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MARTIN BARRAUD
After a year marked by volatile — and frequently high — mortgage rates, little inventory and affordability issues that sidelined many buyers, the 2024 housing market outlook offers more of the same, albeit with some relief.
Housing economists vary somewhat on their assessments of what’s to come in the for-sale market during the next 12 months, and predicting factors like where mortgage rates will end up can be difficult. Most, however, agree the conditions for housing will improve, even if only slightly, and that’s expected to unlock inventory, moderate home-price appreciation and make transactions easier to achieve.
Many groups that closely track the real estate industry are predicting a decline in mortgage rates, although not to the level seen during the depths of the Covid-19 pandemic. Redfin Corp., for example, anticipates the 30-year fixed-rate mortgage will fall to 6.6% next year, a prediction similar to that of the National Association of Realtors, which predicts an average mortgage rate of 6.3% in 2024. Next year’s rates will close around 6.5%, according to Realtor.com, but most of 2024 is expected to see an average of 6.8%.
Most housing economists say the Federal Reserve’s goal of taming inflation has proven to be successful. That could mean interest-rate cuts by mid-2024, though not everyone agrees that will occur. In fact, Ken Simonson, chief economist at the Associated General Contractors of America, said during an NAR forecast summit this week he thought the Fed wouldn’t make any rate cuts next year and, in fact, might actually keep increasing rates because of its persistent concern about inflation.
The Consumer Price Index was at a 3.1% annual rate in November, a slight decline from the CPI annual rate of 3.2% in October and the latest evidence of tempering inflation. The Fed has a stated goal of 2% inflation.
Danielle Hale, chief economist at Realtor.com, said recent weeks have seen a sharp drop in mortgage rates, the latest example of the rate volatility that’s been a hallmark of 2023. As the broader economy, specifically around inflation, begins to moderate, that should push mortgage rates downward — although slowly — and rates are likely to move up and down less rapidly than they did this year, Hale said.
In many ways, the mortgage-rate environment for 2024 could be a return to what was normal in pre-pandemic days, albeit at higher rates, Hale added.
This year saw constrained inventory among existing homes, making whatever inventory did hit the market competitive and, ultimately, keeping prices high in many markets.
The NAR this week said existing-home sales are projected to be down 18% from last year, the second year in a row in which the existing-home market has seen a double-digit decline in sales from the previous year. Existing-home sales slid 4.1% in October, the latest month available, to a seasonally adjusted annual rate of 3.79 million.
About two-thirds of current homeowners have a mortgage rate of 4% of less, Hale said, creating what many have termed the mortgage lock-in effect. With mortgage rates much higher now, it’s become more expensive to purchase a home, prompting many existing owners to stay in place.
Some economists are predicting a shift next year, with an expectation that more owners will put their homes on the market. That should boost existing-home inventory, even if only by a modest amount.
Daryl Fairweather, chief economist at Redfin, said she believes the mortgage lock-in effect will start to fade next year, especially for people who would’ve preferred to sell their home this year. A life event, such as a marriage, a divorce or a birth, may prompt those households to finally make a move in 2024, she said.
The NAR also is predicting home sales to increase next year, about 13% in the existing-home market and 17% in the new-construction market.
Orphe Divounguy, senior economist at Zillow Group Inc., said people are less likely to make a big purchase or life decision, including buying or selling a house, when there’s uncertainty. The mortgage-rate roller-coaster ride in 2023 and threat of a recession made a lot of households unwilling to make a big move.
“If mortgage rates and the broader economic outlook become more certain in 2024, that could then propel more activity in the housing market,” he said.
There’s evidence that inventory already has begun to increase. New listings bottomed out in April at almost 35% below pre-pandemic norms, according to Zillow. As of November, that shortfall had been reduced to 14%.
While the existing-home market this year has been challenging, the new-construction market has seen a rebound. Single-family housing starts in October, the latest month for which data was available, rose 0.2% to a seasonally adjusted annual rate of 970,000 units, according to U.S. Census data.
