Rising Condo Demand

Good morning, Dwellers! Welcome to another edition of Dwellings Digest, a realtor and investor driven newsletter simplifying real estate, exploring the economy-stock-real estate link, adding a fun twist with niche topics and more. Enjoy!

Quote of the day - Each home tells a different story; find the one that resonates with yours.

In today’s edition - This issue examines new U.S. rules limiting investments in Chinese tech, impacting sectors like AI and quantum computing. Stock markets show resilience amid rising Treasury yields, with experts predicting a possible rally. Coastal REIT markets outperform, while Midwest REITs gain traction as affordable options. In real estate, generational wealth gaps widen, while first-time buyers gain ground in states like Rhode Island and Iowa. Explore Atlanta's stabilizing housing market, Southwest Florida's post-hurricane landscape, and condo-buying insights from Bangkok’s medical hub.

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🏛️ Economic & Market Sentiment

The Biden administration has finalized rules aimed at limiting U.S. investment in Chinese technological advancements, particularly in sectors with potential military applications, such as semiconductors, quantum computing, and artificial intelligence. These rules, effective January 2, 2025, are intended to prevent indirect U.S. support for China’s military capabilities by restricting American financial backing and technical assistance in these high-stakes technology areas. The Treasury Department's new regulations align with existing export restrictions and reflect a broader, ongoing policy shift, as U.S. venture capital investment in China has already declined significantly in recent years.

US Stocks Primed for Recovery Amid Treasury Yield Surge, Says Capital Economics

• Rising Treasury Yields and Market Resilience: Despite an ongoing sell-off in Treasury bonds and rising yields, US stocks have remained resilient, particularly in the face of higher borrowing costs and economic uncertainty. Analysts project that stocks are poised for a rally "before long," offering optimism for investors.

• Fed Rate Cut Speculations and Economic Strength: With recent signs of strength in the US economy and labor market, the Federal Reserve may slow down the rate-cutting cycle, impacting investor sentiment on bond yields. Treasury yields for the 10-year note hit new highs since July, suggesting cautious anticipation of Fed actions ahead.

• Presidential Election and Stock Market Outlook: Growing prospects of a Trump re-election bid are adding upward pressure on Treasury yields as markets look to upcoming corporate earnings and economic data. A continued climb in yields could challenge equities; however, Capital Economics anticipates a soft landing and potential rally in the S&P 500.

Major REIT Rent Growth: Coastal Markets Surge, Sunbelt Slows

• REIT Rent Trends: Coastal Growth Over Sunbelt Slowdown
  While Sunbelt markets experienced a pandemic-driven rent surge, oversupply has slowed growth, shifting gains to major coastal metros. Veris Residential in NJ, for example, saw a notable 5.01% annual rent increase, now averaging $3,923.

• REITs Focus on High-Value “Lifestyle” Tenants
  Lifestyle renters, who prefer renting over owning, continue to bolster rent growth in upscale REIT properties, especially in high-demand markets like New York and Chicago, where Aimco’s average rent reached $2,392 this quarter.

• Midwest Gains Momentum as Affordable REIT Market
  Centerspace, a Midwest REIT, saw annual rent growth of 2.84% to $1,558—highlighting the Midwest as an increasingly attractive option for renters amid higher coastal and Sunbelt rates.

🎢 Impact on Real Estate

Generational Wealth Gap Grows: Homeownership Benefits Millennials & Gen Z

• Millennials and Gen Z Homeowners Show Strong Financial Growth: 69% of millennial and Gen Z homeowners report being financially better off than four years ago, while only 52% of their renter counterparts report the same. Rising home equity due to pandemic-era purchases has largely driven this trend.

• Economic Divide Expands for Younger Generations: A surge in home values benefited young homeowners, contributing to significant wealth growth. However, those unable to enter the market face increased barriers due to high home prices and doubled mortgage rates, leading to widening economic inequality among young Americans.

• Baby Boomers Face Declining Financial Well-Being: The majority of surveyed baby boomer homeowners and renters feel financially worse off than in the past, highlighting challenges faced by fixed-income households amid rising living costs.

🎙️ RE Spotlight

First-Time Buyers Gain Ground Despite Unprecedented Housing Market Challenges

• Historic Rise in First-Time Buyer Mortgages: First-time buyers now account for over 50% of conventional mortgages, up from 20% in 2004. This increase is driven by millennials reaching prime home-buying age and the “lock-in” effect, where current homeowners avoid moving due to high mortgage rates.

