Investor Demand for Senior Housing Continues to Grow in U.S – Rebranded

According to CBRE’s latest U.S. Seniors Housing & Care Investor Survey, investor appetite for seniors housing & care real estate continues to grow, with the majority of investors who specialize in the sector planning to increase the size of their portfolios in 2017.

The 2017 survey reveals the intentions of the most influential seniors housing investors, developers, lenders and brokers throughout the U.S. Despite investors’ expectations for rising interest rates, nearly 60% of respondents expect to increase the size of their portfolios in 2017 compared with 47% a year ago.

Compared with prior survey results, the change in expectations for capitalization rates was negligible, indicating the possibility for more pricing stability. The number of investors anticipating a rise in cap rates increased to 44% from 33% a year ago, with only 4% expecting to see a decrease. More than half (52%) of investors expect capitalization rates to remain stable over the next year.

A noticeable shift was apparent in the compression of investment Class C assets that CBRE attributes to increased interest from investors for value-add opportunities in a yield-constrained market. The largest increase was reported for investment Class A nursing care at +24 bps from a year ago, which is likely attributable to the uncertainty regarding health care legislation or investors’ concern over the surging pricing for nursing care properties in recent years.

Independent living eclipsed assisted living as the biggest opportunity for investment, increasing to 40% of respondents from 31% a year ago. Similarly, age-restricted properties also gained interest as participants begin to direct their attention towards the more lifestyle focused spectrum of seniors housing. Memory care properties continued to lose ground, with investors now seeing the last opportunity for this property type, likely due to the overbuilding of this segment in recent years.

Increased construction activity remained the top concern for investors (38%) that would negatively impact the seniors housing and care market over the next 12 months, followed by rising interest rates (22%) and property-level operation (21%). Rising interest rates showed the biggest increase from 11% a year ago.

“Investor interest in the seniors housing sector is clearly rising. Favorable investment yields, the need-driven component of demand and the aging population storyline will continue to drive investment into the sector in 2017 and entrench its attractiveness to investors. We expect valuations to remain stable in this year with a strong long-term outlook. The industry’s fundamentals suggest the necessity for more capacity over the long-term, with short-term oversupply in select markets becoming more likely as a result of the recent record-setting construction levels,” said Jeanette Rice, head of multifamily research, Americas, CBRE.

“As the sector goes through a period of “institutionalization”, the corresponding operational results will continue to evolve with greater efficiencies and innovative design trends, which will be welcomed by investors and developers in the face of increasing supply. The seniors housing investment market is expected to move into a more rational transaction period as capitalization rates slowly increase. A shift in investors’ focus from development and acquisitions to the portfolio and operating platform optimization is also likely. Sound property level operations, capital inflows from foreign investors, and moderated development trends will be critical to maintaining short-term valuations,” said Zach Bowyer, managing director, Valuation & Advisory Services, CBRE.

Courtesy of WORLD PROPERTY JOURNAL and credited to Michael.

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Real Estate Recap on July 2017 -Rebranded

Day-by-day market activity:

Friday, July 7
U.S. Bureau of Labor Statistics Employment Situation Summary

  • Total nonfarm payroll employment increased by 222,000 in June, and the unemployment rate was little changed at 4.4 percent, the U.S. Bureau of Labor Statistics reported today.
  • Employment increased in health care, social assistance, financial activities, and mining.
  • In June, the unemployment rate, at 4.4 percent, and the number of unemployed persons, at 7 million, were little changed. Since January, the unemployment rate and the number of unemployed are down by 0.4 percentage point and 658,000, respectively.
  • The number of long-term unemployed (those jobless for 27 weeks or more) was unchanged at 1.7 million in June and accounted for 24.3 percent of the unemployed. Over the year, the number of long-term unemployed was down by 322,000.
  • In June, 1.6 million persons were marginally attached to the labor force, down by 197,000 from a year earlier.
  • Employment in professional and business services continued to trend up in June (+35,000) and has grown by 624,000 over the last 12 months.