In fact, 2023 is on track to be the third- or fourth-best year for new single-family home construction since 2008, said Lawrence Yun, chief economist at the NAR, during its forecast summit. Many homebuilders have leveraged a competitive advantage over the existing-home market this year, with the ability to offer concessions like rate buydowns.
The National Association of Home Builders is forecasting 950,000 single-family housing starts next year. That’s not quite the estimated 1.5 million housing units the association believes is missing in the market, although there also are about 1 million apartments underway nationally right now.
Divounguy said a lot of builders are focused on finishing their current home construction — bringing that to market and selling it. The NAHB/Wells Fargo Housing Market Index, which measures builder confidence, has been slipping on a monthly basis since July.
“Builders are cautiously optimistic,” Divounguy said. “We still have population growth, new families moving from abroad, older homes that need to be torn down or fixed up. That all means new construction can’t sit idly by on the sidelines.”
If mortgage rates do moderate next year, and more inventory hits the market, does that mean the housing market will become more affordable in 2024?
Yes, albeit not by a significant margin, most housing economists say.
Realtor.com is predicting home prices will decline 1.7% in 2024 after a projected 0.2% growth in 2023 and a whopping 10.3% in 2022. A lack of home-price declines in many markets, paired with a higher mortgage rate, has locked out a significant pool of buyers.
In October, purchasing a typical for-sale home at a 30-year fixed mortgage rate would’ve required 39% of the typical household income, according to Realtor.com. That share is expected to average 36.7% for 2023, much higher than the historical average of 21%.
Because of the more expensive housing market, 40% of first-time homebuyers are making a down payment of 5% or less, according to NAR data.
Still, with a more optimistic mortgage-rate outlook and a greater amount of inventory, combined with strong wage growth in 2023, it’s possible buyers will have an easier time next year.
“It’s not going to completely reverse the trend in affordability — homes are still going to be pretty expensive — but it will be a baby step in the right direction for buyers, to start to bring home prices closer in line to incomes,” Hale said.
Migration trends and moves to more affordable metro areas are still having an influence on the broader housing market, too, although perhaps not at the levels observed during the Covid-19 pandemic.
Fairweather said she expects there will continue to be less migration than there was during the pandemic, adding the share of people moving to a new metro has leveled off. She said prices have corrected significantly in West Coast cities like Los Angeles and the San Francisco Bay Area, and there could be a boomerang effect for those markets.
That’s something Realtor.com also is predicting may happen in 2024, with southern California identified as a region to watch in 2024.
“Southern California has had a really difficult 2023, but we think sales will start to bounce back” there, Hale said during the NAR forecast event.
The markets Realtor.com is predicting will have the biggest home price and sales activity in 2024 are affordable Midwestern and Northeastern markets, including Toledo, Ohio, and Rochester, New York. Other economists also are bullish on Ohio, chiefly for that state’s affordability compared to other parts of the country — although Sun Belt superstar cities like Nashville, Tennessee, and Austin, Texas, will continue to see population migration, Divounguy said.
“Austin is building a ton of housing, and I wish we saw more of that across the country,” he said. “I think people are going to continue to move to where there’s a larger mix of affordable-housing options, and that’s probably going to be states that are building a lot, where you’re getting … a different mix of housing options.”
TADAMICHI VIA GETTY IMAGES
Commercial real estate transactions slowed considerably in 2023, amid high interest rates, declining values and pricing uncertainty.
Investment volume declined by 42% in 2023 from the prior year, according to CBRE Group Inc. (NYSE: CBRE). The Dallas-based commercial real estate firm is expecting deal volume to be down again in 2024, but by a more modest 5% year over year.
Richard Barkham, global chief economist and global head of research at CBRE, said there’s been “enormous excitement” since the 10-year Treasury yield recently dropped, to about 4%. Combined with the Federal Reserve’s signaling of some interest-rate cuts next year, that should propel more commercial real estate transactions in 2024.
“There are still some issues we will need to contend with,” Barkham said, adding the Fed still wants to see a lower rate of inflation, and economies in the rest of the world are also slowing. “We’ve found it very difficult to forecast and be accurate on inflation. It’s not impossible we’ll get another inflation upside surprise,” he added.
