The Gray Report Podcast Spencer Gray

Signs of positive signs for job growth and housing demand are at odds with sluggish commercial real estate capital markets, but key developments could spur more activity among investors and property owners.

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Sources discussed in this episode:

CoreLogic: “US CoreLogic S&P Case-Shiller Index Posts a Small Gain in March, Up 0.7% From Last Year” - https://www.corelogic.com/intelligence/us-corelogic-sp-case-shiller-index-posts-a-small-gain-in-march-up-0-7-from-last-year/

RealPage: “U.S. Home Prices Accelerate, Rising for Second Consecutive Month” - https://www.realpage.com/analytics/us-home-prices-up-second-consecutive-month/

RentCafe: “New Build-to-Rent Homes Hit Record With 3 Times as Many Houses Under Construction” - https://www.rentcafe.com/blog/rental-market/market-snapshots/build-to-rent-single-family-homes-construction/

Newmark: “United States Multifamily Capital Markets Report, Q1 2023” - https://www.nmrk.com/insights/market-report/united-states-multifamily-capital-markets-report

MSCI: “Prices of All Major US Property Types Fell in April” - https://www.msci.com/www/quick-take/prices-of-all-major-us-property/03849362277

For the latest multifamily news from across the internet, visit the Gray Report website: ⁠https://www.grayreport.com/⁠

DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.

Fannie Mae predicts recession, Freddie Mac expects interest rates to remain elevated for the long term, and there is growing attention on the impact of upcoming loan maturities in the multifamily investment market. Continued signs of growing housing demand support the strong fundamentals of the multifamily market, but investment sales activity remains low in the current high interest rate environment.

Sources discussed in this episode:

The Wall Street Journal: “A Housing Bust Comes for Thousands of Small-Time Investors” - https://www.wsj.com/articles/a-housing-bust-comes-for-thousands-of-small-time-investors-3934beb3

Fannie Mae: May 2023 Economic and Housing Forecast” - https://www.fanniemae.com/research-and-insights/forecast/economy-still-expected-slow-housing-construction-looking-more-upbeat

Freddie Mac: “Economic, Housing and Mortgage Market Outlook” - https://www.freddiemac.com/research/forecast/20230522-economic-risks-remain-weighted-downside-because-stubborn-inflation

Moody’s Analytics: “America’s Downtown Recovery and What that Means for the Multifamily/Office Market” - https://cre.moodysanalytics.com/insights/cre-news/americas-downtown-recovery-and-what-that-means-for-the-multifamily-office-market/

For the latest multifamily news from across the internet, visit the Gray Report website: ⁠https://www.grayreport.com/⁠

Sign up for our free multifamily newsletter here: ⁠https://www.graycapitalllc.com/newsletter⁠

DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.

The potential for distress looms large over the commercial real estate market, and a recent report notes that the multifamily market "has the most significant amount of debt maturities coming due," and "pricing is off the most of any asset class." With elevated interest rates as a persistent challenge, these debt maturities could have a major impact on multifamily pricing. At the same time, the fundamentals of the multifamily market are still strong, which continues to drive the interest of investors waiting for a buying opportunity at the intersection of the pricing mismatch and looming debt maturities in the apartment market.



Sources discussed in this episode:

Colliers: "US Market Snapshot Q1 2023" - https://www.colliers.com/download-article?itemId=2f46bb37-44a6-4a2d-8b2a-f9fda0a60c14



GlobeSt: "CRE Lending Index Shows 33% Drop" - https://www.globest.com/2023/05/16/cre-lending-index-shows-33-drop/



GlobeSt: "Warren Buffett: It's Time for CRE Borrowers to Feel the Pain" - https://www.globest.com/2023/05/12/warren-buffett-its-time-for-cre-borrowers-to-feel-the-pain/



GlobeSt: "Can These Recent Private Equity Deals Actually Save Commercial Real Estate?" - https://www.globest.com/2023/05/16/can-these-recent-private-equity-deals-actually-save-commercial-real-estate/



Gallup: "Real Estate Lead as Best Investment Shrinks, Gold Rises” - https://news.gallup.com/poll/505592/real-estate-lead-best-investment-shrinks-gold-rises.aspx



