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White House Announcement on Housing

Plus, Grocery Store Investment Will Accelerate in the next 18 Months and 6 more RE insights


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A Quote

“Be who you are and say what you feel because those who mind don't matter, and those who matter don't mind.”

― Bernard M. Baruch

Today’s Rates

Macro Trends

White House Announcement on Housing link

  • The White House announced new actions to enhance housing affordability and transparency. These include boosting the supply of affordable homes and clarifying policies to protect renters, aiming to address the critical housing shortage.

  • Key initiatives include bolstering existing programs like the HOME Investment Partnership Program, creating a $225 million grant for manufactured housing communities, and increasing FHA Title 1 loan limits. These efforts are designed to preserve affordable housing and support vulnerable communities.

  • The administration is also focusing on increasing transparency in rental housing, including clarifying banned non-rent fees and promoting tenants' rights. New resources and policies are being introduced to protect renters, including military members, and improve the eviction process, aiming to ensure fairness and transparency in the rental market.

Real Estate Trends

Yardi Matrix Increases Its Rent Forecast for 2024 link

  • Yardi Matrix has updated its national rent forecast for 2024, now expecting a 1.8% increase, up from the initial 0.8%. This adjustment follows strong job gains and rising consumer confidence, suggesting a more optimistic economic outlook than previously anticipated.

  • Despite the upward revision in rent forecast, landlords might not see a significant gain in pricing power. A substantial influx of new supply, especially in large Sun Belt markets, is anticipated to keep rent growth in check, balancing out the potential for higher rents.

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Grocery Store Investment Should Accelerate Over Next 18 Months  link

  • 2023 saw a significant decline in grocery retail investment volume across all core real estate property sectors. JLL forecasts a positive turnaround in 2024.

  • Grocery retail properties are highlighted for their anchor tenant stability, favorable lease terms, and reliable cash flow. These factors make them an attractive investment option.

  • The shift in investment trends is based on JLL's analysis. They suggest a growing interest in grocery retail as a secure and profitable real estate investment.

Home-Mortgage Lending Near Two-Decade Low as Slump Continues Across U.S. During Fourth Quarter link

  • U.S. residential mortgage originations fell by 13.8% in Q4 2023, marking the tenth decline in the last 11 quarters. This downturn reflects a significant lending slump, with total activity down 67.7% from a peak in Q1 2021, amid high home prices and mortgage rates coupled with low home supply.

  • Refinance loans also experienced a downturn, dropping by 7.9% to 488,000 deals in the same quarter. This change comes despite a previous increase in refinance activity, highlighting the impact of rising interest rates and the ongoing challenges faced by the mortgage industry.

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Off Topic

Something I found Interesting

Older homeowners want to age in place but are averse to extracting equity link

  • Homeowners aged 60 and above significantly prefer aging in place, viewing their home equity as a financial safety net rather than a resource to tap into during retirement. In 2022, they constituted 29% of the adult population and 44% of homeowners, with projections suggesting they could represent nearly half of all homeowners in the next decade.

  • Fannie Mae's research, involving 1,141 older homeowners, reveals a strong confidence among this group regarding their retirement income, with 72% feeling secure. However, this confidence drops to 55% among economically disadvantaged older homeowners.

  • Despite the potential benefits, only 15% of older homeowners are open to using their home equity for additional retirement funds. This reluctance persists even among economically disadvantaged owners, indicating a widespread hesitance to employ home equity as a financial strategy in retirement.

Location Specific

Milwaukee Is An Emerging Industrial Market link

  • Milwaukee is leveraging its prime location and demographic advantages for industrial growth. The city has a population of approximately 2.6 million within a 50-mile radius, with a significant portion aged 18 to 34, indicating a robust workforce for the industrial sector.

  • Significant economic incentives have been deployed to bolster the industrial market. Over the past five years, Milwaukee metro has seen more than 60 economic incentive deals, valued at over $260 million, averaging $13,000 per new job, which is a strong indicator of the city's commitment to industrial development.

  • The industrial real estate market in Milwaukee is experiencing consistent growth with a notable increase in asking rents. The overall average asking rent in Milwaukee stood at $4.95 NNN per sq. ft. per year, marking a 15% increase since 2019, combined with a positive net absorption for 17 consecutive quarters, highlighting the market's resilience and attractiveness to investors and occupiers.

Apartment Construction Explodes in City Center Philadelphia link

  • Philadelphia's apartment development surged in 2023, with the city's urban core, Center City, leading in new supply. A record 9,197 units came online across the city, with Center City contributing 2,488 units, marking the highest level of new supply in over two decades.

  • The pace of construction is expected to continue rising, with about 13,400 units slated for delivery in 2024. Center City is projected to see nearly 12% growth in total inventory, significantly outpacing the expected annual inventory growth both in the broader market (3.3%) and across the U.S. (3.5%).

  • Despite the increase in new apartments, Center City Philadelphia recorded the weakest occupancy rate at 93.6% as of January 2024. However, it still managed a slight year-over-year price increase of 0.7%, demonstrating resilience amidst the burgeoning supply.

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Self Storage Market Experiences Continued Cool Down, with Double-Digit Drops in 6% of the Nation’s Largest Cities 

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  • National self storage rates saw a 3.2% decline in December 2023. This drop occurred across 79% of the country's largest 150 cities. The average street rate for a 10’x10’ unit was $122, indicating a cautious optimism in the sector despite the decrease from the pandemic-induced peak in 2022.

  • Hialeah, FL, experienced the most significant price drop, at 14.5% year-over-year. However, it's interesting to note that, in line with the national trend, the rate of price decrease has shown signs of slowing down. This deceleration suggests a stabilizing market, with Hialeah showing a month-over-month price increase of 4.4% in December.

  • Las Vegas, NV, San Antonio, TX, and Philadelphia, PA, led in new self storage inventory added in 2023. These additions reflect the ongoing demand for self storage spaces in growing urban areas. Las Vegas, for example, added over 522K square feet of new space, a significant 43% increase from the previous year.

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That's all, folks.



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