Top Compromises Buyers Will Make to Reach Homeownership

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CRE Transaction Numbers May Be Seeing Some Recovery link

• CRE transaction volumes show signs of rebounding with a less severe year-over-year decline. The decline was -8.0% in Q1 2024, an improvement from -18.4% in the previous quarter.

• Large transactions in Q4 2023 skewed early 2024 figures. Notably, transactions like the $2 billion sale of 250 Vesey St. and the $1.5 billion sale of Two Manhattan West dominated Q4.

• A full recovery to pre-pandemic levels hinges on lower interest rates. The Federal Reserve's policies will be crucial to sustaining this recovery trend.

Many Secondary Markets Experiencing Increase in Apartment Asking Rates link

• Despite economic uncertainties, secondary markets are seeing a rise in apartment rents, bucking the trend of falling rates in major cities. This shift indicates a growing interest in smaller, potentially more affordable urban areas.

• Many secondary markets in the Midwest, Northeast and South are experiencing increases in asking rents. Rent rises over 2% have occurred in Albany, NY, Milwaukee, Worcester-Springfield, Louisville, Cincinnati, Des Moines, Richmond, Madison, Portland, ME, Lafayette OH, Youngstown, Providence, Northern Virginia and Scranton-Wiles-Barre. Outside the mainland, Honolulu “is a serious positive outlier at 5.7% growth year-to-date.”

• The Yardi Matrix report predicts a possible downturn in the multifamily sector but suggests that a Fed rate cut by year-end could alleviate pressures. This could provide a more favorable environment for continued rent increases in these markets.

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Affordability Pyramid Shows 66.6 Million Households Cannot Buy a $250,000 Home link

• Nearly 67 million U.S. households cannot afford a $250,000 home under current economic conditions. This figure illustrates the vast gap in housing affordability facing a significant portion of the population.

• The housing affordability pyramid breaks down the income levels required for different home prices. For example, a household needs a minimum income of $45,975 to afford a $150,000 home at a 6.5% mortgage rate.

• Only about 3 million households can afford homes priced over $1.6 million, highlighting a stark disparity in housing accessibility. Most Americans are concentrated at the lower, more affordable tiers of the housing market.

Mixed Signals for Peak Home Buying Season link

• Home inventory continues to rise, especially in the South, reflecting varied market dynamics as some areas see acceleration while others slow down. Current U.S. inventory stands at 568,000 homes, with a significant annual increase of 35%.

• Despite a 7% mortgage rate, home sales volumes slightly exceed those of last year, though the increase is marginal, suggesting many potential buyers remain cautious.

• Real-time data indicates weaker than reported home price growth, with some measures showing stagnant year-over-year prices. Future expectations suggest a decrease in home price headlines in the latter half of the year.

Top Compromises Buyers Will Make to Reach Homeownership

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That's all, folks.

Cheers,

Vidit

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