CBRE is forecasting an average 10-year Treasury yield of 3.3% between 2025 and 2028. That will likely result in more deal volume in the medium term rather than in 2024, though transactions are likely to start picking up in the second half of 2024, Barkham said.
CBRE isn’t predicting a recession in 2024 but expects the economy to slow, with a projected unemployment rate of 4.5% — up modestly from the rate of 3.7% last month — and the inflation rate to cool to about 2.7% by the end of 2024.
Next year will also have a closely watched U.S. presidential election. Barkham said he wasn’t sure what impact that will have on commercial real estate activity but, he added, during very contested elections, the market tends to slow about three months before Election Day.
Rebecca Rockey, deputy chief economist and global head of forecasting at Cushman & Wakefield plc (NYSE: CWK), in an email said last week’s Fed announcement was largely expected and doesn’t meaningfully shift the Chicago-based commercial real estate firm’s perspective for 2024. There’s also still uncertainty about inflation and no guaranteed path for the federal funds rate, she added.
“So, as the Fed stated, it is too soon to declare victory,” Rockey continued. “I think there is a temptation to place too much emphasis on the Fed pause and pivot. Certainly, it will add much needed clarity, but the fact remains that we are in the midst of a broader adjustment process to higher costs of capital, and that will persist well after the Fed’s pivot and throughout their cutting cycle.”
Still, she said, Cushman is predicting commercial real estate transaction momentum to gain steam through next year and into 2025 as the economy and interest-rate picture becomes clearer. That’ll allow for greater conviction in underwriting income and exit assumptions, Rockey said.
Tim Bodner, real estate deals leader at PricewaterhouseCoopers LLP, said there’s new optimism among real estate investors since the Fed’s announcement last week. The economy is also holding up fairly well, with inflation coming down and the consumer and labor market overall resilient, he added.
“All of these things provide a really nice backdrop for … the commercial real estate market,” Bodner said.
But it’s inevitable a looming wave of debt maturities will need to be addressed, and most who track the commercial real estate industry closely expect an uptick in distress and foreclosures in 2024. Moody’s Analytics Inc. estimates there will be $182 billion in commercial real estate debt maturing next year.
The office market will continue to be closely watched next year, in particular as debt matures on troubled properties.
Bodner said challenges observed in the office market right now are similar to what’s been seen in the mall sector in recent decades. There are also a number of properties that don’t have the right capital structure, Bodner added, which will trigger distress — and it won’t be immune to just office.
So far, loans facing issues at maturity in commercial real estate have largely been dealt with through loan extensions and modifications. Barkham said it’s likely banks are going to be a little more firm next year in how they handle financially strained properties after mostly soft pedaling in 2023.
“The banks always go easy in the periods of real uncertainty but, oddly enough, as (there is) greater certainty about the trajectory about the economy and about a soft landing, I think they’re going to want to deal with some of those loans that are very underwater,” Barkham said, adding a marked uptick in office building foreclosures is likely next year.
Rockey said office is likely to struggle because underwriting absorption or rents is very difficult for that sector in today’s market, and pricing is still disconnected from the higher rate environment.
“However, opportunistic capital is eager to see distressed or discounted sales even in this sector,” she added. “It just needs to be the right price.”
While more deals in the distressed space is expected among commercial real estate economists, there’s not likely to be an avalanche of transactions in that world, Bodner said.
Investors ‘look selectively’ at CRE deals
Some major commercial real estate players are sharpening their pencils to figure out which deals will make sense in 2024.
Alfonso Munk, Americas chief investment officer at Houston-based Hines, said during the recent economic and real estate turmoil, his firm has selectively continued to invest, particularly in property types like retail, medical office and student housing.
But Hines has historically been a major traditional office player, with Munk estimating the firm manages close to $30 billion in office assets. The firm has pulled back significantly on its investment in office, having only bought one office property in the U.S. in 2023, an 11-story building in downtown Washington, D.C., for nearly $60 million in April.
“I think you’ll see a re-shift, like we saw in retail, where the demand is going to be there, but it’s going to be focusing on the best office (buildings) and locations,” Munk said.
