I would like to share a few headlines and brief analysis in Real Estate and [Housing] Development industry from the past few days. I hope you find them insightful:
- White House put forth a series of measures aimed at increasing the supply of housing units across the country in late May. One of these measures supports for the production and availability of Manufactured housing as HUD is planning to make it easier to finance new units. The plan also includes incentives to state and local governments for land use and zoning reform. The rising demand for affordable housing has also put pressure on the mobile home market. Nationally, the average sales price of manufactured homes has risen nearly 50% during the pandemic.
- Lawmakers move to ease hotel conversions. A new law passed by the state legislature last week removes some of the regulatory obstacles to conversion of distressed hotels in New York City to affordable housing.
- New York City housing problem is not going anywhere. While The median rent for Manhattan apartments reached a record $4,000 in May, construction of new units (Affordable and market rate) is becoming more challenging. Also watch The Real Deal Amir Korangi's interview with Extell Development founder Gary Barnett.
- Listen to MG Housing Strategies' principals Bob Moss and David Gasson conversation with Beth Mullen, CohnReznick’s Affordable Housing practice leader, to discuss critical legislative updates for the LIHTC industry.
- Rising home prices along with mortgage rates are shifting demand from owning to renting. Now, owning a home costs $839 more per month than renting.
- Listen to Leading Voices podcast interview with Majora Carter discussing revitalizing communities through talent retention.
- Rising interest rates have been slowing sales and mortgage demand in the housing market, but they may be poised to have an even bigger impact on commercial real estate. Commercial sales were down 16% in April compared with the same month a year ago with hotels, office buildings, senior housing and industrial properties recorded big drops in sales last month. In this climate with strong demand and constrained supply, keep a few strategic factors in mind when developing.
- Commercial real estate continues to provide a hedge against inflation, a trend that has been borne out over multiple decades during periods when inflation has exceeded 4%.
- As remote work becomes a more permanent fixture, the values of office buildings are headed south. In New York City alone, office values will drop 28% by 2029, representing value destruction of $49B while we are witnessing a surge in distressed office properties sales in Downtown Chicago.
- Watch Marcus & Millichap video for an update on the state of the economy, inflation, interest rates, and the outlooks for each property types.
- Read about how some real estate startup companies are competing to sell buyers on a fractional lifestyle through a shared ownership structure while some other startups are forming the next frontier for proptech companies.
- Real estate industry accounted for 16.9% of GDP in 2021. "According to estimates from NAR, nationwide, each home sale at the median generated roughly $113,000 of economic impact in 2021. Commissions, fees, moving expenses, and other income to real estate industries was responsible for an estimated $31,742 of the total impact, with the rest comprised of $5,000 from expenditures related to the home purchase, $17,636 from a multiplier of housing related expenditures, and $58,781 from new home construction". Also the World Bank has lowered its forecast for global economic growth this year to 2.9% from 4.1%.
- And finally if you are looking for inspiration, check out Netflix's recently released movie "Hustle" starring Adam Sandler.
