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COST OF HOME REPAIRS INCREASES BY 5.5% FROM Q4 2022

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Price increases slowing nationally after surging due to supply chain disruption and increased demand during COVID-19 pandemic The cost of home repairs and remodeling in the fourth quarter of 2023 continued to increase, rising by 0.54% from the prior quarter and just over 5.5% from the fourth quarter of 2022 according to the Q4 2023 Verisk Remodel Index. Costs set new highs for the past decade, rising over 65% from the first quarter of 2013. The Verisk Remodel Index tracks costs on 31 different categories of home repair, comprising over 10,000 line items ranging from appliances to windows. Data are compiled monthly in over 430 local market areas across the country. “Repair costs continue to rise, but the rate of increase appears to be slowing down,” said Greg Pyne, VP, Pricing for Verisk Property Estimating Solutions. “At an annual increase of 5.5%, this is the slowest pace of cost increases since the second quarter of 2020, when prices rose by 4.8% from the prior year. Since then, due to the impact the COVID-19 pandemic had on supply chains, product demand, and labor shortages, annual cost increases haven’t been lower than 6.1%. But since peaking at 12.3% in the fourth quarter of 2021, the rate of price increases has gradually been slowing down, and will probably continue to do so for the foreseeable future.” Costs rose in all but one of the 31 categories included in the report, both quarterly and annually. The exception was the cost of framing and rough carpentry, one of the biggest costs for builders and remodelers, which was down by about 0.75% from the previous quarter, but still up by 1.5% from a year earlier. Pyne noted that while all other categories showed rising prices, many of the increases were minimal, often less than 1%. “It may be worth noting that remodeling cost increases appear to be largely in synch with rising home prices,” added Pyne. “The most recent Case-Shiller Index said that home prices rose by about 5.1% compared to the prior year, and the Freddie Mac Home Price Index reported a 6.6% increase during the same time period.” New England Region Shows Highest Quarterly Increase; East North Central and Mountain States Have Highest Annual Gains All regions again experienced cost increases both quarterly and annually, but unlike the numbers cited in the Q3 2023 Verisk Remodel Index, all of the regions reported quarterly increases of less than 1%. The New England Region saw costs rise by 0.74% compared to the second quarter. The East North Central Region (6.57%) and Mountain Region (6.3%) had the highest rate of annual cost increases. The Mountain Region continued to have the highest overall cost increases over the ten-year span covered by the index, rising 70 points since the beginning of 2013. The South Atlantic Region had the lowest quarterly (0.41%) and annual (5.1%) cost increases. The West South Central Region also had a 5.1% annual increase, and has risen the least (59.47 points) since the beginning of the tracking period. Q2-Q3 2023 Q3-Q4 2023 Q4 2022-2023 East North Central 1.5% 0.51% 6.57% East South Central 1.6% 0.49% 5.2% Mid-Atlantic 1.9% 0.61% 5.7% Mountain 1.8% 0.59% 6.3% New England 1.5% 0.74% 6.1% Pacific 1.9% 0.53% 5.5% South Atlantic 1.5% 0.41% 5.1% West North Central 1.7% 0.48% 5.3% West South Central 1.4% 0.61% 5.1% Northeastern States Have Both the Highest and Lowest Rates of Increase New Hampshire had the highest quarterly rate of increase in the country at 1.58%, the only state to surpass a one percent increase for the reporting period. Arkansas (0.99%), Colorado (0.96%) and Connecticut (0.94%) barely missed that threshold. Other states with relatively high rates of quarterly increases included Wyoming (0.84%), New York (0.85%), Arizona (0.72%), Hawaii (0.69%), Indiana (0.63%), and Maine (0.61%). Rhode Island had the lowest rate of cost increases at 0.22%, followed by West Virginia (0.27%), Washington DC (0.33%), New Mexico (0.33%), Florida (0.35%), Wisconsin (0.37%), Utah (0.39%), South Carolina (0.39%), Maryland (0.41%) and North Dakota (0.42%). Contact: Rick Sharga CJ Patrick Company (949) 322-4583 rick.sharga@cjpatrick.com Author admin View all posts

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Rents haven’t fluctuated much over the past year, rising 1% in January–a far cry from double-digit growth during the pandemic. The median U.S. asking rent rose 1.1% year over year to $1,964 in January, the largest annual increase since March 2023, and was unchanged from a month earlier, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. While rents ticked up from a year earlier, the bigger picture is that rent growth is leveling off after surging during the pandemic and then rapidly slowing from mid-2022 to mid-2023. Year-over-year rent growth has hovered between -2.1% and +2.4% for the past year, a much narrower range than the prior year, when rent growth was as low as 4.8% and as high as 17.7%. Asking rents have flattened because the pandemic moving frenzy is over and landlords are grappling with vacancies due to a jump in apartment supply. The rental vacancy rate was 6.6% in the fourth quarter, tied with the prior quarter for the highest level since early 2021. Vacancies have climbed due to a building boom in recent years. The number of recently completed apartments is near its highest level in more than 30 years, and the number