And despite the buzz last week around the Fed’s intention of cutting interest rates next year, Munk said Hines isn’t yet counting on rates going down in its underwriting assumptions, which means a lot of deals still won’t pencil.
He said he’s also closely tracking the labor market in 2024, as well as which markets are starting to get crowded and could be at risk of being oversupplied — places like south Florida; Austin, Texas; and Denver, according to Munk.
But metros like Tampa, St. Petersburg and Orlando in Florida; Charlotte, Raleigh and Durham in North Carolina; and Dallas are interesting because of their employment growth and infrastructure investments, such as the Brightline train that connects Miami and Orlando, Munk said.
“We look selectively at markets,” he continued. “You have to go where the barriers to supply are, (where there’s) not as much hype and you can still find value.”
Financial institutions still largely don’t want to own or manage a lot of real estate, and that might prompt lenders to continue to extend loans, even on troubled assets, he added.
KATHLEEN LAVINE, DENVER BUSINESS JOURNAL
As Denver’s final residential rental licensing deadline looms in front of landlords, the city has seen an uptick in applications to receive a license.
The City and County of Denver is taking the program seriously, as it has penalized delinquent landlords with approximately $82,000 in fines so far this year.
Jan. 1, 2024, is the final deadline for single-unit landlords to apply for a now-required license to run a rental property in the City of County of Denver. The Department of Excise and Licenses received a record number of license applications at 1,952 in November, but December has already surpassed that number with 2,415 applications so far.
Denver City Council voted in 2021 to require residential rental licenses; one of the goals of the program has been to make sure Denver renters live in safe and habitable spaces. In July, the program became the most licensed within Denver, with security guards and short-term rentals trailing it.
At least 144,000 rental units throughout the city of Denver now operate under the ownership of a correctly licensed individual or company. Currently, Denver has issued 12,580 active residential rental licenses to landlords. And 7,330 of those licenses belong to single-unit property owners, while 5,250 licenses belong to multi-unit rental properties, according to information provided by Eric Escudero, communications director for the Department of Excise and Licenses.
Single-unit landlords who still need to apply have until Jan. 1 to meet the deadline and pay only $25 of the $50 application fee. The process to get a license involves passing a rental inspection from a certified building inspector. Once obtained, the license is good for four years. If a property sells, the new owner must apply for a new license.
Meanwhile, landlords of multi-unit properties who have not received a license yet are approaching the one-year mark of delinquency, as multifamily landlords had until Jan. 1, 2023, to get a license. Denver continues to take action against those unlicensed property owners. The Department of Excise and Licenses has sent 1,755 warnings so far, followed by 317 $150 fines to different properties. The punishments have kept going for some landlords, with 47 $500 fines issued this past year, and a total of 11 $999 fines to landlords so far.
These properties have each received two $999 fines:
The city plans to begin warning single-unit landlords without pending applications at the beginning of the new year and will prioritize those with health complaints.
Pedestrian traffic and residential growth show signs of positive movement.
Development, storefronts, pedestrians and residents are slowly returning to Denver’s downtown core at pre-pandemic levels, but one chink in the armor remains ahead of the city’s recovery.
Stubborn downtown office vacancy rates reached a new high in the third quarter at a rate not seen in decades, according to the Downtown Denver Partnership’s 2023 State of Downtown Denver report. That number comes from CoStar data, but CBRE reports the number is closer to 30%.
“The greatest vulnerability that downtown Denver faces today — which is very true of every major metro and every downtown across the country — is commercial office [market],” DDP President and CEO Kourtny Garrett told the Denver Business Journal in an exclusive interview and sneak peek at the report.
Average daily pedestrian counts downtown are at 225,000 people per day, just 25,000 shy of averages in 2019. Big events have drawn up to 300,000, and nights and weekends sometimes exceed 2019 levels.
At the same time, the city center experienced residential growth of 1,000 more people this year and is on track to reach or even surpass a projected 40,000 people by 2028, according to the report. About 3,000 residential units are currently under construction to support growth in that sector.
