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The city selling hundreds of vacant homes for $1

Plus, Top Tiny Home Hot Spots and 6 more Real Estate Insights

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A Quote

We underestimate the cumulative effect of work. Writing a page a day doesn't sound like much, but if you do it every day you'll write a book a year. That's the key: consistency.

― From Paul Graham’s Essay “How to do great work

Today’s Rates

Macro Trends

Economic Watch: Fed Holds Rates Steady; Still Expects Three Cuts This Year link

  • The Federal Reserve maintains the federal funds rate at 5.25% to 5.5% but plans for three quarter-percentage-point cuts by the end of the year. This decision reflects a balance between encouraging economic growth and managing inflation risks.

  • GDP growth forecast for 2024 has been revised up to 2.1% from 1.4%, with inflation expected to remain at 2.4% by year-end. The Fed's adjustments signal optimism about economic recovery and the effectiveness of upcoming monetary policy adjustments.

  • High interest rates and economic uncertainties will dampen real estate capital markets activity in early 2024. However, a projected rate cut in June could revitalize investment activity and leasing resilience as the year progresses, indicating a cautious yet optimistic outlook on economic stability and growth.

Real Estate Trends

More inventory is coming as homebuilders ramp up link

  • February saw a significant spike in new residential construction, especially in the single-family sector. The seasonally adjusted annual rate of privately owned housing starts was 1.521 million units, marking a 10.7% increase from the previous month and a 5.9% rise year over year.

  • Despite fewer builders cutting prices recently, there's potential for more pricing flexibility in the coming months. The slowdown in multifamily construction suggests a possible rent increase, as the pace of apartment construction may have reached its peak.

  • Building permits and housing completions also showed notable improvements in February. Permits for new homes rose to a seasonally adjusted annual rate of 1.518 million, and housing completions surged 19.7% to 1.729 million units, indicating a robust demand for new construction.

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Study Shows Buyers Want Smaller Homes link

  • Home buyers' preferences have shifted towards smaller homes compared to two decades ago. In 2003, the ideal home was 2,260 square feet, but by 2023, this preference dropped to 2,067 square feet, indicating a permanent shift in buyer desires for smaller living spaces.

  • The average size of new homes in the U.S. has been decreasing for nearly a decade. The trend began in 2015 when the average home size peaked at 2,689 square feet, dropping to the smallest in 13 years by 2023 at 2,411 square feet, demonstrating a broader trend towards downsizing.

  • The study, based on a national survey of over 3,000 recent and prospective home buyers, aims to provide a detailed analysis of buyer preferences. It considers various demographic factors such as generation, geographic location, and income, offering insights into the evolving landscape of residential construction and home buying trends.

Multifamily Permits Rise in Northeast, Midwest, Fall in South, West link

  • January saw a significant rise in multifamily permits in the Northeast by 64.5% and a moderate increase in the Midwest by 13.6%. This indicates a growing interest in multifamily developments in these regions.

  • In contrast, the South and West experienced sharp declines, with permit numbers falling by 32.5% and 27.9%, respectively. This downturn reflects regional shifts in housing demand or potential economic factors influencing these areas.

  • The data comes from the National Association of Homebuilders, highlighting the uneven geographic distribution of multifamily housing developments across the United States. This discrepancy suggests differing regional growth strategies or variances in economic conditions.

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Something I found Interesting

A $2B Bet on Demographics link

  • Harrison Street is focusing a $2 billion fund, with potential expansion to $4 billion, on the demographic trend of an aging population. The investment targets the growing 80-plus age range, emphasizing the need for senior housing.

  • Launched in 2022, Harrison Street Real Estate Partners Fund IX had surpassed $1 billion by September 2023. It aims for a $3 billion target, setting a record as the firm's largest fund, with a cap at $4 billion.

  • This strategic move underscores the increasing importance of demographic trends in investment decisions. It represents a significant shift towards specialized real estate markets, such as senior housing, highlighting a long-term vision for demographic-based investment strategies.

Location Specific

Baltimore wants to sell hundreds of vacant homes for $1 each link

  • Baltimore plans to revive neighborhoods by selling over 200 city-owned vacant properties for $1 each to residents willing to repair and inhabit them. This initiative aims to tackle the issues of crime and disrepair in areas with high poverty.

  • The city's decision is a nod to the "dollar house" program of the 1970s, prioritizing individual buyers over developers, who must pay $3,000 per home. Home repair grants of $50,000 are available, although a pre-approved construction loan is required.

  • Despite targeting a few hundred homes, Baltimore has close to 15,000 abandoned properties as of 2022. The current program could be a step towards addressing the larger issue of urban decay and revitalizing distressed neighborhoods

One Chart

Top Tiny Home Hot Spots

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That's all, folks.

Cheers,

Vidit

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