under construction is just shy of its record high. Redfin Chief Economist Daryl Fairweather expects apartment completions to peak in 2024. While rents have cooled, they haven’t yet posted significant declines. That’s likely because high mortgage rates continue to fuel rental demand, and because some landlords are offering one-time concessions like a free month’s rent or reduced parking costs to attract renters without having to lower asking rents on paper. Home prices are rising much faster than rents, which is also fueling rental demand and motivating renters to stay put instead of entering the housing market. “There’s not a huge incentive for renters to buy right now. Asking rents are stable, and while mortgage rates have dipped in recent months, they haven’t fallen enough to make the financial equation of homebuying feasible for many people,” Fairweather said. “If you’re a renter who’s interested in buying but isn’t in a rush, there’s not much downside to waiting for mortgage rates to fall and your savings to grow.” Buying may make sense for people who can afford a large down payment and plan to stay put for at least five years, Fairweather said. Putting 20% down helps offset the cost of elevated mortgage rates and removes the cost of private mortgage insurance, and some may prefer to buy now before competition inevitably heats up when mortgage rates fall further. Of course, many Americans can’t afford a 20% down payment, though some do qualify for down payment assistance. Rents Climb Fastest in the Midwest and Northeast The median asking rent in the Midwest increased 4.6% year over year to a record $1,437 in January. Rents also rose in the Northeast (2.3% to $2,427) and the West (0.6% to $2,358). In the South, rents were unchanged at $1,637. The Midwest was the only region where rents hit a record high. “Rent prices in Chicago are still out of control,” said local Redfin Premier real estate agent Dan Close. “A lot of the buyers I’m working with are people who have been pressured out of renting–if you’re paying an arm and a leg for rent, why not try to buy and build some equity? We’ll likely see this trend intensify in the spring and summer, when the vast majority of leases end.” Rents are likely holding up best in the Midwest and Northeast because those regions haven’t been building as much as the South and West, meaning landlords aren’t under as much pressure to fill openings. To view the full report, including charts and methodology, please visit:https://www.redfin.com/news/redfin-rental-report-january-2024 Author admin View all posts

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Fewer independent landlords are planning to raise rents this year, but tenants paying persistently higher rents say it’s likely to impact their home purchasing plans this year Over the past few years it’s become more expensive than ever to rent, and with rental affordability a pressing national concern, landlords and tenants alike say it’s impacting their future plans, according to a new Realtor.com® Avail Landlord & Renter Survey. Fewer surveyed independent landlords are planning to raise rents this year, but with more tenants paying persistently higher rents in recent years, many renters say it’s likely to impact their home purchase plans this year. “The once-hot rental market has been stabilizing and softening year-over-year since May 2023, mostly from a surge in new rental options coming to the market that gave renters more to choose from. But the surge in rents and the sheer number of renters, many of whom have held off on buying in recent years, continue to minimize any potential price impacts that increased rental inventory could have on the market,” said Danielle Hale, Chief Economist, Realtor.com®. “The median asking rent in 2024 is expected to drop only slightly below its 2023 level (-0.2%), but with wages rising 4.5% in January and anticipated to continue growing, even the modest decline in rent is giving households a real break, reducing the share of each paycheck going toward rent.” Fewer landlords raising rents this yearAccording to the survey, while six in 10 landlords (60%) plan to raise rent in the next 12 months, that percentage declined in recent quarters, down from 65% in Q1 2023. The majority of surveyed landlords (69%) noted they raise rent differently for renewals versus new leases, with the most opting for 0-5% increases for renewals and 0-10% increases for new leases. Among landlords who don’t raise rents differently for renewal versus new tenants, the majority (50%) plan to increase rent between 0-5%. Planned rent increases are inline with higher costs across the board for many Americans, including landlords who are passing those costs on to their tenants. The majority of landlords (60%) stated that their ownership costs increased upwards of 10% in the past 12 months. Among landlords not planning to raise rents this year, 72% cite their unit already being priced at or above local market value. Persistently high prices squeeze rentersThe average responding renter pays between $1,000 and $1,500 monthly, but the survey found more renters are paying rents upwards of $1000–$2000 than in previous surveys, indicating continued rent increases for many across the country. In fact, 71% of surveyed renters noted a rent increase when renewing their most recent lease. And relief from high housing costs isn’t in sight, with 35% of surveyed renters anticipating future rent increases and 38% unsure if they will see one, leading nearly two