Lenders Showing Greater Urgency to Close Multifamily Deals

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“Once you realize how amazing you are, you will find it hard to keep the company of those who do not.”

― Unknown

Weekly Housing Trends Summary link

• The housing market shows more options for buyers as new listings increased by 14.9% from last year. This marks the 22nd consecutive week of newly listed homes surpassing levels from the year before, hinting at a hopeful spring season for homebuyers seeking fresh options.

• Home prices remained stable with the median listing price showing no year-over-year change for the second consecutive week. Despite a flat price trend, the inventory of homes seeing price reductions has increased, suggesting a potential ease in the price growth pace.

• The active inventory of for-sale homes is 25.5% above last year's levels, yet homes are selling slightly faster, spending one day less on the market than the previous year. This indicates a dynamic market where, despite the increased inventory, demand remains strong enough to keep sales brisk.

Lenders Show Greater Urgency to Close Multifamily Deals link

• The multifamily investment market is rebounding in 2024, with lenders increasingly eager to finalize deals. After a challenging year marked by a buyer-seller pricing gap and volatile interest rates, the market sees heightened enthusiasm from lenders to work with borrowers.

• Interest rates and cap rates are moving towards an equilibrium, bridging the gap between buyer and seller expectations. This shift is essential for facilitating transactions, despite interest rates remaining significantly higher than pre-pandemic levels.

• Lenders are adopting a more urgent stance to close deals, fueled by a renewed appetite and alignment between market participants. Innovative financing strategies and a clear understanding of investment objectives are crucial for borrowers to navigate this optimistic capital market landscape.

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How 7% Rates Are Keeping the Housing Market in Check link

• High mortgage rates are reshaping homeowner behaviors and market dynamics. As rates remain at 7%, a significant shift is seen with the share of borrowers having rates below 6% dropping from 92% to approximately 85%, indicating a loosening of the peak lock-in effect observed in early 2022.

• The balance between new home constructions and existing home sales is delicate, influenced by mortgage rates. Elevated new home inventories, now at 31% of all unsold single-family homes, present a risk if resale inventory increases, potentially eroding builders' market advantages.

• Economic resilience complicates the Federal Reserve's efforts to control inflation, suggesting sustained higher interest rates. Despite strong job growth and positive consumer sentiment, the anticipation of higher inflation, evidenced by 32% of small businesses planning to raise prices, supports the Fed's stance on maintaining higher rates for an extended period.

Office Vacancy Rate Still Going Up in San Francisco link

• San Francisco's office market struggles continue with a vacancy rate hitting 36.6% in Q1 2024, up from 35.6% in Q4 2023. This increase signals ongoing challenges in the 88M SF office sector, despite previous hopes for stabilization.

• Total availability in San Francisco's office market, including occupied spaces, marginally increased to 38.7% from 38.5%. This slight uptick suggests a persistent lack of demand amidst a considerable supply of office spaces.

• The report from CBRE indicates that the market has not yet found its bottom, with vacancy rates climbing higher than anticipated. The rise suggests that the city's office sector may face more hurdles before seeing improvement, impacting landlords and investors alike.

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That's all, folks.

Cheers,

Vidit

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