Inventory Is 19% Higher Than a Year Ago

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“If more information was the answer, then we’d all be billionaires with perfect abs.”

– Derek Sivers

Inventory Is 19% Higher Than a Year Ago link

• The housing market inventory has surged by 19% year-over-year, highlighting a significant increase in unsold homes. This growth raises questions about the market's capacity to absorb this inventory without impacting home prices negatively.

• As mortgage rates remain elevated, the demand for homes has lessened, contributing to the inventory buildup. Interestingly, the current inventory level is still 107% higher than two years ago, during the end of the pandemic buying frenzy, suggesting a prolonged period of market adjustment might be required to return to pre-pandemic inventory levels.

• The volume of new listings has slightly increased by 5.7% compared to the same week a year ago, indicating a slow growth in seller activity. This trend suggests that while there is a slight increase in inventory, it's not due to a sudden influx of sellers but rather to decreased demand, potentially moderating the impact on home prices for now.

Hotel Investors Tired of Waiting for Distress, Move to Well-Performing Assets  link

• Hotel investors are shifting focus to well-performing assets, driven by prolonged waiting for distressed opportunities. The expected market of distressed hotels has not materialized as anticipated, leading investors to adjust their strategies.

• The increase in borrowing costs is complicating deal-making within the hotel investment sector. Higher financing rates are affecting the feasibility of new acquisitions, pushing investors towards more stable, high-performing assets despite the less favorable financing conditions.

More than 90% of housing markets overvalued, Fitch says link

• Over 90% of U.S. housing markets are overvalued, with home prices rising at an unsustainable pace. On average, prices were overvalued by 11.1% across the country, up from 9.4% in the previous quarter.

• Supply is slowly returning, yet it's not enough to meet the high demand and improve affordability. Interest rates, higher than recent norms, further complicate the path toward greater affordability.

• Fitch forecasts national home price appreciation to slow to under 3% this year, after a 5.5% rise by the end of 2023. This is due to a mix of affordability challenges and a tight supply of homes, with the latter being a dominant factor for sustained positive growth.

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Northern Virginia Sees Record Demand for Data Centers link

• Northern Virginia continues to dominate the U.S. data center market, achieving a fourth consecutive year of record demand. The region reported 1.6 gigawatts (GW) of transaction volume with 581 megawatts (MW) of net absorption last year, setting a new high-water mark.

• Data center rents in Northern Virginia are surging, reaching up to $300 per square foot, which is over 20% above the highs of 2022. This increase in rent is indicative of the burgeoning demand for data center services in the area.

• The explosion in generative AI, requiring unprecedented amounts of power, is driving this increased demand for data centers. Companies like Microsoft, Facebook, and Google are investing heavily in AI, further exacerbating the need for more data center capacity.

What are America’s Most Disappointing Cars in 2024?

Whole Foods to Launch Small Format Stores, Starting in NYC link

• Whole Foods plans to open mini-stores in NYC, a significant shift towards smaller, more urban-focused retail spaces. These stores, ranging from 7,000 to 14,000 square feet, aim to offer a curated selection of meals, snacks, and everyday staples.

• The move is part of a broader retail trend towards micro-stores, designed to cater to the fast-paced lifestyle of city dwellers. While some retailers have struggled with small format stores, Whole Foods' strategy focuses on convenience and proximity to customers, betting on the growing consumer preference for quick and easy shopping experiences.

• This strategy highlights the evolving landscape of grocery retail, where traditional large-format stores are being complemented or even replaced by smaller, more accessible locations. Whole Foods, under Amazon's ownership, continues to innovate, aiming for growth through adaptation to consumer habits and urban living requirements.

• The initiative reflects an industry-wide attempt to boost margins through smaller retail footprints. Despite mixed success in the sector, Whole Foods is leveraging Amazon's resources and market insights to make its small format stores a key component of its expansion strategy.

U.S. Cap Rate Survey BY CRE (H2 2023) - Interesting insights.

Top 10 Airbnb Investment Markets in the US 

Insights from National Rent Report by Zumper

That's all, folks.

Cheers,

Vidit

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