Apartment resident retention rates went on a wild ride during the course of the past year or so, but the ability to hold onto renters at lease expiration now is returning to more typical levels for the country as a whole. Looking at what happened for leases that expired in 1st quarter 2021, 53.7% of households opted to stay in place, rather than move. That figure exactly matches results seen when averaging the share of households renewing their leases in the initial quarters of 2018, 2019 and 2020.
Landlords of shops in Hong Kong have had a rough ride over the past two years. The political unrest in the middle of 2019 had already exacted a heavy toll on retailers, with businesses disrupted by the clashes and overseas visitors unnerved. (This author too put his own family’s vacation plans on ice.) Then tourist numbers all but evaporated with the onset of Covid-19 less than a year later. Resultantly, prices of CBD shops plummeted, as average quarterly yields headed upwards by 100 basis points between the middle of 2018 and the second quarter of 2020. (This analysis is based on retail assets trading at a value of HK$20 million — $2.5 million — and greater.) Throughout the whole of 2020, no shop assets traded at a sub-2% yield, according to Real Capital Analytics records. The last time the yield floor for such assets was this high was in 2008.
In January 2021, 5.6% of home mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure)\[1\], a small decrease from December 2020, and the fifth consecutive monthly decrease. While this is good news, the overall delinquency rate remained high and was 2.1 percentage points above the year ago level, according to the latest CoreLogic Loan Performance Insights Report. The share of mortgages that were 30 to 59 days past due – considered early-stage delinquencies – was 1.3% in January 2021, down sharply from a post-pandemic high of 4.2% in April 2020 and the lowest rate recorded in at least 22 years.
Spring is here and the first quarter is behind us. It was around this time last year that the COVID-19 pandemic really began to significantly affect life and the economy with effects reverberating throughout the rest of 2020. A strong, though not ubiquitous, resurgence in apartment demand in the latter half of last year created a question for industry participants at the turn of the new year – to what extent would the multifamily recovery continue into 2021? At the national level, new construction activity continued at a feverish pace to the tune of more than 96,000 new units delivered in the quarter. This level of new supply outpaced that from the opening quarters of 2020 and 2019 by a significant margin. The 2021 deliveries equaled around 10,000 units more than in the opening quarter of 2020 and almost 25,000 units more than that portion of 2019.
ATTOM Data Solutions, curator of the nation’s premier property database, today released its 2020 property tax analysis for almost 87 million U.S. single family homes, which shows that $323 billion in property taxes were levied on single-family homes in 2020, up 5.4 percent from $306.4 billion in 2019. The average tax on single-family homes in the U.S. in 2020 was $3,719 — resulting in an effective tax rate of 1.1 percent. The average property tax of $3,719 for a single-family home in 2020 was up 4.4 percent from $3,561 in 2019 while the effective property tax rate of 1.1 percent in 2020 was down slightly from 1.14 percent in 2019.
The National Multifamily Housing Council reports that 79.8% of households living in the country’s stock of professionally managed market-rate apartment properties have paid rent for April as of the 6th. The latest results are up by 1.8 percentage points from the 78% share of households making payments through April 6, 2020. However, collections have started off a bit slower in April than a month ago in March, when 80.4% of households paid in the initial week of the month. The findings come from the National Multifamily Housing Council’s Rent Payment Tracker research, compiling information provided by five technology firms, including RealPage, Inc., for more than 11 million market-rate apartment units.
U.S. apartment occupancy remains in great shape as of March 2021. In turn, healthy occupancy is allowing rents to climb in most places, although the differences in pricing power from metro to metro – or even from neighborhood to neighborhood – are unusually big. Apartment occupancy across the country’s 150 largest metros stands at 95.5% in March. There’s been minimal movement in results of late, with occupancy bouncing around between 95.2% and 95.8% since late 2019.
National home prices increased 10.4% year over year in February 2021, according to the latest CoreLogic Home Price Index (HPI®) Report. The February 2021 HPI gain was up from the February 2020 gain of 4.3% and was the highest year-over-year gain since April 2006. Low mortgage rates and low for-sale inventory drove the increase in home prices; however, affordability constraints may work to slow home price growth later this year, especially as mortgage rates increase.
Despite many accounts of an urban exodus, the COVID-19 pandemic will not leave American cities hollow. Throughout the pandemic search activity has turned towards large, dense cities, not away from them. For every renter who left, there appear to be many ready to take their spot. Compared to this time last year (i.e., pre-pandemic), the data show more search activity directed towards higher-density cities and towards the principal cities that anchor each major metropolitan area. Simultaneously, increased demand for short-term leases indicate that pandemic-era moves are less permanent than those of previous years.
Renter demand for U.S. apartments proved solid in 1st quarter 2021, exceeding typical results for what’s normally a slow leasing period. Demand for 52,661 apartments registered across the country’s 150 largest metros during 1st quarter. That’s a solid performance given that leasing activity tends to be limited in the cold weather months. Product absorption in 1st quarter 2021 topped the year-earlier volume of 29,657 units by a sizable margin. Early 2021 demand more than doubled the average 1st quarter demand of about 25,000 units recorded over the previous 10 years.
