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CRE Mortgage Delinquencies Increase in Q1
Charted: Countries Offering Digital Nomad Visas, Weekly Housing Trends and 5 more RE insights
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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'.
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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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That's all, folks.
Cheers,
Vidit
P.S - Read past newsletters here
Referral Milestones
Discount | Referrals Needed |
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3 MONTHS FREE on the Pro Plan | 1 |
30% off FOREVER on the Pro Plan | 5 |
50% off FOREVER on the Pro Plan | 10 |
75% off FOREVER on the Pro Plan | 15 |
100% off FOREVER on the Pro Plan | 25 |
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