Within commercial real estate (CRE), the apartment sector garnered the second-highest return in the second quarter—behind only industrial—at 16.4% quarterly annualized.
Within REIT property subsectors, apartment REITs only fell by 5.3%, faring better than office (15%) and retail (9.5%).
Of particular interest to Class A multifamily investors, professional and business services employment advanced by another 89,000 jobs during July. There are now nearly one million more people working in this critical sector than just prior to the start of the pandemic.
Sales of existing homes also dropped for the fifth straight month in June, according to the National Association of Realtors. Total existing home sales slid by 5.4% from the month prior.
Renters are indeed having to pay a higher percentage of their income towards rent, but the rent-to-income ratio is still far below the 33% widely regarded as the threshold for “cost burdened.”
The 0.9% decline in inflation-adjusted economic output in 2Q reflects weakness in private inventories, housing and government spending.
Within the past year, eye-popping home prices and a rapidly increasing mortgage rate have shut more and more people out of the homebuying market within the past several months, pushing more people to rent for longer.
This week’s GDP report may very well indicate that the economy contracted during 2Q 2022. That would make it the second consecutive quarter of negative economic growth, which is often and incorrectly assumed to be the definition of a recession.
According to the Census Bureau, total retail sales in June increased by 1.0% compared to a month earlier. This is a very solid monthly growth rate and it reverses the -0.1% contraction reported in May.
The impact of the 2 percentage point hike between late December of 2021 and mid-April of 2022 was equivalent to a breathtaking 27% jump in the cost of buying a home, per the Harvard housing study.