Having residents and foot traffic has contributed to sustained interest from food and beverage and other businesses in the area, Garrett said. More than 27 new ground-floor businesses opened this year, including 17 new bars and restaurants, and the DDP counts 14 projects under construction at the end of 2023 that total $1.37 billion in development.
Long-term success for the city center, though, means ensuring a holistic and multidimensional downtown, Garrett said. Leaving out the workplace is not an option.
From a recruitment standpoint, Denver and Colorado as a whole continue to be very attractive markets, according to the report. The problem stems not from fewer companies choosing Denver, but choosing to relocate or make any changes to their office space, she said.
“For us, it’s a multipronged approach of business recruitment, business retention,” Garrett said, and finding other creative ways to make downtown a destination.
Adaptive reuse is an option that many in the city continue to explore. Adding residents will ultimately keep more workplaces in the area, Garrett said.
“If we can continue to build this place where people want to live, it will then also be a place where people want to work,” Garrett said. “When you have a strong residential population, it naturally begets really beautiful places.”
Depending on the metrics used, Denver appears to be ahead or in the middle of the pack in its recovery compared to similar cities in the U.S.
DDP’s rankings place Denver’s downtown ahead of many peers in job growth, geographic inclusion and fostering business for women entrepreneurs. The downtown employment base is now just 300 jobs shy of 2019 levels, according to the report.
Tech-related jobs account for a larger share of the area’s worker base, which could work against some efforts to boost weekday traffic as they are more likely to allow for remote work.
Garrett said the DDP also isn’t wearing rose-colored glasses about a tight lending market that could keep a lid on construction.
Still, she points to several game-changing projects underway in the area that indicate a sustained upswing: Ball Arena and Auraria Campus redevelopment, River Mile, and 16th Street Mall renovations.
“You don’t see that type of transformational development happening in a lot of cities,” Garrett said. “There is confidence in the market to say that these projects haven’t fallen by the wayside over the course of the last three years.”
November 20, 2023
New construction surge prompts landlords and property managers to provide more perks
SEATTLE, Nov. 20, 2023 /PRNewswire/ — Rental concessions—offers meant to entice tenants, such as free months of rent or free parking—are at their highest level in more than two years despite strong renter demand, Zillow’s latest data shows. That’s because property managers are now likely competing for tenants, as new, primarily upscale buildings from the recent construction boom enter the rental market.
About 30% of rental listings on Zillow advertised concessions in October, a surge that signifies a notable shift in the rental market. Within the past five years, concessions reached a peak in February 2021, with 36.7% of rentals offering incentives, coinciding with low renter demand during the pandemic. Those concessions then dropped as far as 19.4% in July 2022. However, the current rise comes as typical rent prices are nearly 30% higher than pre-pandemic levels, and annual rent growth just ticked back up(opens in a new window) after nearly two years of slowing down.
“The pandemic era’s increase in concessions was a direct response to decreased renter demand. Currently, we’re witnessing a different scenario where the demand for rental housing is high, but there’s been a notable rise in supply,” said Anushna Prakash, an economic research data scientist at Zillow. “To differentiate themselves from newer, potentially more amenity-rich apartment buildings, property managers are stepping up their game, offering more incentives to attract potential renters with a broader range of choices.”
Nationwide increase in concessions
Zillow data shows an astonishing 43 of the nation’s largest 50 metropolitan areas have seen a rise in rental concessions compared to last year. The most deal sweeteners are found in Salt Lake City, Utah, and San Jose, California, where more than half the rentals listed on Zillow in October advertised concessions.
Construction boom and its effects
This trend is especially pronounced in metro areas experiencing a construction boom. According to Fannie Mae’s Mid-2023 Multifamily Construction Update(opens in a new window) , markets such as Washington, D.C., Dallas and Austin are seeing more new developments, with Dallas and Austin having 74,000 and 66,000 new units, respectively, either recently completed or underway .
Zillow’s data reveals a similar upswing in concessions in those metros and others, including Phoenix and Atlanta, which are also among the top markets for new multifamily construction. This correlation highlights how the influx of new apartments is likely prompting housing providers to offer incentives to attract renters.
