June 25th, 2024 - This Week in Real Estate

Brought to you by Percent, offering private credit investments to individual investors


What’s new in the world of Real Estate
  • New construction is slowing

  • Existing-home sales fall

  • The hottest rental markets

  • Prices rising at a slower pace

Plus: Where to buy a beach house, Oregon farmland values, banks bailing on CRE, and more.

Listing of the week: The “Ziggurat” building in Southern California.


Freddie Mac 30 Year Fixed
6.87% (-.08% weekly)
Dow Jones Real Estate Index
337.18 (+1.2% weekly)
330.03 (+1.0% weekly)
Zillow Observed Rent Index - May
$2,036 (+0.6% monthly)

as of market close on June 24


Survey Says: Investment Strategies Are Shifting Towards Private Credit

The stock market is burning red hot these days, which has many investors wondering: If a market correction happens, where can we ride out the storm? 

A Bloomberg survey1 reveals that many institutions now prefer private credit over bonds to hedge against economic downturns. 

Why? T. Rowe Price data2 suggests that allocating 10% to private credit historically reduces volatility and improves risk-adjusted returns

But this ‘safe haven’ asset class isn’t just for Blackstone, KKR, and Morgan Stanley–now, everyday investors can diversify with private credit using Percent. 

  • Low minimums: Start with $500

  • Shorter durations: Maturity in 6-36 months (average ~9 months)

  • Monthly cash flow: Most deals offer cash flow through monthly interest payments.

  • Return potential: Percent boasts a net return over 14% in the last 12 months as of Q1 2024

Smart Humans Podcast

In this episode of Smart Humans, Slava Rubin talks with Groundfloor CEO Brian Dally about capturing yield via real estate investing and predicting the US economy.

Market Updates

Homebuilder confidence is declining (NAHB)

The rate of new construction is down significantly in the past year. Overall housing starts fell by 5.5% in May and are down 19.3% year-over-year, while building permits are down 3.8% monthly and 9.5% year-over-year. Meanwhile, homebuilder sentiment is at its lowest level since December 2023, as the National Association of Home Builders/Wells Fargo Housing Market Index fell to 43. Reasons for the decline include high interest rates, increased construction costs and fewer prospective buyers. These factors suggest a future decline in supply, although current inventory levels are still increasing.

Existing-home sales continued to decline. According to a report from the National Association of Realtors (NAR), total sales were down 0.7% in May and 2.8% year-over-year. However, the monthly decline was entirely limited to the South, as sales in the Northeast, Midwest and West stayed flat. Total inventory is up 6.7% from April, and 18.5% year-over-year, an indication that either buyer demand is down or prices remain too high to generate sales. NAR Chief Economist Lawrence Yun predicts that “more inventory will help boost home sales and tame home price gains in the upcoming months.”


Miami remains the #1 most competitive rental market in the country. This ranking is based on RentCafe’s Rental Competitive Index (RCI), which looks at vacancy rates, days an apartment stays vacant, prospective renters, renewal rates, and the number of new apartments completed. Following Miami were the Chicago suburbs and North New Jersey, which are suburbs of New York City. This is a notable trend as potential homeowners who may be priced out of buying are now choosing to rent in the suburbs. The Twin Cities, Memphis and New York City ranked as the top three trending markets, seeing the biggest increases in RCI since last year. The top three small rental markets were Lehigh Valley, PA, Madison, WI and Providence, RI - notably, all college towns. Rental trends are important for potential investors to monitor when deciding which locations to target.

The rate of home price appreciation is slowing. While home prices are up 7.2% year-over-year, according to Redfin, the 0.3% gain in May represented the lowest gain since January 2023. The report points to the rise in supply and high mortgage rates as the main reasons for the slowing pace, but if mortgage rates fall in the second half the year, the rate of appreciation could start increasing again.

Listing of the Week

A property that caught our eye

The Chet Holifield Federal Building in the Orange County town of Laguna Niguel, CA, is better known as the “Ziggurat” building. Built in 1968, it sits on 89 acres of land and has over 1 million square feet of space. The General Services Administration is now auctioning off the property, but with no requirement to preserve the building. The current bid is $125.3 million, and the auction goes through July 31.


  • Beach house opportunities: The top places to buy a beach house, as measured by the potential short-term rental revenue divided by the price of the house, are Pawleys Island, SC, Michigan’s East Coast and a couple of Gulf Coast towns.

  • Oregon farmland: The per-acre value of farmland in Oregon grew by 29% between 2017 and 2022, and its total value grew at triple the national average. Shrinking supply and increased demand from non-farmer investors were largely responsible for the price increases.

  • Wall Street cutting CRE losses: Banks such as Deutsche Bank, CIBC and Goldman Sachs are selling non-performing mortgages, primarily on office buildings, as they reduce exposure to the struggling CRE sector.

  • Blackstone’s dry powder: The world’s largest real estate investor has $65 billion to deploy, and is increasingly looking at student housing, life sciences sites and data centers, and away from office and retail.

  • Multifamily issues: Persistently high interest rates and other expenses like rising insurance costs are making multifamily properties a riskier bet, particularly in areas that have rent control.

  • Watch out for wire fraud: A New Jersey couple lost $32,000 when they wired their down payment to a scammer, who was impersonating their attorney. Be vigilant and get verbal confirmations before sending any wire transfers during real estate closings.

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