America’s fastest growing housing markets

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Immigration levels are the highest in U.S. history link

• Over the past four years, U.S. immigration increased by 8 million, with 5 million being unauthorized, pushing the foreign-born population to 15.2%. This marks the highest percentage since the European migration boom of the 1850s-1900s.

• Major Sun Belt cities like Miami, El Paso, and Orlando report a significantly higher share of foreign-born residents, such as Miami at 42%. These cities are also projected to dominate the housing market growth in 2025, reflecting strong immigrant-driven economic activity.

• International interest in cities like El Paso, McAllen, and Miami is soaring, with El Paso seeing six times the international attention of the average U.S. metro. Despite immigrant growth, rising home prices are more closely tied to millennial buyers than immigration trends.

Retail rents outperform in prime business and vibrant mixed-use districts link

• Prime Business districts, with their mix of high-end office spaces and retail, had the highest retail rent growth. This trend highlights the resilience of areas with sustained office occupancy rates despite the challenges of remote work.

• Vibrant Mixed-Use districts saw slower rent growth compared to Prime Business districts but maintain a 74% rent premium. High existing rent levels in these districts partly explain this contrast.

• Non-Prime Business districts, often near suburban office parks, also exceeded market rent averages. Limited retail space availability and increased consumer spending closer to home drove this performance.

America’s fastest growing housing markets link

• Housing inventory in the U.S. increased by 16.7% from 2005 to 2023, with the South leading the growth. Texas stands out as the top performer in this housing boom.

• Rapid population growth and economic expansion in Southern states are key drivers of the housing market's surge. Cities like Austin, Dallas, and Houston are among the fastest-growing areas in the country.

• Demand for affordable housing and lower costs of living in these regions continues to attract buyers. This trend reflects a long-term shift from high-cost coastal markets to more affordable inland and southern cities.

New apartments fill up slower, returning to pre-pandemic speeds amid construction boom link

• Apartment absorption rates have slowed to 52% within three months of completion, down from 54% last quarter and 60% a year ago. This marks the second-lowest rate since mid-2020, reflecting increased supply.

• The Northeast leads in absorption rates at 67%, while the South lags at 51%. The West saw the steepest year-over-year drop, declining 14 percentage points to 58%.

• Completions of one- and two-bedroom apartments rose over 20%, leading to slower absorption for these categories. Meanwhile, 3+ bedroom apartments rented out the fastest, with a 63% absorption rate despite a 48.6% surge in new builds.

Boston surprisingly has an abundance of starter homes under $550K—along with these markets 

• Boston's metro area has 41% of homes priced under $550,000, above the national average of 38.9%. This makes it unexpectedly accessible for first-time buyers despite the high overall median list price of $949,000.

• Stabilizing mortgage rates around 6% are expected to encourage more homeowners to sell, easing inventory constraints. This could help alleviate the impact of the “lock-in” effect from pandemic-era interest rates below 3%.

• Cities like Charlotte, Grand Rapids, and Greenville also shine, with shares of starter homes above 39% and job growth rates well exceeding national averages. Knoxville and Kansas City feature lower locked-in rates, suggesting more inventory and strong appeal for younger buyers.

• click on the link to see the rest of the list.

Baltimore’s a case study for multifamily stability link

• Baltimore's multifamily market remains steady, with rents rising year-over-year alongside cities like D.C. and Richmond. Despite elevated new supply, renter demand has surged, with vacancy rates dropping by 80 basis points in 2024.

• Multifamily investment activity is rebounding, with 2024 business tracking 75% higher than 2023. Value-add properties have been more appealing than Class A units, and debt assumption deals are becoming increasingly common.

• Rising interest rates in 2022 and 2023 caused a shift from agency financing to life companies offering 60-65% LTV loans and other alternative funding sources. The Federal Reserve's recent rate cuts are expected to impact capital costs gradually.

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Vidit

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