Distress has been the watchword for capital raising in recent months as investors eye assets under pressure because of Covid-19 challenges. As yet though, troubled assets have not translated through to a spike in distressed asset sales. As shown in the chart, so far only the hotel sector has seen a notable surge in distressed sales as a percentage of the sector volume. Between March of 2020 and February of 2021, 8% of hotel sales involved a distressed asset. However, the total level of hotel transaction activity was scant during that time frame: only $10.6 billion of hotels traded, as compared to $36.6 billion in the prior 12-month period.
ATTOM Data Solutions’ new Q1 2021 U.S. Home Affordability Report shows that median home prices of single-family homes and condos in Q1 2021 were more affordable than historical averages in 52 percent of the counties analyzed. That figure was down from 63 percent in Q1 2020 and 95 percent in Q1 2016. The latest home affordability analysis conducted by ATTOM, reported that with workplace pay rising and home mortgage rates continuing to hit historic lows, major expenses on a median-priced home nationwide still consumed just 23.7 percent of the average wage across the country in Q1 2021. That figure was up from 22 percent in Q1 2020 and 19.7 percent in Q1 2016. However, the report noted that figure remained well within the 28 percent standard lenders prefer for how much homeowners should spend on those major expenses.
Robust home price growth, which averaged 5.7% nationally over the last year according to the CoreLogic Home Price Index , drove equity of America’s homeowners with a mortgage up by more than $1.5 trillion. Added together across all homeowners in the U.S., home equity has grown more than $12 trillion since its low point during the Great Recession. This is good news for homeowners —but the situation is a little trickier when it comes to how that $12 trillion is spread, and which of those homeowners are currently in a stage of forbearance. For families who have a low amount of equity and are in forbearance, the risk of losing their home becomes higher.
This month’s data shows rent prices continuing to rebound in markets across the country. Our national index increased by 1.1 percent over the past month, the largest monthly increase ever in our estimates, going back to the beginning of 2017. The data continue to exhibit significant regional variation, but the days of plummeting rents in pricey coastal markets appear to be over. Although rents in San Francisco are still down 23.2 percent year-over-year, the city saw an increase of 3.4 percent this month, the biggest increase among the 100 largest cities in the country. 9 of the 10 cities with the sharpest year-over-year declines have now had two consecutive months of rising rents. At the other end of the spectrum, many of the mid-sized markets that have seen rents grow rapidly through the pandemic are showing that there’s still steam left in the current boom -- Boise rents also jumped by 3.4 percent this month, and are now up by 16.1 percent year-over-year.
Both multifamily building permits and starts were down in February compared to January’s annual rates. After growing for three consecutive months, building permits for the construction of multifamily projects faded after a major winter storm had widespread impacts across the United States. Permits fell to an annual level of 495,000 units in February 2021, according to the U.S. Census Bureau’s monthly building permits survey. Although that was down 11.6% from last month, multifamily permitting is up 24.1% from February 2020. Multifamily starts slipped to 372,000 units in February, down 14.5% from January’s annual rate and down 27.6% from last year.
Since the end of 2015 Germany has attracted more investment capital than any other European commercial property market. Real Capital Analytics has recorded transactions totaling €372 billion ($438 billion) in the last five years, €47 billion more than in the U.K., the second most active market. One of the explanations offered for this rise to prominence is the U.K.’s June 2016 decision to leave the European Union, subsequent to which, Germany has been labelled as Europe’s new safe haven and a home for capital that might previously have gone elsewhere.
Recent announcements of forbearance extension by the Federal Housing Finance Agency (FHFA) came on the heels of millions of forbearance plans that are about to expire at the end of March under the CARES Act. The new extensions allow an additional six months’ stay in forbearance, making borrowers eligible for a total of 18 months of temporary payment relief. The latest loan performance data from CoreLogic reveals that 75% of the pandemic forbearance-loan pool consists of loans in forbearance since April.
The annual pace of U.S. commercial property price growth reached 6.8% in February, a rate comparable to the months preceding the country’s initial coronavirus lockdowns, the latest RCA CPPI: US summary report shows. The US National All-Property Index rose 0.9% in February from January. The office index increased 2.0% year-over-year in February. Prices in the office market have slowly crept back from the middle of last year when the index was flat, but are still only increasing at half the rate seen a year ago. Suburban office prices kept the office index afloat last month, gaining 2.2% year-over-year.
The housing market, like many segments of the economy, had a unique year in 2020. Pandemic-induced demand – for homes with more living space and located in lower density neighborhoods -- coupled with historically favorable mortgage rates and declining for-sale inventories led to the most competitive market seen since at least 2008. Buyers competing for fewer properties on the market were generally willing to offer relatively more than they have been in recent years, leading to the ratio of closing price to listing price reaching the highest level since at least 2008.
ATTOM Data Solutions, curator of the nation’s premier property database, today released its Q1 2021 Single Family Rental Market report, which ranks the best U.S. markets for buying single-family rental properties in 2021. The report analyzed single family rental returns in 495 U.S. counties, each with a population of at least 100,000 and sufficient rental and home price data. The average annual gross rental yield (annualized gross rent income divided by median purchase price of single-family homes) among the 495 counties is 7.7 percent for 2021, down from an average of 8.4 percent in 2020. Within that group of counties, the yield declined from 2020 to 2021 in 87 percent of counties. However, it’s not all bad news for rental property investors.