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Happy Tuesday! This is The Real Deal. The email that tells you the latest that's going on with Real Estate in plain jane english.
Email Read Time: 2 Minutes & 52 Seconds
In Today's Email:
For the first time since 2019, the average rate for a 30-year mortgage breached 4 percent in March, then accelerated at an even faster pace, following the Fed’s first interest rate hike in over four years.
Higher mortgage rates make houses less affordable, in an environment where elevated prices are already an inhibiting factor.
In February, fewer existing homes sold than in any of the previous five months, as the number of existing homes available for purchase declined for the seventh straight month.
The record-low supply and sturdy demand is maintaining upward pressure on values, with the median sale price reaching $382,200 in February, up 15.4 percent year-over-year.
These conditions reinforce the multifamily segment’s demand surge, as the gap between mortgage and rent payments is wide, despite the recent swell in effective rents.
Preliminary estimates for the first quarter of 2022 show a 16.8 percent lift in average effective apartment rents in the United States, slightly faster than the annual price leap for homes.
The formidable apartment rent increase is facilitated by extremely tight vacancy, with tenants competing for record-low volumes of available units in markets across the country.
The national rental vacancy is estimated at just 2.4 percent for March 2022, almost 200 basis points below the 2019 register. Metros across the Sun Belt are recording the steepest rent climbs relative to home price growth.
The six largest Florida markets, along with Charlotte and Atlanta, each had 2021 average effective rent jumps that were 1.5 times faster than their respective median home price rises. Young adults are moving to these markets in waves, aligning well with apartment demand.
Remember Terrance Doyle's segment from last week?
Well, this week we're looking at more of his secret sauce.
This is how Terrance underwrites a multifamily deal in under 60 seconds...
Step 1: Can I bump rents up 25%?
Step 2: Is it a minimum of 7% un-leveraged yield?
Step 3: Proceed with due diligence
We're your partner for sourcing, analyzing, and negotiating long/short term rentals. Go to www.TeamKekoa.com to get started today.