The U.S. Housing Market Gained $2 Trillion in Value Over the Last Year

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

I'll repeat something you might consider tattooing on your forehead: What we fear doing most is usually what we most need to do - Timothy Ferriss

Today’s Rates

Homebuyer mortgage demand down for 5th consecutive week link

• Homebuyer demand for purchase loans has declined for the fifth consecutive week, with mortgage rates remaining above 7 percent. This trend reflects a 5 percent week-over-week decrease in purchase loan requests and a 12 percent drop from the previous year.

• Applications to buy new homes saw a 19 percent increase in January from the previous year, suggesting a shift towards new construction due to the existing home shortage. This shift is occurring despite the overall sluggish demand in the housing market.

• Mortgage rates have been on the rise, with 30-year fixed-rate mortgages reaching 6.93 percent, up 43 basis points from a recent low in February. This increase in rates is contributing to the ongoing decline in homebuyer mortgage demand.

The U.S. Housing Market Gained $2 Trillion in Value Over the Last Year link

• The U.S. housing market experienced a significant value increase, gaining $2.4 trillion over the last year, bringing its total value to $47.5 trillion. This growth represents a 5.3% increase from the previous year, marking the largest gain in 11 months.

• Affordable metros in the East Coast and Midwest saw home value gains of over 10%, while more expensive metros and pandemic boomtowns witnessed declines. This trend highlights the varying impact of economic factors across different regions.

• Elevated mortgage rates and affordability challenges have slowed housing demand, yet home values continue to rise due to a shortage of homes for sale. Many homeowners are reluctant to sell because they secured low mortgage rates in recent years, contributing to the supply constraint.

• New construction has slightly alleviated the housing shortage, contributing to the overall gain in home value. Approximately 96 million homes were included in Redfin's analysis, up from 95 million in December 2022.

• The average U.S. home was valued at $495,183 as of December, up from $474,740 a year earlier. However, not all homeowners have seen their property values increase, with average home values peaking in the summers of 2022 and 2023 before experiencing declines.

• Newark, NJ, New Haven, CT, and Camden, NJ, led the metros with the largest year-over-year increases in home value. These areas are becoming more attractive due to their affordability compared to nearby major cities like New York.

• Urban home values grew by 3.6% year over year, while suburban and rural areas saw increases of 5.6% and 6.3%, respectively. The shift towards remote work and the search for affordability have driven growth outside of urban centers.

Restaurants Sales Projected to Rise 6% link

• The food and drink industry, a significant segment of net lease, is expected to see a 6% increase in restaurant sales. This projection is based on a review of industry trends from 2023 by Citizens, a banking company with expertise in the restaurant sector.

• Increased menu prices and strong demand are the primary drivers behind the projected sales growth. This trend reflects the industry's resilience and adaptability in response to economic challenges.

Commercial Foreclosures Increasing link

• Commercial foreclosures have seen a significant rise, escalating from 141 in May 2020 to 635 in January 2024. This sharp increase reflects a 17% jump from January and a 97% surge from the previous year.

• California, New York, and Texas are leading the states with the highest number of commercial foreclosures as of January 2024. This trend indicates a nationwide challenge in the commercial real estate sector.

• The increase in commercial foreclosures is not just a rebound to pre-pandemic levels but also highlights the sector's ongoing adjustments. These adjustments are in response to changing business practices and consumer behaviors

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

Bulk Warehouse Space Sees Significant Drop in Occupancy link

• Occupancy rates for bulk industrial spaces dedicated to warehouse and distribution plummeted nearly by half in 2023 compared to 2022. This decline was anticipated following two years of exceptionally high and unsustainable demand.

• Vacancies increased across all regions of the U.S. and nearly every market, influenced by 607 million square feet of new development. Remarkably, about 85% of this new development was speculative.

• Some emerging markets saw vacancy rates surge by several hundred basis points over the year, with figures nearing or surpassing 10%. The report suggests it might take a while for these rates to stabilize back to historical norms

The State of Global Fertility

Charted: U.S. Median House Prices vs. Income

Mapped: Inflation Projections by Country, in 2024

That's all, folks.

Cheers,

Vidit

P.S - What would you like to see improved in the newsletter? I’ll reply 🙂