Christopher Thornberg

Negativity sells. Gloomy real estate headlines flood YouTube, TikTok, Instagram, and X (formerly Twitter), spreading stories of bubbles, crashes, and price collapses. These channels, often lacking economic expertise, misguide many consumers, discouraging potential buyers for years. Many dream of a market crash to finally afford a home. The pandemic caused prices to surge, and then rates surged higher, sparking more negative narratives. Distinguishing fact from fiction in these headlines is challenging but crucial. The latest report does just that. Subscribe today for the full report that debunks the myths of the current housing market! Subscribe by visiting our website at www.ReportsOnHousing.com Our reports are designed to set expectations. Invest in your business and subscribe. It will help you close more deals.

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Apartment purchase prices are down compared to recent peaks…so why hasn't transaction volume picked up? Part of the reason is that, despite the recent decline in prices, they still remain meaningfully higher than they were pre-pandemic. In this latest post, I look at how price changes have varied between Class A, B and C units over the last four years. https://lnkd.in/giZwArcT

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A new state legislative bill, which is a vehicle for commercial rent control, will be heard before the CA State Senate Judiciary Committee on Tuesday, April 30. The bill, SB 1103 (Menjivar), will upend commercial tenant-landlord relationships, limit security deposits, and add complex and ambiguous regulations to the business-to-business relationship. SB 1103 will have detrimental consequences not only on commercial landlords but also on small businesses and not-for-profit organizations that the bill is trying to protect.

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Weakness for single-family and multifamily construction in the May data. The ratio of multifamily completions to the pace of starts is 1.8, a large reversal from the 0.6 ratio in Apr 2022 as the apartment slowdown continues: https://lnkd.in/eBmxee6G

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The least affordable metro area for America’s middle class: San Jose-Sunnyvale-Santa Clara "The San Jose-Sunnyvale-Santa Clara metro area in California is the least affordable for all middle-class income ranges in the U.S., according to the report." - To afford a house in the San Jose area, you will need to make $468,252 — the highest of all 221 U.S. metro markets surveyed in an April National Association of Realtors report. - In addition, the average San Jose home value is $1,461,923, up 10.1% over the past year, according to Zillow. - In its report, Creditnews Research warns that the San Jose-Sunnyvale-Santa Clara metro area runs the risk of becoming a “donut city” as rising costs lead to a “wave of out-migration where residents and businesses relocate to the suburbs.” https://lnkd.in/g5BP6b2X

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Less housing is not very inclusionary. #REITsforHousing #housingsupply #affordability

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On this episode of RealPage Economy Express, we delve into the latest economic data, shedding light on the robust job growth witnessed in March, persistent inflationary pressures, the mixed housing market picture, and the Federal Reserve's cautious stance on monetary policy. #EconomicTrends #RealPage #MarketAnalysis

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There have been a lot of headlines on the liquidity issues faced by non-publicly traded REITs, particularly Blackstone’s B-REIT and Starwood's S-REIT. Both firms have been facing major liquidity squeezes... but is panic warranted? My two cents: things are going to be OK. Given the number of questions I’ve received on the issue, I wanted to lay out the facts and offer my perspective: 🤔 What's a Non-Traded REIT? Unlike publicly traded REITs with readily available stock market liquidity, non-traded REITs (NTRs) offer limited redemption windows, creating a structural challenge. 🤷 The Problem? A recent NAREIT study shows a 22% increase in NTR redemption requests, highlighting the difficulty NTRs face in meeting redemption demands without sufficient cash flow. ⏰ Why Now? CBRE revealed a 15% drop in office occupancy rates, highlighting negative real estate sentiment and potentially driving the 22% surge in NTR redemption requests. So, what does this mean? 🔎 BREIT faced significant redemption requests throughout 2023 and in 2024, but successfully fulfilled all requests in February, March and April of 2024. 🧐 SREIT's liquidity reserves dropped significantly, reaching a low of $752 million in April 2024, forcing them to tap a $1.3 billion unsecured credit line with limited remaining funds ($225 million). 💡Non-traded structures have created a liquidity mismatch - investors hold quarterly redemption options, but the underlying assets and sluggish CRE market make it difficult for firms to liquidate properties fast enough to meet demands. Reality or Market Jitters? BREIT and SREIT’s respective office exposures are a mere 3% and 7%, representing a miniscule amount of the PE giant’s NTR’s gross exposures. Likewise, both BREIT and SREIT boast 95% occupancy across all sectors - further highlighting the quality of the minimal office product within each firm's NTR vehicles. Recent liquidity challenges highlight a negative sentiment on commercial real estate, which has led to a bank-run-like panic from retail investors seeking to pull cash out. This sentiment mostly stems from higher interest rates and office woes: declining demand due to remote work trends, lower rents, rising vacancies, and refinancing difficulties for office owners with maturing loans on lower-quality properties. Redemptions more than likely stem from these negative headlines and a level of retail investor unsophistication of what they actually own. TLDR: BREIT and SREIT's minimal and strong performing office exposure positively positions them to navigate these challenges, although there are some lessons learned by the industry about this structure and the consequences of retail participation. While this issue likely won’t go away in the near term, I don’t see this issue mushrooming into a bigger catastrophe. While Blackstone’s Jon Gray may be biased, I agree with his quote from a recent interview: “the market has reached its nadir, and now is the opportune moment to buy.”