• State-Level Trends Highlight the Northeast and Midwest Gains: Rhode Island leads with a 14.3% increase in first-time buyer market share from 2019 to 2024, with additional strong gains in Iowa, Nebraska, Wisconsin, and Connecticut. These states’ slower sales activity and smaller housing markets enhance first-time buyer presence, contrasting with lower growth in retirement states like Florida and Arizona.

• Persistent Affordability and Supply Issues: Entry-level home prices have surged 63% more than high-end homes since 2000, making starter homes less accessible. Additionally, supply shortages, with about 30 renters per available home, have left potential buyers competing in an undersupplied market, partly due to limited new construction following the Great Recession.

Southwest Florida Housing Market Post-Hurricane: Insights on Pricing, Inventory, and Buyer Trends

• Hurricane Impact on Buyer Behavior: With new state disclosure laws and heightened awareness of flood risks, buyers are carefully evaluating properties in Southwest Florida, particularly in hard-hit areas like Charlotte County. Homes built to recent codes are attracting interest due to their resilience, while older, flood-prone properties may face slower sales until cleanup efforts are complete.

• Current Market Trends: September inventory data shows Charlotte County with 6.6 months of supply for single-family homes and 9.4 months for condos and townhomes, reflecting a buyer's market. Median home prices dipped from $350,000 in August to $335,250, while condo/townhome prices rose to $250,000, with closed sales in each category experiencing month-over-month fluctuations.

• Future Outlook: As tourist season begins and hurricane concerns linger, additional factors like red tide could influence market activity. However, demand for well-built, waterfront properties and vacant lots continues as buyers weigh long-term investment in Southwest Florida’s warm coastal appeal.

🏰 RE State Zone

Atlanta's Housing Market on Path to Stability: What This Means for Buyers and Sellers

• Market Leveling in Sight: Atlanta’s Months of Inventory (MOI) rose to 4.2 months as of September 2024, a considerable increase from 0.7 months in March 2022. Though still below the balanced six-month mark, this growth indicates a move toward equilibrium, offering buyers more options and a chance for smoother negotiations.

• Impact on Home Prices: While price drops are unlikely, the breakneck pace of price increases may decelerate, which could be beneficial for buyers who've struggled with limited inventory and rapid price growth in recent years.

• Sustained Demand and Balanced Outlook: Atlanta remains a relocation hotspot, helping maintain steady demand even as inventory grows. This shift suggests a healthy market moving forward, balancing opportunities for both buyers and sellers.

🏕️ Niche-RE

Key Factors for Choosing the Right Condo: A Case Study on Aroon Siriraj Triple Station

Dr. Tanita Narongdej, an operative dentistry specialist, shares her thoughtful criteria for selecting a condo near Siriraj Hospital. Her decision to invest in The Amarin's Aroon project illustrates the importance of location, developer reliability, and low-rise living for privacy and convenience. Here’s a breakdown of her insights:

1. Prime Location for Convenience: Dr. Tanita prioritized proximity to Siriraj Hospital, allowing her daughter, a medical student, to walk to campus easily. This strategic location addresses both safety and convenience, crucial for students facing demanding schedules. The area has also seen improved accessibility, making it a strong investment choice with a steady rental demand from medical professionals and students.

2. Developer Credibility and After-Sales Service: Though The Amarin Company is relatively new, Dr. Tanita’s research into the developer’s track record instilled confidence in the project’s quality and after-sales service. Their responsiveness to residents' needs post-purchase underscored a commitment to long-term property value.

3. Advantages of Low-Rise Living: Dr. Tanita highlighted the privacy and reduced dust exposure that low-rise buildings offer. With fewer neighbors, shared spaces remain accessible, and stairs become a practical alternative to elevators.

4. Investment Potential in Siriraj's Expanding Hub: Recognizing Siriraj as a growing medical hub with continuous housing demand, Dr. Tanita plans to retain her Aroon unit as a long-term investment, expecting it to appreciate over time.

🌍 Dwelling of the Day

77 Acre Estate in Rancho Santa Fe, CA

Link to Listing

And…that's a wrap on this edition!

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