• Zero Flux
  • Posts
  • Nation’s hottest housing market

Nation’s hottest housing market

Plus, A Small Colorado Town Sees Apartment Volume Skyrocket and 5 more RE insights

Hey

If you have not received an email in a while, as a reminder you signed up on Zero Flux - A daily newsletter with 5-10 actionable real estate trends.

If you would like to unsubscribe, here is a quick link

Please note: I send an email most weekdays at 6:00 ET, so if you don’t see the email in your inbox in the future, please check your spam.

Let’s get to it—

A Quote

“Anyone who says failure is not an option has also ruled out innovation.”

— Seth Godin

Macro Trends

Today’s Rates

Load images to see this chart

Mortgage rates keep surging after strong inflation reading link

  • Mortgage rates have continued to climb, with the 30-year fixed-rate mortgage reaching an average of 6.90% as of February 22, up from 6.77% the previous week.

Real Estate Trends

Institutional buyers pumped the brakes on purchase activity in 2023 link

  • Contrary to viral social media claims, institutional buyers significantly reduced their home purchase activities in 2023, with the 10 largest buyers acquiring between 1,500 to 3,500 homes per month. This marked a notable decrease from previous years, debunking rumors of a 44% market takeover.

  • The threshold for ranking among the top 10 largest single-family rental (SFR) buyers dropped dramatically from over 5,000 acquisitions in 2021 to just 671 in 2023. This shift indicates a cooling off in institutional buying frenzy, further highlighted by Zillow's exit from the home-flipping business due to forecasting challenges.

  • Dallas emerged as the top market for institutional buyers in 2023, with nearly 3,000 homes purchased, followed by Atlanta, Houston, and Phoenix. Despite this targeted activity, overall institutional investment in residential properties decreased by 10.5% in the fourth quarter of 2023 compared to the same period in 2022, aligning with a broader slowdown in U.S. home purchases.

Enjoy the newsletter? 🙏 Please forward to a friend. It only takes 10 seconds. Writing this one took 4 hours. 🙂

Boston is the nation’s hottest housing market link

Load images to see this chart

  • Boston's housing market is currently the hottest in the nation, with an Altos Market Action Index score of 60.59, indicating a strong seller's market. The demand is so high that buyers are paying over asking prices, waiving home inspections, and doing whatever it takes to secure a property.

  • Inventory shortages are a significant challenge, with the number of active single-family listings in the Boston-Cambridge-Quincy, MA-NH metropolitan area drastically lower than pre-pandemic levels. This scarcity of available homes is driving up competition and prices, making it an extremely challenging market for buyers.

  • Despite high interest rates potentially locking sellers into their current homes, buyer demand remains strong, driven by life events such as births, marriages, and divorces. The market is slightly cooler than at the pandemic's peak, but multiple offer situations are still common, and homes in desirable locations are selling quickly.

If you are finding value, please consider helping the newsletter by becoming a paying subscriber

A subscription gets you:

✓ More issues per week

✓ Special reports on new housing studies

✓ Exclusive insights that are usually tucked behind paywalls (which I cover the costs for)

✓ Curated Top 10 lists

✓ The latest updates on prop-tech funding rounds

Off Topic

Load images to see this chart

Something I found Interesting

KKR Forecasts Drastic Increase in transactions link

  • KKR predicts a nearly one-third increase in commercial mortgage-backed securities (CMBS) issuance this year, signaling a robust recovery in commercial real estate financing. This forecast is based on the accumulation of capital by private equity funds, indicating a shift towards more aggressive investment strategies.

  • The firm's real estate credit pipeline surged from an average of $10 billion to $12 billion last year to $15 billion, reflecting a growing appetite for commercial real estate investments. This increase demonstrates KKR's confidence in the market and its readiness to capitalize on emerging opportunities.

  • A vacuum in commercial lending created by the retreat of regional banks has opened up opportunities for private investors like KKR and Brookfield. However, the reliance on private capital alone may not suffice to meet the market's lending needs, potentially leaving some landlords in distress.

Location Specific

Small Colorado Town Sees Apartment Volume Skyrocket link

Load images to see this chart

  • In 2023, Greeley, Colorado, witnessed a significant increase in apartment inventory, adding approximately 1,350 units and bringing the total to over 17,500 units. This expansion represents a 63% growth in the last decade, highlighting Greeley's rapid development in the housing sector.

  • With a population of about 110,000, Greeley is strategically located between Denver and Cheyenne, making it an attractive location for new residents and investments. The ongoing construction of an additional 2,500 units, expected to be completed in the next couple of years, indicates a continued bullish outlook on Greeley's housing market.

  • Despite the surge in apartment inventory, Greeley's average effective rent stands at $1,574, one of the lower rates in Colorado. This affordability, compared to nearby cities like Denver, Boulder, and Durango, where rents hover around $1,900, makes Greeley an appealing option for renters seeking value in a growing market.

An interesting trend

Crexi Google searches are on the rise

Load images to see this chart

Crexi is a commercial real estate (CRE) platform aiming to streamline and accelerate the transaction process. It is a comprehensive marketplace and technology platform for the commercial real estate industry, providing tools and services for buyers, sellers, and real estate professionals.

Want to sponsor the newsletter? Details here

Proptech

Virtual Staging AI helps Realtors digitally furnish rooms within seconds link

Load images to see this image

  • Virtual Staging AI, emerging from Harvard Innovation Labs, has revolutionized the real estate staging process by enabling Realtors to digitally furnish empty rooms in seconds. The startup has quickly grown to 4,500 monthly paid subscribers and generated $1 million in ARR within 10 months, showcasing the high demand and potential impact of AI in real estate.

  • The platform's AI technology can accurately analyze the 3D structure of a room, allowing Realtors to add or replace furniture based on realistic interpretations of the space. This capability ensures that the property is represented accurately, avoiding common issues with other AI image generators that might misrepresent room features.

  • With plans starting at $12 per month for six photos, Virtual Staging AI offers an affordable and efficient alternative to traditional staging and professional digital staging services. This innovation is particularly appealing given the real estate industry's demographic, with a median agent age of 60, highlighting the need for user-friendly technological solutions.

One Chart

Load images to see this chart

Subscribe to Pro to read the rest.

Become a paying subscriber of Pro to get access to this post and other subscriber-only content.

Already a paying subscriber? Sign In

A subscription gets you:
Content delivered 5-6 days a week
Exclusive insights that are usually tucked behind paywalls (which I cover the costs for)
Curated Top 10 lists + Special reports on new housing studies
The latest updates on prop-tech funding rounds

Join the conversation

or to participate.