Multi-family Just Took a Huge Hit!!
Housing starts are up?
I have been tracking the increase in housing starts for May 2023, although lower than the same period in 2022, is a positive indicator that the US economy is rebounding from the Federal Reserve’s interest rate hikes aimed at curbing inflation. Despite the decline from the previous year, the fact that housing starts are still on an upward trajectory suggests that the market remains robust and resilient. This demonstrates that the measures taken by the Federal Reserve to temper inflationary pressures have not severely dampened the overall economic activity in the housing sector. Kudos to good ole’ American resilience.
But there is more, the increase in housing starts signals renewed confidence among consumers and builders alike. It indicates that despite the higher interest rates, individuals and businesses are still willing to invest in new construction projects. This suggests that the impact of the interest rate hikes on borrowing costs has been relatively manageable and that market participants continue to perceive the long-term benefits of investing in real estate. The growth in housing starts thus serves as a testament to the underlying strength of the US economy and its ability to adapt to changes in monetary policy.
So you like multifamily as an investment?
Turmoil in commercial property markets is starting to spread beyond urban offices and aging shopping malls to rental apartments. The multifamily sector has long been considered a relatively safe investment, especially when home prices rose so much during the pandemic and forced many home shoppers to keep renting.
Landlords have benefited from surging apartment rents and cheap debt in recent years, which pushed property values to record highs. Investors paid high prices for the buildings partly because they were betting on a continued rent rise. They also considered apartments a safer bet during a recession because people always need a place to live.
The recent interest rate increase has cooled off the apartment sector. Investors who bought properties at the peak of the market in 2021 often financed those deals with floating-rate mortgages. Many of those loans have reset at higher rates. An apartment-building investor lost four Houston complexes to foreclosure last week, the latest sign that surging interest rates are beginning to upend the multitrillion-dollar rental-housing market.
Within the VIP+ Community, we have avoided such disasters focused on Single Family Residential and some Small Multifamily from two to eight units. Additionally, using the award-winning real estate valuation data within InvestorComps it is much easier to swiftly determine market areas conditions which are much more challenging to access with large multifamily.
What happens before Halloween?
This year the VIP+ Community and newcomers are celebrating Foreclosures before we get to the fun, ghouls, and goblins of Halloween. One, We will gather in Salt Lake City. Second, since we are “Virtual Real Estate Investors”, the “10th Annual InvestorComps Foreclosure University” will be live and streaming.
Join the vibrant VIP+ Community as we unite to exchange and collaborate on the latest concepts and strategies in virtual real estate investing on October 27th. Together, we can unlock a world of opportunities and harness the power of investing in the digital realm. Don’t miss out on this exclusive VIP+ event, where you can gain invaluable insights and resources to confidently invest in real estate from anywhere, at any time. Take charge of your financial future and become a part of our thriving community today!