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CRE Mortgage Delinquencies Increase in Q1

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Latest Rates

Loan Type

Rate

Daily Change

Wkly Change

52-Wk Low/High

30 Yr. Fixed

7.03%

+0.00%

-0.26%

6.61%/8.03%

15 Yr. Fixed

6.55%

+0.00%

-0.21%

5.95%/7.35%

30 Yr. FHA

6.54%

-0.01%

-0.28%

6.00%/7.44%

30 Yr. Jumbo

7.30%

-0.01%

-0.22%

6.66%/8.09%

7/6 SOFR ARM

7.14%

-0.01%

-0.24%

6.11%/7.55%

30 Yr. VA

6.55%

-0.02%

-0.29%

6.02%/7.46%

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Real Estate Trends

Weekly Housing Trends —Data for Week Ending June 1, 2024 link

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  • Mortgage rates have climbed back over 7%, deterring many buyers who are waiting for better affordability. This rise in rates, alongside slightly higher home prices compared to last year, continues to make housing expensive.

  • The inventory of homes for sale increased by 35.2% from last year, with a significant 46.6% boost in affordable homes. This increase is largely concentrated in the South, which has more smaller, affordable homes available.

  • Despite improvements, inventory levels in the U.S. and all regions remain 20% to 60% below pre-pandemic levels. This suggests that the market still needs time to regain balance.

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CRE Mortgage Delinquencies Increase in Q1 link

  • Delinquency rates rose for all lender types except Fannie Mae in Q1 2024. Banks and thrifts saw a 0.09 percentage point increase to 1.03%, while life company portfolios rose by 0.16 percentage points to 0.52%.

  • Freddie Mac delinquencies increased by 0.06 percentage points to 0.34%, while CMBS delinquencies went up by 0.05 percentage points to 4.35%. Fannie Mae was the only lender type to see a decline, dropping 0.02 percentage points to 0.44%.

  • Higher interest rates, uncertain property values, and questions about some properties’ fundamentals are challenging the market. The rise in bank delinquencies was driven by non-multifamily loans, particularly office spaces, being classified as 'nonaccrual'.

Emerging Industrial Markets: San Luis Potosi, Mexico link

  • San Luis Potosi (SLP) benefits from large land reserves, competitive costs of land and labor, and a strategic location that connects Mexico’s Central and Northeast regions. The local-warehouse labor force is expected to grow by 6% by 2034, with an average salary of $3.65 per hour.

  • SLP's industrial market is strong, with a Class A stock of 27.6 million sq. ft. and a Q1 2024 vacancy rate of 2.5%. Average asking rents grew by 29% year-over-year, reaching $6.07 per sq. ft./year, while 64% of construction activity was pre-leased.

  • The automotive sector is a key driver of SLP's economy, accounting for 71% of the total industrial activity in 2023. BMW has begun construction of a new 861,000 sq. ft. battery module production center, aiming to start production of fully electric vehicles and high voltage batteries by 2027.

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Location Specific

Apartment Revenue Growth Sizable in Cleveland link

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  • Cleveland's apartment revenues rose by 2.4% in the year-ending April, outperforming the national trend which saw a 0.4% decline. This growth is notable despite net move-outs and declining occupancy rates in the city.

  • Effective asking rents in Cleveland grew by 3.2% over the past year, the second-best performance among the largest 50 U.S. apartment markets. This rent growth helped bolster revenue despite occupancy softening to 94.6%, down 90 basis points year-over-year.

  • Cleveland's revenue growth was supported by modest apartment supply, adding about 1,300 units in the past year. This stability, along with a positive absorption of 250 units in the first quarter, indicates a market turnaround heading into prime leasing season.

Pro Member Only Content Below

Zumper National Rent Analysis

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U.S. Apartment Occupancy Demonstrates Resilience Amid Historic Supply 

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What will the pullback in multifamily construction permitting mean for the rental market? 

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Bought a Home Before the Pandemic? (Break Out the Champagne)

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Off Topic

Charted: Countries Offering Digital Nomad Visas

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Cheers,

Vidit

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