10 Metro Areas with the Largest Share of Rental Concessions
Source: Zillow data
Diverse concession strategies across metros
Conversely, metro areas such as New Orleans (9%), Providence (14%), Miami (14%) and New York (15%) observed the lowest concession rates in October. This varied landscape suggests that property managers across the country are exploring different strategies as they gauge the effectiveness of concessions before potentially adjusting rental prices.
Zillow’s research(opens in a new window), echoing the sentiments of economists and housing experts, highlights the fact that new construction and zoning reform are pivotal in enhancing housing affordability. The current trend in concessions, likely fueled by the spike in multifamily construction, is an interesting twist in the quest for affordability. It remains to be seen if the rise in concessions will translate to a significant drop in rent growth.
Zillow provides a clear and user-friendly platform for both housing providers and renters. Property managers can easily list concessions for their properties, while renters can find all available offers under the “Special Offers” tab on participating building detail pages, enabling them to make well-informed housing decisions.
About Zillow Group
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make home a reality for more and more people. As the most visited real estate website in the United States, Zillow and its affiliates help people find and get the home they want by connecting them with digital solutions, great partners, and easier buying, selling, financing and renting experiences.
Zillow Group’s affiliates, subsidiaries and brands include Zillow®; Zillow Premier Agent®; Zillow Home Loans℠; Trulia®; Out East®; StreetEasy®; HotPads®; ShowingTime+℠; and Spruce®.
All marks herein are owned by MFTB Holdco, Inc., a Zillow affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). © 2023 MFTB Holdco, Inc., a Zillow affiliate.
This time every year, homeowners who are planning to move have a decision to make: sell now or wait until after the holidays? Some sellers with homes already on the market may even remove their listing until the new year.
But the truth is, many buyers want to purchase a home for the holidays, and your house might be just what they’re looking for. As an article from Fortune Builders explains:
“ . . . while a majority of people take a step back from the real estate market during the holiday months, you may find when the temperature drops, your potential for a great real estate deal starts to rise.”
To help prove that point, here are four reasons you shouldn’t wait to sell your house.
1. The desire to own a home doesn’t stop during the holidays. While a few buyers might opt to delay their moving plans until January, others may need to move now because something in their life has changed. The buyers who look for homes at this time of year are usually motivated to make their move happen and are eager to buy. A recent article from Investopedia says:
“Anyone shopping for a new home between Thanksgiving and New Year’s is likely going to be a serious buyer. Putting your home on the market at this time of year and attracting a serious buyer can often result in a quicker sale.”
2. While the supply of homes for sale has increased a little bit lately, overall inventory is still lower than it was before the pandemic. What does that mean for you? If you work with an agent to price your house at market value, it could still sell quickly because today’s buyers are craving more options – and your home may be exactly what they’re searching for.
3. You can determine the days and times that are most convenient for you for home showings. That can help you minimize disruptions to your own schedule, which can be especially important during this busy time of year. Plus, you may find buyers are more flexible on when they’ll tour a house this time of year because they have more time off from work around the holidays.
4. And finally, homes decorated for the holidays appeal to many buyers. For those buyers, it’s easy to picture gathering with their loved ones in the home and making memories of their own. An article on selling at this time of year offers this advice:
“If you’re selling around a holiday and have decorations up, make sure they accent—not overpower—a room. Less is more.”
There are plenty of good reasons to put your house on the market during the holiday season. Connect with a real estate agent and see if it’s the right time for you to sell.
UNITED STATES: Apartments and a small lake in Reston, Virginia, a planned development not far from … [+]
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If you know what type of asset class you want to invest in and have found an opportunity, you’ll want to put together a business plan. This can include where the property is located, how you plan to improve it, and details related to the project. Once you have formulated the business plan, you might consider bringing in a partner—especially if you don’t have experience in real estate investing.
Since commercial properties typically have starting prices in the millions of dollars, new investors frequently struggle to gather the needed capital to make an acquisition. Rather than trying to figure it out alone, bringing on a great partner can help resolve these initial funding obstacles. If you connect with someone who has a track record of accomplishments and relationships with investors and lenders, it could be the perfect way to step into the game. Moreover, you’ll benefit from their experience and can pick up insight as you go through the investment process.