thirds (63%) to explore other housing options besides renewing their current lease. Common reasons for those not renewing leases included that the current rent was too expensive (43%) and unaffordable rent increases (23%). For some, staying put when a lease is up and negotiating rent increases may help save money; the percentage of renters attempting to negotiate rent increases when renewing their lease increased from 28% in Q1 2023 to 34% in Q4 2023. This may be especially true in 2024 as higher rental vacancy rates may mean landlords are more interested in securing renewals. Budget constraints put home buying plans on pauseRising interest rates and inflation are impacting home purchasing plans for many renters looking at buying in the year ahead, with 82% of surveyed renters noting the economy has had an impact on their housing plans. Among renters who are not considering a home purchase this year (71%), the majority cited not having enough for a down payment (61%) and that interest rates are too high (42%). The proportion of renters considering purchasing a home in the next 12 months decreased slightly from 30% in Q1 2023 to 29% in Q4 2023, with concerns about a lack of savings and their ability to qualify for a mortgage increasing. That’s not surprising, given that two thirds of renters (68%) reported saving less each month than they were 12 months ago. Rental owners staying put on their properties Higher home prices and mortgage rates are also impacting landlords’ plans for investing in more rental properties in the year ahead. Only 22% of surveyed landlords reported plans to buy one or more rental properties in the next 12 months, not unexpected given that approximately 7 in 10 surveyed landlords already have a mortgage on at least one rental property, and would likely finance another purchase with a mortgage. The majority of landlords have no plans to exit the market either: 73% stated they don’t plan to sell any units in their portfolio over the next 12 months. SOURCE Realtor.com Author admin View all posts

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New Zillow analysis finds Texas, California top the list of Gen Z relocation destinations Gen Z may prioritize job opportunities and sunshine over affordability when moving out of state. A new Zillow® analysis of the U.S. Census Bureau’s 2022 American Community Survey (ACS) finds Gen Z interstate movers flocked to California, even as the state experienced the highest outbound migration among all out-of-state movers. Nearly 215,000 movers left California in 2022, yet the Golden State saw a net positive gain of nearly 44,000 Gen Z adults who moved there from other states, according to the data released in October. It’s not just California. Gen Z movers, excluding students, migrated to other relatively more expensive states compared to all interstate movers. Washington, Colorado and Virginia were among the top 10 states with the highest Gen Z net migration but had minimal or negative net migration among all movers who switched states. More than three-quarters of Gen Z adults who moved to these pricier states are renting (77%). An analysis of ACS data shows renters can expect to pay more per month to rent in California ($1,856), Washington ($1,592), Colorado ($1,594) and Virginia ($1,440) versus the median rental price nationally ($1,300). “Compared to all interstate movers, Gen Z adults who moved to California, Washington, Colorado or Virginia were more likely to have a four-year college degree, more likely to be serving in the military, and more likely to work in tech, ACS data shows,” said Edward Berchick, a principal population scientist at Zillow. “Gen Z movers are likely drawn to the job opportunities in these states, despite the higher costs of housing. They may also be in a stage of life where they’re willing and able to be flexible in their standards of living while starting their careers.” Texas far and away gained the most Gen Z movers. When adding up inbound and subtracting outbound moves, the Lone Star State had a net gain of more than 76,000 Gen Z movers. California gained the second highest number, followed by Florida, which saw the highest net migration among all interstate movers. Michigan, Maryland and Idaho had the lowest Gen Z net migration. Michigan was the only state where more Gen Z movers departed than arrived. In Zillow’s analysis of ACS data, Gen Z is defined as those born between 1996 and 2004. To avoid capturing the temporary moves of college students, these statistics exclude respondents who reported attending school in the past three months. Top 10 states for Gen Z out-of-state movers(2022) Top 10 states for all out-of-state movers(2022) State Net migration State Net migration 1. Texas 76,805 1. Florida 187.848 2. California 43,913 2. Texas 123,886 3. Florida 41,394 3. Georgia 57,888 4. North Carolina 33,690 4. South Carolina 54,678 5. Washington 33,534 5. Arizona 53,520 6. Colorado 39,797 6. North Carolina 46,852 7. Virginia 26,418 7. Connecticut 39,877 8. Illinois 25,890 8. Tennessee 33,112 9. Georgia 24,788 9. Oklahoma 21,431 10. Arizona 21,418 10. Nevada 15,853 Bottom 10 states for Gen Z out-of-state movers(2022) Bottom 10 states for all out-of-state movers(2022) State Net migration State Net migration 1. Michigan -2,858 1. California -214,517 2. Maryland 579 2. New York -184,390 3. Idaho 850 3. Illinois -62,549 4. Vermont 861 4. Maryland -36,632 5. Maine 1,241 5. Massachusetts -36,358 6. South Dakota 1,591 6. New Jersey -33,203 7. Delaware 1,944 7. Louisiana -23,557 8. Rhode Island 2,198 8. Pennsylvania -22,234 9. New Hampshire 2,298 9. Oregon -20,267 10. West Virginia 2,299 10. Utah -17,749 SOURCE Zillow Group, Inc Author admin View all posts

