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Archives for August 2021

Housing Market Research Brief | August 2021

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Easing Lumber Prices Allow Projects to Push Forward; Seller Activity Increases

  • Completions climb to a three-month high. Builders finalized more single-family and multifamily housing units combined in July than in either of the previous two months.
  • Inadequate supply pace sustains tight apartment vacancy. Nearly 1.4 million new households are projected to form in the U.S. this year as a result of both the aging millennial cohort and a broad-based economic improvement.
  • More homes being sold a boon for some property types. Existing home sales jumped for the second straight month in July, while listings surpassed the 1 million threshold for the first time this year.

Developing Trends

  • Widening disconnect between listings and the buyer pool. The number of new homes available for purchase, more than 90 percent of which are not yet built, rose for the fourth straight month in July to up 26 percent year over year.
  • Revived trade may start to lessen material costs. More border openings and greater efficiencies in global trade are starting to resolve the backlog of building materials that resulted in rapid cost appreciation.

Sources: Marcus & Millichap Research Services; Capital Economics; Freddie Mac; Moody’s Analytics; Mortgage Bankers Association; National Association of Home Builders; National Association of Realtors; RealPage, Inc.; U.S. Bureau of Labor Statistics; U.S. Census Bureau; Wells Fargo

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Q3 2021 Multifamily Market Report | Chicago Metro Area

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Fundamentals Return to Pre-Pandemic Levels, Boosting Investment and Out-of-State Interest

  • Positive absorption resurfaces across all submarkets. Chicago recorded a recent spike in apartment demand that restored vacancy and rent metrics to levels last seen before the health crisis.
  • Epicenter of inventory growth shifts. For the first time since 2004, suburban deliveries exceed urban completions.

Investment Highlights

  • Chicago notched an 8 percent rise in deal flow over the trailing-12- month period ended in June, one of the largest gains among Midwest metros.
  • Average pricing fell 2 percent during the past year to $155,500 per unit, a figure that trailed the national mean by 9 percent.
  • Urban submarkets have accounted for two-thirds of all apartment transactions since last July, with trades most concentrated in North and South Lakefront neighborhoods.
  • Strong renter demand for suburban units has drawn more out-of-state investors to locales outside the CBD including North and Northwest Cook County.

* Forecast; ** Through 2Q
Sources: CoStar Group, Inc.; Real Capital Analytics; RealPage, Inc.

Download the Full Report Here

The information contained in this report was obtained from sources deemed to be reliable. Every effort was made to obtain accurate and complete information; however, no representation, warranty or guarantee, express or implied, may be made as to the accuracy or reliability of the information contained herein. Note: Metro-level employment growth is calculated based on the last month of the quarter/year. Sales data includes transactions sold for $1 million or greater unless otherwise noted. This is not intended to be a forecast of future events and this is not a guaranty regarding a future event. This is not intended to provide specific investment advice and should not be considered as investment advice. Sources: Marcus & Millichap Research Services; Bureau of Labor Statistics; CoStar Group, Inc.; Real Capital Analytics © Marcus & Millichap 2021 | www.MarcusMillichap.com

Q3 2021 Multifamily Market Report | Orlando Metro Area

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Corporate Expansions Bolster Renter Demand; Construction Starts Tapering

  • Local employment and household growth support rental demand. Employment losses in the leisure and hospitality sector due to the pandemic negatively affected the performance of multifamily properties across the metro in 2020.
  • Deliveries approach record but may slow over the next few years. Orlando has consistently posted some of the strongest population and job growth figures in the nation, which prompted developers to build at a pace the metro has not seen in two decades.

Investment Highlights

  • Following a period of uncertainty, investment activity escalated in Orlando during the fourth quarter of 2020 and has since further accelerated.
  • The increase in Class A transactions over the last four quarters contributed to the average sale price per unit in Orlando climbing 2.2 percent to $158,400, while the average cap rate fell 20 basis points to 5.2 percent.
  • Increased competition for assets and compressing cap rates drew investor interest farther away from the CBD.

* Forecast; ** Through 2Q
Sources: CoStar Group, Inc.; Real Capital Analytics; RealPage, Inc.

