CRE Mortgage Delinquencies Increase in Q1

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Only a couple days left to invest in this smart home startup.

The ball-park isn’t the only place to look for home runs. Best Buy has a proven record of placing early bets on home-tech products that go on to dominate the market.

• Ring - acquired by Amazon for $1.2B

• Nest - acquired by Google for $3.2B

Early investors in these companies are sitting on some serious returns - but for the rest of us, there's still a chance to get in on the action with RYSE.

History tends to repeat itself, and RYSE's launch in +100 Best Buys points towards their company being the next home run.

Their Smart Shade tech is poised to dominate an industry growing at 50% annually, and there's still time to invest in their $1.50/share public offering.

The window to invest is closing - learn more here.

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

• 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.

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.

Apartment Revenue Growth Sizable in Cleveland link

• 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.

Zumper National Rent Analysis

U.S. Apartment Occupancy Demonstrates Resilience Amid Historic Supply 

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

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

Charted: Countries Offering Digital Nomad Visas

That's all, folks.

Cheers,

Vidit

P.S - Read past newsletters here