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Consumer Sentiment toward Housing at Highest Level in Nearly Two Years The Fannie Mae Home Purchase Sentiment Index® (HPSI) increased 3.5 points in January to 70.7, its highest level since March 2022, due primarily to increased consumer confidence in job security and another significant jump in the share of consumers expecting mortgage rates to decrease. In January, 82% of consumers indicated that they are not concerned about losing their job in the next 12 months, up from 75% last month. Additionally, an all-time survey-high 36% of respondents indicated that they expect mortgage rates to go down in the next 12 months, while 28% expect them to go up, and 35% expect rates to remain the same. However, consumer perceptions of homebuying conditions remain overwhelmingly pessimistic, with only 17% of consumers indicating it’s a good time to buy a home. Overall, the full index is up 9.1 points year over year. “Mortgage rate optimism increased markedly again in January, with a survey-high percentage of consumers anticipating mortgage rate declines over the next year,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “For the first time in our National Housing Survey’s history, a greater share of consumers believe mortgage rates will decrease over the next year, rather than increase. Consumers also expressed greater confidence in their job situations this month, another sign that housing sentiment may continue to improve in 2024.” Duncan continued: “However, while home affordability may improve if actual mortgage rates continue moving downward, other parts of the affordability equation have yet to ease or improve for consumers. A large majority still think home prices will either increase or stay the same; the ‘good time to buy’ component continues to hover near its historical low; and fewer than one-in-five respondents indicated that their household income was significantly higher year over year, matching a survey low. All in all, while a lower mortgage rate path supports our forecast for a gradual increase in housing demand and sales activity in 2024, until we see a meaningful increase in housing supply, we expect affordability will remain a significant barrier to homeownership for many households.” Home Purchase Sentiment Index – Component HighlightsFannie Mae’s Home Purchase Sentiment Index (HPSI) increased in January by 3.5 points to 70.7. The HPSI is up 9.1 points compared to the same time last year. Read the full research report for additional information. To receive e-mail updates with other housing market research from Fannie Mae’s Economic & Strategic Research Group, please click here. SOURCE Fannie Mae Author admin View all posts

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Multifamily construction starts expected to continue to moderate this year Multifamily construction starts declined in 2023, but exceeded expectations considering the turmoil in the financial markets. A new report on multifamily construction starts from Yardi® Matrix states that the number of units that broke ground in 2023 ranks third in recent years, behind 2022 and 2021. Full year data for 2023 is collected with a lag. As such, data shows that there were 506,742 new construction starts in 2023, which is 25.3 percent below the 2022 volume. Of these, 454,182 units broke ground during the first three quarters, marking an 11.6 percent decrease from the volume recorded over the same interval in 2022. The decline in construction starts started in the third quarter. “Yardi Matrix expects new construction to remain on a moderating trend in 2024. Meanwhile, multifamily completions will remain elevated in 2024 and early 2025 and will not bottom out until 2026,” say Matrix analysts. Construction trends vary geographically. Half of the 678,771 units that broke ground in 2022 occurred in 22 markets, and during the first three quarters of 2023, 18 of these markets registered declines in new construction. Some posted declines of more than 40 percent, such as Indianapolis, Salt Lake City, Austin and Seattle. The highest declines were recorded in the Bay Area-South Bay (down 72.4 percent), Urban Chicago (down 55 percent) and Las Vegas (45.8 percent). New construction remained on an upward trend in Phoenix, North Dallas, Raleigh-Durham and Tampa-St. Petersburg-Clearwater and picked up in Boston and Kansas City. The composition of construction starts changed over the last decade. Affordable housing grew from 8.4 percent of the pipeline in 2013 to 13.4 percent in 2023, while the share of single family rentals increased from less than 1 percent in 2013 to 5.8 percent in 2023. Review the latest bulletin on Multifamily Construction Starts from Yardi Matrix. Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, vacant land, industrial, office, retail and self storage property types. Email matrix@yardi.com, call 480-663-1149 or visit yardimatrix.com to learn more. About Yardi Yardi® develops industry-leading software for all types and sizes of real estate companies across the world. With over 9,000 employees, Yardi is working with our clients to drive significant innovation in the real estate industry. For more information on how Yardi is Energized for Tomorrow, visit yardi.com. SOURCE Yardi Author admin View all posts