States With the Steepest ‘Hidden Fees’ for Home Buyers

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.

Unsubscribe below if you would like to stop receiving future emails

He will win who knows when to fight and when not to fight― Sun Tzu

Get smarter on AI in 5 minutes a day.

• The world’s largest AI newsletter, read by over 600,000 AI professionals.

• One free email every morning on what’s new in AI and gives you “the rundown” of the most important developments.

• Allowing for readers to keep up with the insane pace of AI and why it actually matters

Subscribe with one click.

High Supply Submarkets Log Deepest Rent Cuts in Class B and C Stock link

• In areas with high apartment supply, Class B and C apartments faced the most significant rent reductions in the year-ending first quarter. Class B rents dropped by 3.2%, while Class C saw a decline of 4.7%.

• Contrarily, Class A apartments generally saw rent increases, except in extremely high-supply areas where the increases were up to 10% of the existing stock. Even there, the reduction was moderate at around 2%.

• In submarkets with minimal new supply, accounting for less than 1% of existing inventory, Class A rents grew by 2.6%. Other classes in these areas also experienced growth, albeit at a more modest pace.

Demand For Vacation-Home Mortgages Fell 40% in 2023 link

• Vacation home mortgage demand plummeted by 40% in 2023, significantly outpacing the decline in primary home mortgages, which fell by 20%. This sharp drop reflects the rising cost of housing and increased loan fees for second homes.

• The typical profile of a vacation-home mortgage borrower in 2023 includes high earners, predominantly white, and largely from the Gen X demographic. This trend underscores the financial divide in access to second-home ownership.

• Austin, TX, and the Bay Area experienced the steepest declines in second-home mortgage originations, with drops of 62.5% and 57.6% respectively. These figures highlight the shifting dynamics in traditionally hot markets, influenced by soaring prices and changing workplace policies.

New here? Join the newsletter (it's free).

Yardi Says Steady Absorption is Boosting Multifamily Rents 

• Multifamily rents in the U.S. continue to rise, reaching an average of $1,725 in April 2024, driven by robust demand and strong market dynamics. This represents a steady increase, with two consecutive months of rent growth.

• Strong job market conditions and high rates of household formation, fueled by immigration and migration to the South and West, underpin this demand. These factors contribute to the sustained interest in apartment rentals.

• Although the rent growth rate is moderate, the overall market signals are positive. This trend is bolstered by ongoing demand that does not show signs of slowing down.

States With the Steepest ‘Hidden Fees’ for Home Buyers link

• Home buyers face varied "hidden fees" across the U.S., with the highest averages in Hawaii ($17,966) and lowest in West Virginia and Arkansas (around $5,000). These fees include mortgage origination, insurance, and more, heavily influenced by local regulations and property prices.

• While Delaware tops the list for the highest fees as a percentage of home price at 3.75%, Colorado offers the most affordable fees at just 1.95%. This highlights a significant disparity in how different states manage real estate transaction costs.

• The study by Frontdoor underlines the importance of awareness about these fees, as they can significantly impact the overall affordability of homeownership. It also emphasizes the need for home buyers to prepare for these costs in their budgeting.

• The following are the 10 states that pay the highest “hidden fees,” according to Frontdoor:

  • Hawaii: $17,966

  • California: $14,964

  • Maryland: $14,614

  • Delaware: $13,935

  • Vermont: $13,720

  • New Hampshire: $13,481

  • Massachusetts: $12,536

  • New Jersey: $12,363

  • New York: $12,304

  • Washington: $11,401

Once-Strong Apartment Fundamentals in Portland Slump Among Nation’s Weakest link

• Portland's apartment market struggles with a significant downturn, recording one of the lowest occupancy rates and rent growth in the U.S. The city's apartment occupancy dipped below 94% for the first time in over a decade, with rent reductions following due to decreased demand.

• Job market challenges intensify, as Portland's employment growth lags behind national averages, contracting by 1.8% year-over-year as of March 2024. This slow job recovery contributes to a weaker demand for apartments, overshadowing previous growth.

• Despite increasing new apartment constructions, Portland faces demographic headwinds, with a notable population decline impacting the market. The city continues to see new units being added, but the current supply outpaces demand, leading to increased vacancies and pressure on rent prices.

Emerging Self Storage Hot Spots: New England Joins the West and Midwest in Offering the Greatest Growth Opportunities link

The multifamily market is a tale of two supply scenarios, shows a new special report from Yardi® Matrix link

CoreLogic Says Northeast Continues to Lead US for Annual Home Price Gains 

Visualized: Which Jobs Are Most at Risk?

That's all, folks.

Cheers,

Vidit

P.S - Read past newsletters here

ay