Bisnow: "‘There’s A Degree Of Wonder’: Why New AI Tools May Finally Be The Tech That Shakes Up Real Estate" - https://www.bisnow.com/london/news/proptech/theres-a-degree-of-wonder-why-new-ai-tools-may-finally-be-the-tech-that-shakes-up-real-estate-118953



Bisnow: "How ChatGPT Will Change Real Estate — In Its Own Words" - https://www.bisnow.com/london/news/proptech/how-chatgpt-will-change-real-estate-in-its-own-words-118956



For the latest multifamily news from across the internet, visit the Gray Report website: ⁠https://www.grayreport.com/⁠



Sign up for our free multifamily newsletter here: ⁠https://www.graycapitalllc.com/newsletter⁠



DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.

New rent growth data cements a robust positive trend for multifamily performance, with four consecutive months of increasing monthly rent growth and forecasts that Q2 rent growth could exceed pre-pandemic averages if current trends continue. On the other hand, the rent growth measured in the Consumer Price Index, (0.6% month-over-month and 8.8% year-over-year), continues to misrepresent the current state of the market and are a large part of the high year-over-year inflation number (4.9%) and the elevated monthly inflation (0.4%, up from 0.1% the previous month).



Sources discussed in this episode:



Bureau of Labor Statistics: “Consumer Price Index, April 2023” - https://www.bls.gov/news.release/cpi.nr0.htm


NAR: “April 2023 Commercial Market Insights” - https://www.nar.realtor/commercial-market-insights/april-2023-commercial-market-insights

Yardi Matrix: “National Multifamily Report, April 2023” - https://www.yardimatrix.com/publications/download/file/3792-MatrixMultifamilyNationalReport-April2023

Apartment List: “The Number of ‘Super Commuters’ Has Fallen to the Lowest Level in Over a Decade” - https://www.apartmentlist.com/research/number-of-super-commuters-has-fallen-to-lowest-level-in-over-a-decade

SSRN: “Persistently Poor Performance in Private Equity Real Estate” - https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4437519


For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/

Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter

DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.

The Federal Reserve increased the Federal Funds rate by 25 BPS, breaking the 5% barrier in a rate hike that was largely anticipated by the markets, but with comments by Fed Chair Powell indicating a pause in interest rate increases, the next meeting of the Federal Reserve could be a significant indicator of the Fed's path going forward. As the FOMC anticipates economic decline, the multifamily market continues to see positive rent growth in the Northeast and Midwest, but growth has been slower in many previously-strong markets in the Sunbelt and West.

Sources discussed in this episode:

Yahoo Finance: “Federal Reserve pushes interest rates above 5% for first time since 2007” - https://finance.yahoo.com/news/federal-reserve-interest-rate-decision-may-3-155524134.html

RealPage: “Reframing 1st Quarter’s Performance Into Historical Perspective” - https://www.realpage.com/analytics/1st-quarter-demand-comparison/

Apartment List: “National Rent Report, April 2023” - https://www.apartmentlist.com/research/national-rent-data

IU Center for Real Estate Studies: Prepare for a Generational Housing Bubble” - https://www.ibrc.indiana.edu/realestateoutlook/index.html

RealPage: “Apartment Operational Expenses Soar” - https://www.realpage.com/analytics/apartment-operational-expenses-soar/

For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/

Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter

DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.

Despite a report from Fannie Mae downplaying the region's performance, Midwestern markets have been a major contributor to the upswing in national rent growth.

Sources discussed in this episode:

RealPage: “U.S. Apartment Market Rallies After 3+ Volatile Years” - https://www.realpage.com/analytics/volatile-us-apartment-market-calms/

Fannie Mae: “Multifamily Economic and Market Commentary” - https://www.fanniemae.com/media/46851/display

Marcus & Millichap: “What’s Happening with CRE Supply and Demand?” - https://www.marcusmillichap.com/research/videos/whats-happening-with-cre-supply-and-demand

Harvard Joint Center for Housing Studies: The Sociology Of Housing: How Homes Shape Our Social Lives - https://www.jchs.harvard.edu/blog/sociology-housing-how-homes-shape-our-social-lives

For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/

Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter

DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.