Gen Z Trends, Mortgage Updates, and Market Shifts

Mortgage & REITS

Average going rates as of Aug 14 2024

Numbers as of Aug 14 2024 closing

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🏛️ Economic Rundown

Mortgage Interest Rates Fall for 30-year Terms While 15-year Terms Remain Unchanged

• As of August 14, the median interest rate on a 30-year fixed-rate mortgage sits at 6.375%, slightly lower than the previous day, while the 15-year fixed rate remains unchanged at 5.625%. Analysts anticipate potential cuts by the Federal Reserve in September, which could further lower rates.

• The relationship between mortgage rates and other economic factors, such as the 10-year Treasury yield (currently around 3.8%), provides insights into economic health. Historically, mortgage rates tend to be about 1.5% to 2% higher than the 10-year Treasury yield, indicating that the current spread is within a typical range.

🤌🏻 Real Trends

Gen Z’s Affinity for Fitness is Reshaping Residential Real Estate

• Rising Rental Developments: Developers are responding to Gen Z's fitness and wellness focus by planning nearly 520,000 rental units by year-end, a 30% increase from 2022, integrating health and wellness amenities across diverse residential properties.

• Wellness Amenities in Demand: With health becoming synonymous with wealth, residential buildings now feature amenities like fitness centers, spas, and mindfulness spaces, reflecting Gen Z’s preference for holistic well-being in both luxury and affordable housing markets.

• Mixed-use and HVLP Fitness Trends: Mixed-use buildings like The Commodore in Arlington are incorporating fitness brands, while HVLP gym chains like Planet Fitness continue to attract Gen Z with specialized programs, including the High School Summer Pass, which achieved a 5.5% conversion to memberships in 2023.

🎙️ Spotlight

ADUs: Housing Crisis Solution or Expensive Standalone Projects?

• Accessory dwelling units (ADUs), typically under 1,000 sq. ft. with 1-2 bedrooms, are designed for private use and often include separate entrances and HVAC systems.

• California has seen a surge in ADU construction, from 3,000 units in 2018 to nearly 23,000 in 2023, driven by legislation enacted in 2016.

• Despite the growth, ADUs are primarily high-end and standalone, limiting their effectiveness in addressing broader housing affordability issues.

RE Experts Explain Why Housing Hot Spots are Still Scorching

• Texas, with over 30 million residents as of 2024, is the second state to reach this milestone, driving an increased demand in its real estate market. This demographic shift continues to bolster property sales and values.

• Arizona's real estate landscape is flourishing thanks to high-tech investments like the Taiwanese chip plant and Intel's expansion. Phoenix ranked ninth in new home listings in August 2024, showcasing the region's growth potential.

• Florida emerged as the second-most-valuable residential market nationwide, with cities like Tampa, Miami, Jacksonville, and Orlando among the top six in value gains since the pandemic. This strong performance reflects the ongoing allure of Florida’s lifestyle and economic opportunities. 

🏰 State Zone

South Florida Condo Owners are Dumping their Homes

• Condo owners in Florida face significant financial challenges, with units in buildings like the Cricket Club condo tower seeing special assessments of over $134,000 per unit for necessary renovations and reserve replenishment’s, impacting affordability and sales.

• The inventory of condos for sale in South Florida has more than doubled since the first quarter of 2023, surpassing 18,000 units due to rising insurance and repair fees that many owners cannot afford, leading to increased listings.

• Condo prices in areas such as Fort Myers have seen a steep decline, with sellers like Ivan Rodriguez experiencing a 42% loss on their property sale, exacerbated by higher association fees that have risen between 20% and 25% on average.

🏕️ Niche-RE

USA Properties kills 160-unit affordable project in San Jose

• USA Properties Fund has scrapped its plans for a 160-unit affordable apartment complex in San Jose’s Valley View Reed area due to high construction costs and soaring interest rates. Originally designed to include 119 one-bedroom and 41 two-bedroom units, the project was deemed financially unfeasible after extensive analysis.

• This cancellation highlights the significant hurdles facing housing development in the Bay Area, where high interest rates, currently hovering around 8%, and elevated construction costs are stalling major projects. The decision also reflects broader trends in affordable housing challenges, potentially leaving the 0.9-acre site in limbo and contributing to ongoing inventory shortages in the region.

👉 More Stories

• Investors Capital Group (ICG) Acquires "Equestrian Luxury Apartment Homes," 288-Unit Multifamily Property in Tucson, AZ

• Commercial shop house at Serangoon Gardens on the market for $10.5 mil

• Australia’s largest home builder reported $42m in earnings in the 2024 financial year, a massive jump after being $33m in the hole in the financial year prior.

Chart-Tastic

The average American 25-year-old Gen Zer has an annual household income of over $40,000, rendering them “better off” than Millennials were at the same age, and placing their income at 50+% above Baby Boomer income when Boomers were 25 years of age – after accounting for taxes, government transfers, and inflation

Interesting in Social

 Dwelling of the Day

Brook’s End Tiny House, Cabin on Wheels

And…that's a wrap on this edition!

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