Investors in lower-income opportunity zones are seeing appreciation on their properties grow higher and higher.

Opportunity zones were established by Congress in the Tax Cuts and Jobs Act of 2017. They offer investors tax breaks in exchange for making long-term investments in the revitalization of low-income federally designated neighborhoods nationwide.

The median single-family home and condo price increased from 2021’s third quarter to its fourth in 56% of the opportunity zones nationwide and rose by at least 20% annually in nearly half, according to a newly released analysis by ATTOM Data Solutions.

Median values rose in about half of the zones by more than 16.1% in the fourth quarter of 2021 compared to the fourth quarter of 2020.

Still, homes in opportunity zone areas continued to cost a fraction of those in most other regions of the U.S. in the fourth quarter. Typical values remained under $200,000 in 51% of the zones during that time. The Midwest region had the highest portion of opportunity zone tracts, with a median home price of less than $150,000 (61%), followed by the South (40%), the Northeast (36%), and the West (4%).

“Neighborhoods in and around some of the poorest areas of the United States kept riding the national housing market boom in the fourth quarter of last year, much as they did throughout 2021,” says Todd Teta, chief product officer with ATTOM. “The pace of price increases slowed, which is common in the last few months of any year. But gains in opportunity zones again pretty much matched what was going on elsewhere and even beat out the rest of the market in some ways. While opportunity zone markets remained depressed, the increases probably reflected the trickle-down effect of buyers priced out of more expensive neighborhoods. The gains also represented an ongoing sign of vitality in lower-income areas– something that ups the ante for investors looking to take advantage of opportunity zone tax breaks.”

©National Association of REALTORS®
Reprinted with permission

Requiring buyer’s agents to call the listing broker before a showing can provide sellers additional clarity on property access and greater peace of mind.

Key takeaways:

• When you take a listing, talk with the sellers about the CBS (“call before showing”) codes that can be programmed into today’s lockboxes.
• CBS codes offer several benefits, including greater security and transparency about showings.
• Agents who are unfamiliar with the codes or who are reluctant to use them should learn more about the codes so they can discuss the pros and cons with sellers and buyers.

Recently, there has been a lot of talk about CBS codes in one of the markets I serve. If you aren’t already aware, CBS stands for “call before showing.” These codes are a setting in the most widely used lockbox brands, Sentrilock and Supra. They’re easily programmed when setting up a lockbox on a listing. When the listing agent applies the setting, it requires a second code to be entered to open the lockbox, after the agent’s normal code. When buyer’s agents call the listing brokerage or agent to set up a showing, they’re given the code.

“Why use them?” some agents ask. The codes were made part of lockbox functionality for a reason. Sharing more about this functionality will allow agents and their brokerage to determine if the benefits outweigh the cons.

Learn more about the power of Sentrilock(link is external), the official lockbox solution for the National Association of REALTORS®.

“I recommend making CBS codes part of the discussion you have with sellers at the time you list their property. Invariably, sellers have questions about how their house will be shown. They want to know if showings are coordinated by appointment and whether the listing agent will be present. For any number of reasons, they may be uncomfortable having a lockbox on their property (live alone, what ifs, don’t live there full time to monitor, multiple occupants, pet concerns, alarm, and so on). I counter concerns by sharing the benefits of our standard lockbox, and I explain that we’re notified when the box is opened.

If the sellers still feel hesitation, I have the CBS code conversation, and the sellers’ concerns generally vanish. That’s because they know their trusted agent will be contacted before the lockbox is popped open. Some of the benefits of a CBS code include:

• It prevents showing agents from opening the door without a confirmed appointment and walking into the home when someone is, say, in the shower—or worse.
• It reduces seller reluctance to have a lockbox at all.
• In the sale of a second home, it offers a heads-up to sellers who may be in and out of the property, with or without notice.
• Sellers like that it allows for dialogue between the listing and showing agent in advance, and that is the point when negotiations begin.
• If you send the code and any instructions by text, you’re fresh in the showing agent’s text history, which encourages questions to be asked on the spot during the showing.
• If the home is occupied or semi-vacant, valuables may be present. The extra code provides the homeowner with a greater sense of comfort knowing “anyone with a key” cannot pop open a box without requesting to do so. The standard alert is often delayed, either because the agent doesn’t see the alert right away or because the notice, sent by email, doesn’t arrive until hours later, or even the next day.
• If there’s a vacation or off-market hold requested by the seller, you can still leave the key in the lockbox. Just apply the CBS code.
• During the inspection period, you can monitor inspection access by the buyers, their agent and the inspector in states where inspectors have their own lockbox keys. After inspection, the CBS code can be changed so that the listing agent is aware if the buyers want to go back in.
• CBS codes can be changed frequently if too many people who aren’t making an offer have the code.

