Housing plunge déjà vu? 📉

Happy President’s Day 🇺🇸! I hope you have the day off, but either way, here are today's top stories:

• Housing crash predictions cast shadow

• Older Americans staying home longer

• AI resuscitating SF real estate

• 🔥 Deal of the Day! 🔥: 5 bd | 5 ba | McHenry, MD

Looming Housing Crash Warnings

Folks, lending rates have nearly doubled since last March, hovering around 7-8%. This threatens housing.

• New construction contracts. Housing starts declined over 13% from November to January. Builders cite rising interest rates and material costs.

• Selling stagnates. Only 1% of owners sold in 2023's first half versus 2% normally. Many cling to sub-4% rates locked in earlier.

• Affordability plunges. A $500K mortgage now costs $660 more per month than last February. Owning pricier homes requires substantially larger down payments.

Yet opportunities exist:

• Values appreciate. Home prices rose 10.2% nationally over the past year per the Case-Shiller index.

• Investors withdraw. Only 15% of January's home purchases went to investors versus 19% typically.

• Rents rise. U.S. rents leapt 12% last year. Ratio of home prices to rents remains near historic lows in many areas.

The market teeters. Sellers wait for rates to fall before listing. But each uptick erodes buyers’ purchasing power further. Adaptability and diligence triumph in these dynamic conditions. Tracking metrics like housing starts and rent ratios spot prospects.

Home Sweet Longterm Home 🏡

Homeowners now inhabit houses for nearly twice as long as in 2005. The median tenure has risen steeply from just 6.5 years to 11.9 currently.

Older residents primarily drive this trend, staunchly refusing to decamp from longtime homes. 54% of baby boomer homeowners hold no lingering mortgage. With median monthly ownership costs of only $600, moving presents no financial incentive for them. Meanwhile over half of Gen Xers have also bunkered down in the same residence for at least a decade now as well.

By contrast, less than 7% of millennials have remained in place nearly that long. Gen Z trails even further behind the curve, with virtually none exceeding 5 years of tenure given many are still under 30. But these generations also rent homes at far higher rates than their elders did at similar ages.

High mobility likewise characterized the early 2000s however. Loose lending standards at the time enabled easier purchasing for first-timers. Today's radically higher mortgage rates and record low inventory levels discourage housing transitions instead.

Yet persistent occupants increasingly contribute to the ongoing supply shortfall, further elevating sale prices. Boomers in particular cling possessively to spacious owned residences. This severely frustrates young families seeking to upsize out of cramped rentals or starter homes into something roomier.

The median US tenure figure temporarily peaked at 13.4 years in 2020 itself. For a fleeting moment remote work opportunities and all-time low mortgage rates sparked a surge in household moves. But existing home sales then plunged 13% year-over-year in 2022. Minor loosening of the market lies ahead but any sustained spikes in listings or transactions seem improbable given still elevated carrying costs for buyers.

AI Reawakens SF Offices

San Francisco commercial real estate stirs from its pandemic-induced slumber, roused by an influx of artificial intelligence firms hungry for space. AI startups now account for nearly one-third of the city's total office leasing activity. Generative AI leases alone surged 46% in 2023 to 3.6 million square feet occupied, per real estate giant Jones Lang LaSalle (JLL). Their collective footprint should swell to 12.5 million square feet by 2030, over triple current levels.

Two key drivers propel this rapid AI ascent within the city. First and foremost, the Bay Area still concentrates the highest density of talent in this cutting-edge domain nationwide with its proximity to universities birthing industry leaders like Stanford and UC Berkeley. Fully 20% of all domestic AI experts already reside locally. Hence out-of-town startups relocate there en masse while existing ones expand aggressively to access this vital human capital.

Secondly, ample venture capital nurtures the San Francisco AI industry in particular. Downtown alone contributes an estimated 75% of the entire city's economic production. So revival of its commercial real estate also ripples out more broadly, buoying the whole regional economy. AI firms snapping up more space in turn attracts associated businesses to their orbit over time as well, like startup accelerator Y Combinator recently shifting its headquarters there out of strategic necessity.

So while many big tech stalwarts have shrunk local operations, AI provides a counterweight - positioned to inherit the mantle and reshape the city's workplace landscape dramatically over the coming decade through its magnetic agglomeration of resources and brainpower.

🔥 Deal of the Day! 🔥

Address: 92 Big Dipper Ct, McHenry, MD 21541

This luxurious property, nestled in the heart of McHenry, MD, offers stunning views of Deep Creek Lake and the surrounding mountains, making it an ideal retreat for those seeking a peaceful escape with easy access to outdoor adventures and local amenities.

Airdna data:

Estimated monthly payment: $8,012/month (if financed)

Estimated monthly revenue: $8,066/month

Cashflow excludes additional operating expenses. Always confirm local regulations, HOAs and permits before purchasing a property.

The tides always shift - we'll keep you posted on opportunities.