Thursday, July 6

Mortgage Applications Increase in Latest MBA Weekly Survey

  • Mortgage applications increased 1.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 30, 2017.
  • The refinance share of mortgage activity decreased to 44.9 percent of total applications from 45.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.2 percent of total applications.
  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased to its highest level since May 2017, 4.20 percent, from 4.13 percent, with points decreasing to 0.31 from 0.32 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) increased to its highest level since May 2017, 4.10 percent, from 4.09 percent, with points increasing to 0.23 from 0.20 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages increased to its highest level since May 2017, 3.43 percent, from 3.39 percent, with points decreasing to 0.32 from 0.33 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 5/1 ARMs increased to its highest level since March 2017, 3.37 percent, from 3.31 percent, with points decreasing to 0.22 from 0.25 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
  • The 30-year fixed mortgage rate on Zillow Mortgages is currently 3.83 percent, up 16 basis points from this time last week. The 30-year fixed mortgage rate rose throughout the week, reaching 3.87 percent on Tuesday before falling to the current rate on Wednesday.
  • The rate for a 15-year fixed home loan is currently 3.07 percent, while the rate for a 5-1 adjustable-rate mortgage (ARM) is 3.09 percent.

“Mortgage rates moved decisively higher last week, reaching their highest levels in two months, on speculation that the European Central Bank is looking to end its bond-buying program which has helped hold down long-term interest rates around the world,” said Erin Lantz, vice president of mortgages at Zillow. “Despite a holiday-shortened week, important economic news later in the week – notably today’s publication of the minutes of the Federal Reserve’s June meeting and Friday’s monthly jobs report – could move rates.”

Wednesday, July 5

  • Home prices nationwide, including distressed sales, increased year-over-year by 6.6 percent in May 2017 compared with May 2016 and increased month-over-month by 1.2 percent in May 2017 compared with April 2017.
  • The CoreLogic HPI Forecast indicates that home prices will increase by 5.3 percent on a year-over-year basis from May 2017 to May 2018, and on month-over-month basis home prices are expected to increase by 0.9 percent from May 2017 to June 2017.
  • Overall single-family rent inflation was 3.1 percent on a year-over-year basis in May 2017 compared with May 2016.
  • Nationally, the year over year home price changed by 6.6 percent. Most states experienced increases, except Alaska, West Virginia and Wyoming. The states with the highest increases were Utah (10.4 percent) and Washington (12.6 percent), both experiencing double-digit increases.

“For current homeowners, the strong run-up in prices has boosted home equity and, in some cases, spending,” said Frank Nothaft, chief economist at Core Logic. “For renters and potential first-time homebuyers, it is not such a pretty picture. With price appreciation and rental inflation outstripping income growth, affordability is destined to become a bigger issue in most markets.

Courtesy of Inman and Credited to the writing staff.

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Home Builder Lumber Shortage Growing in U.S – Rebranded

According to the May 2017 survey for the NAHB/Wells Fargo Housing Market Index, availability of building materials, especially framing lumber is rising on the list of home builder concerns. The results revealed that 21 percent of single-family builder respondents reported a shortage of framing lumber.

“It is certainly concerning that we have seen such a large jump in reported framing lumber shortages in a relatively short period of time,” said NAHB Chief Economist Robert Dietz. “The rising reports of shortages along with the recent increases in softwood lumber prices can almost certainly be related to the ongoing softwood lumber trade dispute between the U.S. and Canada.”

This is a striking jump from 2014 when no product or material was cited as being in short supply by more than 15 percent of builders. In fact, this remained true for most other materials in the 2017 survey. Next to framing lumber, the most widespread shortages reported in 2017 were ready-mix concrete and trusses, with 14 percent of builders reporting shortages of each.

While other building materials have remained fairly stable, framing lumber has been the notable exception. Only eight percent of builders reported a framing lumber shortage in July of 2014, but that share more than doubled in May of 2017, to 21 percent–a post-housing recession high. The last time framing lumber shortages were as widespread was in October of 2004, at a time when the annual rate of housing starts was around 2 million, compared to the current rate of about 1.1 million.

“Lumber is a major component in new home construction, and it is critical that we continue to have a sufficient and fairly priced supply to keep up with housing demand,” said NAHB Chairman Granger MacDonald. “These reports of framing lumber shortages and rising prices only harm housing affordability and price countless American households out of the housing market.”

