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Welcome to the Daily Dose of Real Estate, your go-to source for the latest updates and insights into the real estate market. In today’s edition, we cover the latest trends in residential and commercial real estate, recent regulatory actions affecting mortgage lenders, and key market activities in the multifamily and CMBS/REIT sectors. Stay informed with our comprehensive analysis and key takeaways to help you navigate the ever-changing real estate landscape.

Key Takeaways

• Residential Market: National housing market experiences a slowdown in price growth with increasing inventory levels.
• Mortgage Rates: Falling for four consecutive months, with the 30-year mortgage rate averaging 6.38%.
• Regulatory Actions: CFPB orders NewDay USA to pay $2.25 million for deceptive practices targeting veterans and military families.
• Commercial Real Estate: Significant challenges with $1.5 trillion in debt maturing by the end of next year.
• Multifamily Market: Strong investor interest despite challenging conditions, with high absorption rates and strong demand drivers.
• CMBS/REIT Markets: CMBS delinquency rate rises to 5.44%, with significant contributions from the multifamily sector.

Residential Real Estate

• National Trends: According to ATTOM Data Solutions, the national housing market is experiencing a slowdown in price growth, with some regions seeing slight declines. Inventory levels are increasing, which is providing more options for buyers but also putting downward pressure on prices.
• Inventory Update: As of September 2024, active single-family inventory increased by 0.1% week-over-week but is down 6.9% year-over-year. Year-to-date, inventory is up 3.7% and up 25.6% from the seasonal bottom 21 weeks ago (Calculated Risk).
• Market Dynamics: The U.S. housing market is seeing a shift as more homeowners are “locked in” due to high interest rates, leading to a rise in tappable equity. This trend is expected to continue as homeowners seek to leverage their home equity to cover living expenses (Mortgage News Daily).

Mortgage Markets

• Interest Rates: Mortgage rates have been falling for four consecutive months, with the 30-year mortgage rate averaging 6.38% as of September 4, 2024, down from 6.40% on September 3, 2024 (Mortgage News Daily). Freddie Mac’s weekly survey also reported a 30-year fixed rate of 6.35% as of August 29, 2024 (Freddie Mac).
• Regulatory Actions: The Consumer Financial Protection Bureau (CFPB) has ordered NewDay USA to pay $2.25 million for illegally luring veterans and military families into cash-out refinance loans. The CFPB found that NewDay USA used deceptive marketing practices to target veterans and military families, leading them into costly refinance loans. This enforcement action underscores the CFPB’s commitment to protecting consumers from predatory lending practices (Consumer Financial Protection Bureau).

Commercial Real Estate Markets

• Debt Maturities: The commercial real estate market faces significant challenges with $1.5 trillion in debt maturing by the end of next year. Refinancing will be difficult due to higher interest rates and lower property valuations. About 40% of these maturities are in the multifamily sector, which has been hit hard by rising insurance costs and falling values (Fortune).
• Bank Exposure: Banks across the U.S. are under pressure due to high commercial real estate exposure. Many banks have CRE exposures greater than 300% of their total equity, which is considered excessive. This has led to stricter lending requirements and higher equity demands from borrowers (Largo Capital).

Multifamily Real Estate Markets

• Market Activity: A 15-unit multifamily property in Jersey City recently sold for $2.3 million, demonstrating strong investor interest despite challenging market conditions. The property, built in 1910, offers studio, one-bedroom, and two-bedroom units with parking on site. The buyer plans to renovate the apartments to capture the upside in below-market rents (ROI-NJ).
• Sector Performance: High absorption rates and strong demand drivers were cited in the most recent earnings reports from major apartment REITs. While rent growth in 2024 is looking very similar to 2023, continued signs of the enormity of underlying housing demand have made apartment investors increasingly confident in the multifamily market’s performance moving into 2025 and beyond (Gray Capital).

CMBS/REIT Markets

• CMBS Market: The CMBS delinquency rate inched up in August 2024, with the overall rate rising to 5.44%. The multifamily sector contributed the largest net change in delinquent dollars, with a total of $407.77 million. The multifamily delinquency rate rose 67 basis points, reaching 3.30% (Trepp).
• REIT Dispositions: American Hotel Income Properties REIT LP has announced the disposition of five hotel properties for $45.9 million. These sales are part of the company’s strategy to reduce leverage and address loan maturities. The proceeds will be used to pay off CMBS mortgage debt and term loans (GlobeNewswire).

This comprehensive analysis provides a snapshot of the current state of various real estate markets as of September 5, 2024. Please check us out for yourself at www.impactcapitoldc.com.