with high concentration of tech workers and high earners. If this pushes more people to rent, that would be encouraging for multi-family investors, as rental demand will go higher, but discouraging for potential sellers, as the pool of buyers diminishes.

After being left for dead, foot traffic at malls is rebounding. Visits in 2023 were down only 2.3% compared to pre-pandemic levels, with open-air centers seeing the biggest rebound in activity. Luxury stores have made up 38% of all new store openings, as high-end shopping centers, often with new amenities, have seen strong performance numbers. As a result, mall-centric REITs Simon Property Group Inc. (SPG) and Macerich Co. (MAC) have seen their share price increase by 9.7% and 11.7% respectively in 2024 so far.

Blueground, a startup that provides furnished rentals, raised $45 million in funding. The company leases apartments and then furnishes and equips them for short-term renters. It has a worldwide inventory of short-term furnished rentals, with over 15,000 apartments in 17 countries, generating $560 million in gross revenue in 2023 with a 35% margin. Blueground’s current valuation was not disclosed, with the CEO only saying that it exceeded the $750 million valuation from its last funding round. While short-term rentals have been struggling since a pandemic boom, this raise clearly shows there is some optimism in that part of the industry.

The commercial real estate “urban doom loop” may still be coming. With the prices of office buildings falling in major urban centers like New York and San Francisco, there has been a concern that it will lead to a so-called “doom loop,” a cycle of lower downtown activity leading to lower tax revenue, leading to lower public services, leading to a population loss, leading to lower activity, and so on. With remote or hybrid work looking like a permanent fixture, cities may need to reimagine their downtowns to avoid this fate. Bloomberg’s Odd Lots podcast spoke with NYU professor Arpit Gupta about whether the “doom loop” is still a possibility in some of the biggest economic centers in the country.