Use these guidelines as you search for a partner who can help you break in and achieve more in the commercial real estate space.
Look to see which investors, operators, and developers are actively carrying out projects that are similar to yours. Check online, read trade publications, and review what’s trading. Make a note of anyone you see who is already doing the type of project you want to emulate.
Oftentimes an established professional who is doing a larger project might be interested in the idea of bringing on a junior partner to do the day-to-day business on smaller deals. Suppose you’re looking to convert mixed use properties in Brooklyn. Maybe you’re considering a 10-unit multifamily with a store. There could be a developer who is doing a project involving 100 units with five stores. You could ask if they would consider partnering with you for a smaller arrangement. Offer to take care of the daily tasks and help with what’s needed.
So, what are these Future-Focused Fundamentals? Let’s explore a few key pillars:
Reach out to professionals you’ve worked with, including your attorney, mortgage broker, and investment sales broker. Tell them you’re looking for a partner for a potential project. Check if they have other clients or know developers who might be interested in hearing about your business plan. Your deal team could provide the inner track to get you connected with the right person.
Many cities have real estate associations—check your area to see what’s available at a local level. Look for national organizations and tap resources like Bisnow to see how you can connect. I helped found the Colgate Real Estate Council at my alma mater as a place where alumni, students, parents, faculty, and staff can connect with others in the real estate industry. Check alumni groups from your years of education, as they may open doors and lead to potential partners. Also review your social media channels and groups—sites like LinkedIn can be a powerful tool. Start following influencers who share information and updates on commercial real estate in your area; also reach out to others who share your same interests.
While it’s easy to connect digitally today, there’s really no substitute for meeting someone in person and getting a feel for them. You’ll be able to identify what their values are and how they will act as a partner. You want to understand their traits and skills so you know exactly who you’ll be working with as you go into a deal. While expertise and a history of high-performing projects plays a role, the way they achieved their success is far more important.
When I started in real estate, I built a couple of strong relationships that have lasted for decades. In fact, throughout my 25-year career I have relied on these personal connections, as they have led to some of the best long-term deals that have outperformed the market. As you move ahead, choose a partner wisely—if done well, you can create a working relationship that is maintained in deal after deal.
In an era dominated by technological advancements and digital transformation, the phrase “Back to the Basics” has emerged as a rallying cry within the multifamily housing industry. This movement reflects a growing realization that, amidst the rapid evolution of tools and systems, some core principles and values may have been inadvertently sidelined. As the multifamily landscape continues to evolve, there’s a renewed emphasis on reestablishing these essential building blocks, with a modern twist: enter “Future Focused Fundamentals.”
But what exactly do we mean by “back to the basics”? At its core, this movement seeks to reconnect the industry with the fundamentals that define the multifamily experience. It’s
about rediscovering the essence of what we do beyond the allure of cutting-edge technologies. It’s about putting the resident experience front and center, from the moment
they start their journey trying to find a home to the day they embark on their next adventure.
Enter “Future Focused Fundamentals.” This innovative approach combines the timeless principles that underpin multifamily living with a forward-looking perspective that leverages the power of technology. It’s not about rejecting progress; it’s about embracing it in a way that enhances, rather than detracts from, the human touch.
So, what are these Future Focused Fundamentals? Let’s explore a few key pillars:
In an age of data analytics and AI-driven insights, personalization has taken on new dimensions. Leveraging technology to better understand residents’ preferences, habits, and needs allows property managers to curate experiences that feel tailor-made. From suggesting nearby amenities to anticipating maintenance requests, personalization enhances resident satisfaction and fosters a sense of belonging.
As society grapples with environmental concerns and well-being, multifamily living can play a pivotal role. By integrating sustainable practices and wellness initiatives, properties can create a living environment that resonates with residents’ values and promotes a healthier lifestyle.
While digital communication is now the norm, it’s crucial not to lose sight of the art of effective conversation. Combining cutting-edge communication tools with genuine human interaction can create a seamless resident journey. Virtual tours and chatbots can coexist harmoniously with open houses and face-to-face interactions, providing a wellrounded
experience.