Download the Full Report Here

The information contained in this report was obtained from sources deemed to be reliable. Every effort was made to obtain accurate and complete information; however, no representation, warranty or guarantee, express or implied, may be made as to the accuracy or reliability of the information contained herein. Note: Metro-level employment growth is calculated based on the last month of the quarter/year. Sales data includes transactions sold for $1 million or greater unless otherwise noted. This is not intended to be a forecast of future events and this is not a guaranty regarding a future event. This is not intended to provide specific investment advice and should not be considered as investment advice. Sources: Marcus & Millichap Research Services; Bureau of Labor Statistics; CoStar Group, Inc.; Real Capital Analytics © Marcus & Millichap 2021 | www.MarcusMillichap.com

Q3 2021 Multifamily Market Report | Dallas-Forth Worth Metro Area

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Dallas Urban Core Posts Strongest Absorption in More Than 20 Years

  • Young adult migration stimulates downtown demand. Many firms are expanding their workforce in the Metroplex, luring young adults to accept jobs and relocate.
  • Positioning of development bodes well for absorption. Dallas-Fort Worth led all U.S. markets over the past year ended in June with the addition of nearly 27,700 units.

Investment Highlights

  • Deal flow has been consistently strong through the health crisis, as more out-of-state investors set their sights on Dallas-Fort Worth.
  • Class A properties traded more frequently during the past four quarters than in the previous year.
  • The suburb of Denton has been attracting more private buyers seeking lower-tier complexes.

* Forecast; ** Through 2Q
Sources: CoStar Group, Inc.; Real Capital Analytics; RealPage, Inc.

Download the Full Report Here

The information contained in this report was obtained from sources deemed to be reliable. Every effort was made to obtain accurate and complete information; however, no representation, warranty or guarantee, express or implied, may be made as to the accuracy or reliability of the information contained herein. Note: Metro-level employment growth is calculated based on the last month of the quarter/year. Sales data includes transactions sold for $1 million or greater unless otherwise noted. This is not intended to be a forecast of future events and this is not a guaranty regarding a future event. This is not intended to provide specific investment advice and should not be considered as investment advice. Sources: Marcus & Millichap Research Services; Bureau of Labor Statistics; CoStar Group, Inc.; Real Capital Analytics © Marcus & Millichap 2021 | www.MarcusMillichap.com

Q3 2021 Multifamily Market Report | Houston Metro Area

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High-Quality Suburban Rentals Attracting Residents Priced Out of Homeownership

  • Affordability gap doubles that of the U.S. The metro’s median single-family home price surged 19 percent during the past year as migration to the market accelerated.
  • Northwest portion of Inner Loop to be tested by supply influx. The Greater Heights/Washington Avenue submarket is an area of active development, which could apply pressure to fundamentals.

Investment Highlights

  • The number of trades during the past 12 months ended in June was about the same as the previous year, though the average sale price advanced 9 percent to roughly $122,000 per unit.
  • North Houston near the George Bush Intercontinental Airport and the Greenspoint area recorded stronger deal flow over the past four quarters.
  • Upper-tier apartments have been changing hands most frequently in north and northwest suburbs including Cypress and Spring, where average pricing on Class A/B properties has been $140,000 per unit.
  • Within the Inner Loop investors are focusing on Class C apartments, favoring neighborhoods that appeal to young adults.

* Forecast; ** Through 2Q
Sources: CoStar Group, Inc.; Real Capital Analytics; RealPage, Inc.

Download the Full Report Here

The information contained in this report was obtained from sources deemed to be reliable. Every effort was made to obtain accurate and complete information; however, no representation, warranty or guarantee, express or implied, may be made as to the accuracy or reliability of the information contained herein. Note: Metro-level employment growth is calculated based on the last month of the quarter/year. Sales data includes transactions sold for $1 million or greater unless otherwise noted. This is not intended to be a forecast of future events and this is not a guaranty regarding a future event. This is not intended to provide specific investment advice and should not be considered as investment advice. Sources: Marcus & Millichap Research Services; Bureau of Labor Statistics; CoStar Group, Inc.; Real Capital Analytics © Marcus & Millichap 2021 | www.MarcusMillichap.com

Retail Sales Research Report | August 2021

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Annual Retail Sales Remain Strong; Property Fundamentals Resilient

  • Consumers tapped brakes on spending last month. Core retail sales dipped 0.7 percent on a monthly basis in July.
  • Restaurants a bright spot for sales. Diners showed little hesitation in July, pushing spending at eating and drinking places up 1.7 percent for the month, and 38.4 percent annually.
  • Inflation weighs on several sectors. Rising energy prices continued to fuel an increase in sales at gasoline stations last month, where spending increased 2.4 percent, the second largest advance.

New Factors Emerge

  • Vaccine passports gain momentum. Two of the nation’s largest cities, New York and San Francisco, have implemented vaccine mandates that will limit access to most retailers for those who are not vaccinated.
  • Health crisis emergency measures ending. Without an extension, the federal unemployment benefits expire nationwide on Sept. 6, which will remove income from millions of people out of work.

Sources: Marcus & Millichap Research Services; Bureau of Labor Statistics; Conference Board; CoStar Group, Inc.; U.S. Census Bureau

Download the Full Report Here