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Since Q1 2022, submarkets that are immediately adjacent to downtown (so-called Inner Ring submarkets) have seen annual multifamily rent growth of 3%, outstripping lower-density suburbs and office-dominated downtowns. #CBRE

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Awesome, Jason 😃 I’ve taken 3-4 of your classes and am better for doing so. Trendsheet Lite v2 helps me create poly charts like below which speak volumes about what’s taking place in the most recent competing market segment. With fewer and fewer sales, it’s been more difficult to analyze trends so I expand sources such as Infosparks, Appraiser Genie (Freedom) export & charts, and Redfin for that local market. I’m cautious about basing a time or market change % adjustment on 12-months chart, more like 6-months in Infosparks.

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The ANREV/INREV/NCREIF Capital Raising Survey has just been released and illustrates the challenges of our industry in 2023: -51% in capital raised last year compared to 2022! Dive into the report for more global and APAC insights https://lnkd.in/gXFfAKY ANREV INREV National Council of Real Estate Investment Fiduciaries (NCREIF) #nonlistedrealestate #capitalraising #anrev

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Appraisers in the U.S. need better tools that allow them to use more judgement in valuing assets. My colleague Willem Vlaming has been developing work showing that in parts of the world with low market liquidity and few comparable sales, that appraisal teams have been better able to capture the decline in asset values. http://ms.spr.ly/6040Yw5ts MSCI Real Assets #CRE

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A good long-term look at SF BTR starts by the NAHB. A few moving parts in the analysis, but they show two primary trends: BTR starts accelerating (80,000 units started in the past 4 quarters, up 16% compared to the 4 quarters before) BTR starts accounting for a larger share of all SF starts (about 8% now, compared to 4-5% a few years ago). The rental and for-sale housing industries continue to adapt to the changing demand preferences for housing, as well as the market dynamics that emerge as mortgage rates go from all-time lows a few years ago, to 20-year highs today.

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From DC to Your Doorstep: NAR’s Latest Insights from Chief Economist, Dr. Lawrence Yun https://lnkd.in/g4ANM_3H This week, I am bringing you housing and market information from NAR Legislative meetings held last week in Washington DC. Since 1995, the U.S. population has surged by 70 million, driving demand in a market already constrained by a persistent shortage of homes for sale. As a result, first time home buyers continue to suffer the most coupled with having to compete with investors in the entry level price points and mortgage interest rates at or near 7%. In all this, there is still optimism and hope. Join me for a special NAR economic update report. Weekly Show Graphics and More at https://lnkd.in/gJeYSHWt Head To My YouTube Channel https://lnkd.in/exg4MvQ Subscribe To SimplyDesMoines YouTube Channel https://lnkd.in/g55pUuPd 

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The CMBS market has made a remarkable comeback in the first five months of 2024, with U.S. private-label CMBS issuance skyrocketing to $32.2 billion, up from $13 billion during the same period in 2023. This resurgence highlights the critical role of CMBS in commercial real estate (CRE) lending, now accounting for 14% of all U.S. CRE lending. Despite rising defaults, CMBS is effectively bridging the liquidity gap left by commercial banks. Major players like Goldman Sachs, Bank of America, and Blackstone are driving this growth, leveraging their substantial balance sheets to meet the increasing demand for securitized loans. With narrowing spreads and a favorable interest rate environment, CMBS continues to be a crucial source of capital for CRE borrowers and investors, offering a reliable alternative in a challenging market landscape. As the market adapts to changing economic conditions, CMBS stands out as a resilient and indispensable component of the CRE financing ecosystem. #CMBS #RealEstate #Finance #CRE #Investment #MarketTrends #EconomicRecovery #CapitalMarkets #CommercialRealEstate https://lnkd.in/eNYvb9Xv

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There are a number of good real estate finance texts out there, but my favorite is by Norm Miller, David Geltner, Jim Clayton, and Piet Eichholtz. The reason I like it so much is that it puts front and center the fact that any increase in returns generated by leverage is offset by an increase in risk. That increase may be measured by the fact that property level return is not affected by financial structure, meaning that more reliance on relatively low-cost debt means that the required return to equity must rise. This required increase is just the market price of the added risk involved with leverage, and so the discount rate for equity must rise such that the net present value of a project does not change with its financial structure. At times like this, I wish that people who participate in the market would have internalized this insight. https://lnkd.in/gQJVrDwG

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In 2024, several misconceptions about the housing market were clarified. These included the idea that housing prices always increase, the belief that renting is inherently inferior to buying, and the assumption that the housing market behaves similarly to the stock market. #Seattle #Bellevue #Redmond #Kirkland #SeattleRealestate #SeattleWashington #SeattleWa #RealestateInvestment #PropertyManagment #SeattleRealtors #RealestateNewsletter #Realtor #RealestateGoals #HousingMarket #RealtorsofInstagram #Realestate #RealestateTipsandAdvice

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