Technology can be a powerful enabler of community, connecting residents through online platforms and shared experiences. However, the heart of community is built through real connections and shared spaces. Future Focused Fundamentals embrace both virtual and physical aspects of community, fostering relationships that transcend the digital realm.
Education is a cornerstone of personal growth. Multifamily communities can provide opportunities for residents to engage in continuous learning, whether through workshops, seminars, or curated resources. By promoting lifelong learning, properties become more than just places to live; they become spaces for personal development.
In essence, Future Focused Fundamentals represent a conscious shift towards a holistic approach to multifamily living. It’s about recognizing that technology is a tool, not a substitute for genuine connection. By reimagining the basics with a future focused mindset, the industry can embrace innovation while staying grounded in the values that make multifamily living truly exceptional.
In conclusion, “Back to the Basics” has taken on new meaning within the multifamily housing sector. The concept has evolved into “Future Focused Fundamentals,” a harmonious blend of timeless principles and cutting-edge technologies. By placing the resident experience at the forefront and leveraging technology to enhance, rather than overshadow, human interaction, the industry can usher in a new era of multifamily living that is both innovative and deeply meaningful. As the journey continues, embracing these Future Focused Fundamentals will undoubtedly shape the multifamily landscape for years to come.
Homeownership is a dream shared by many, and for those considering investing in 2-4 unit properties, this dream just became more accessible. Fannie Mae, one of the nation’s leading providers of mortgage financing, will update its guidelines on November 18th, 2023 to make it easier for buyers to secure financing for 2-4 unit properties. The key change is a reduction in the minimum down payment requirement to just 5%, making it more affordable for aspiring homeowners and investors to venture into the multi-unit property market.
Fannie Mae, a government-sponsored entity that plays a crucial role in the U.S. housing market, has traditionally had varying down payment requirements for different types of properties. The standard down payment for a single-family home has typically been 3%, while larger down payments were required for multi-unit properties. With the recent update, buyers can now take advantage of a more affordable 5% down payment for 2-4 unit properties.
Benefits of the New 5% Minimum Down Payment:
Enhanced Affordability: The reduced minimum down payment significantly enhances the affordability of 2-4 unit properties. This change allows a broader range of individuals and families to explore the advantages of multi-unit ownership, such as rental income and property appreciation.
Diversified Income Streams: Owning a multi-unit property can be a strategic financial move. With the lower down payment requirement, investors have an opportunity to diversify their income streams through rental income from multiple units within the same property.
Property Investment: The updated guidelines are particularly advantageous for real estate investors. With a lower upfront cost, investors can allocate their capital to other investment opportunities while enjoying the potential for income and property value growth.
Housing Flexibility: Multi-unit properties provide homeowners with the flexibility to live in one unit and rent out the others, effectively offsetting their mortgage expenses. The reduced down payment makes it more feasible for homeowners to explore this housing arrangement.
Supporting Affordable Housing: Fannie Mae’s update aligns with broader efforts to increase affordable housing options in the United States. By reducing the minimum down payment, more individuals and families can enter the housing market and access quality multi-unit properties.
Important Considerations
While the 5% down payment requirement is an exciting development for many, it’s essential to keep several factors in mind:
Creditworthiness: Lenders will still assess your creditworthiness to determine your eligibility for a mortgage. A strong credit profile remains crucial.
Income and Debt: Lenders will also consider your income and existing debt when evaluating your eligibility and determining the loan amount you qualify for.
Property Eligibility: Not all multi-unit properties may be eligible for this lower down payment option. Ensure that the property you’re interested in meets Fannie Mae’s criteria.
Fannie Mae’s updated 5% minimum down payment requirement for 2-4 unit properties is a promising development for aspiring homeowners and investors. It offers enhanced affordability and opens doors to the world of multi-unit property ownership. This change reflects a broader effort to make homeownership and real estate investment more accessible, contributing to a more diverse and inclusive housing market in the United States. If you’re considering a multi-unit property purchase, it’s an excellent time to explore your options and make your homeownership dreams a reality.