Courtesy of Residential News  and credited to Michael Gerrity

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Manhattan apartment prices hit record, averaging $2.19 million -Rebranded

  • Prices for Manhattan real estate hit a new all-time high in the second quarter, with apartments now selling for an average of $2.19 million.
  • The total number of sales jumped 15 percent compared with last year.
  • Douglas Elliman Real Estate and Miller Samuel Real Estate Appraisers and Consultants compiled the report.

Prices for Manhattan real estate hit a new all-time high in the second quarter, with apartments now selling for an average of $2.19 million, according to a new report.

Despite soft sales in the second half of 2016 and an uneven start to the year that led many to predict a slowdown at the high end, sales in Manhattan showed surprising resilience in the second quarter.

The total number of sales jumped 15 percent compared with last year, to 3,153, according to the report from Douglas Elliman Real Estate and Miller Samuel Real Estate Appraisers and Consultants.

The average sales price rose 8 percent over the same period last year, hitting $2.19 million. The median sales price also hit a record, up 7 percent to $1.19 million. While homes were sitting on the market slightly longer, inventory fell modestly.

Guests attend a pool party in a penthouse apartment in New York.

“The expectation for the second quarter had been more modest,” said Jonathan Miller, president of Miller Samuel. “We did see the market cool in April. But by May the market kicked in and the quarter ended up finishing strong.”

Miller said the strong sales and prices were driven by two factors: more realistic sellers and continued pent-up demand from buyers who held off purchases in 2016.

“Sellers realized that if they wanted to move their property, they needed to be more realistic,” he said.

Condos — especially new condos — continue to fuel the rise. The average condo sales price jumped 13 percent over the same quarter last year, to $3.12 million. Despite concerns about a glut of fresh condo towers in Manhattan, sales of new units continued to be brisk. The average sales price for new condos jumped 7 percent to $4.70 million. Inventory rose only slightly, to a 5½-month supply.

As for the rest of the year, Miller said that the very top of the market — multimillion-dollar apartments — will continue to be weaker than the entry-level market (entry level being a relative term in Manhattan). But, he said, the outlook for the upper end has improved.

“I think the upper half of the market is stronger than we think,” he said

Courtesy of cnbc.com credited to Robert

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Mortgage applications rise 1.4%, defying higher rates –Rebranded

  • Total mortgage application volume increased 1.4 percent from the previous week, according to the Mortgage Bankers Association.
  • Application volume is 26 percent below the same week one year ago when rates were lower.

The math doesn’t exactly make sense, but perhaps the sentiment does.

More borrowers applied for home loans last week, even as interest rates made their largest five-day jump since just after the presidential election. Perhaps some thought it might be their last chance at low rates.

Total mortgage application volume increased 1.4 percent from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted report. Application volume was 26 percent below the same week one year ago, when rates were lower.

Refinance volume, which is highly rated sensitive, dipped just 0.4 percent for the week, despite interest rates hitting their highest level in seven weeks. While millions of borrowers have already refinanced at rock-bottom rates — some several times — there is still a sizable pool who could benefit from a refinance. Well over a million borrowers could qualify and see at least $200 per month in savings, according to a recent survey by Black Knight Financial Services.

Homebuyers, who are less rate-sensitive week-to-week, accounted for the gains in total volume. Purchase applications rose 3 percent for the week and are 6 percent higher compared with a year ago. Buyers have been plagued by high prices and limited supply, which may be why the adjustable-rate mortgage share of activity increased last week. ARMs offer lower interest rates than fixed term loans.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $424,100 or less increased to its highest level in about two months, 4.20 percent, from 4.13 percent, with points decreasing to 0.31 from 0.32, including the origination fee, for 80 percent loan-to-value ratio loans.

“The 30-year fixed mortgage rate increased to its highest level since May 2017, following a jump in the U.S. 10-year Treasury which was driven mainly by the news that European economies have strengthened and the ECB may be poised to tighten its accommodative policies,” said Joel Kan, an MBA economist.

Mortgage rates continued to move higher early this week but then stalled Wednesday. All eyes are now on Friday’s monthly employment report, which could move markets.

“Friday’s jobs report is the headliner. If rates make it through Friday morning at current levels or below, the recent trend toward higher rates would be officially defeated.

Courtesy of Mortgage News Daily and Credited to Matthew Graham.

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