Agents who are reluctant to use this feature may simply be unfamiliar with it. Or they may have a concern that other agents won’t show the property if they need to acquire and enter a second code. I don’t believe that’s an issue because buyers have wide access to property listing information, through both their agent and property portals, and buyer’s agents are motivated to show clients properties that fit their criteria and price range.

A successful agent introduced me to the CBS code feature during an interview with a seller, and I observed how the seller’s concerns were resolved. I work with senior clients, and I believe this feature offers them greater protection while allowing me, as the listing agent, to closely monitor who is showing the property and when. That’s one of the reasons clients hire me! I’d love to hear from other agents willing to share their experiences.

©National Association of REALTORS®
Reprinted with permission

Vacation homes have seen growing demand since the pandemic began, and investors are taking notice of the sector, largely the domain of individual homeowners until now.

Investors want to capture more of the bustling market for short-term rentals. Saluda Grade, a New York investment firm, has teamed up with AvantStay, a short-term rental operator, to buy about $500 million of homes. Saluda Grade, which is targeting homes within driving distance of major population centers, will buy the properties, and AvantStay will manage them for a fee, The Wall Street Journal reports.

“There’s a lot more yield available in the short-term market,” Ryan Craft, Saluda Grade’s chief executive, told The Wall Street Journal.

The startup reAlpha Tech Corp. is reportedly pooling money from small-time investors to buy short-term rental homes as well.

But buying properties one by one can take time and make it more difficult for investors to invest large sums all at once, The Wall Street Journal reports. Also, many cities have restrictions on the amount of short-term rental listings.

“Regulatory risk is a huge problem,” Sebastian Rivas, CEO of Andes STR, told The Journal. But investors are eyeing how to take advantage of the growing interest in short-term rentals. Short-term rentals, such as those offered through Airbnb and Vrbo, have been growing in demand as remote work has allowed more people to work from anywhere.

©National Association of REALTORS®
Reprinted with permission

Commercial properties with a drive-thru lane are commanding higher rents. The pandemic has led to a new appreciation for being able to stay in your car while you’re served.

Properties with drive-thru lanes are being sold at a premium and attracting rents that are 10% to 20% higher than typical lots, the CoStar Group reports.

More restaurants are showing a desire to add a drive-thru lane. For example, Chipotle Mexican Grill, which opened its first drive-thru in 2018, now has 355 drive-thru restaurants. Of the 78 locations it opened last quarter, 86% have drive-thru lanes.

Activity for commercial properties has been increasing over the past year. In 2021, the sales of restaurant, pharmacy, and bank properties rose to a record high of $12 billion. That is 43% more than 2019, prior to the pandemic, CoStar Group reports.

Read more: Commercial Investments Hit Record High in 2021

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Life science and medical offices are proving to be the all-stars in the recovering office sector. A $3.4 billion sale of University Park at MIT topped the 2021 rankings for commercial transactions in the office space, setting a new record, according to a new study released by CommercialCafe, a commercial real estate internet-listing service.

CommercialCafe used data from CommercialEdge to identify the top 50 U.S. office sales in 2021 by evaluating the transactions involving office buildings with at least 25,000 square feet and mixed-use properties that were more than 50% office space.

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Reprinted with permission

The onset of the pandemic led to a decrease in multifamily housing demand in high-density cities as renters started to favor more spread-out communities in the suburbs. But big-city demand is coming back.

Multifamily home building is gradually picking up pace in large metros once again, according to an analysis from the National Association of Home Builders.

“In the wake of the public health crisis, there is a pronounced return to higher density markets or geographies, particularly in apartment and other multifamily residential construction,” researchers note on the NAHB’s Eye on Housing blog.

Overall, about 67% of multifamily development occurred within large metro areas; 27% in small metro areas; and 6.1% in rural areas and small towns, according to the builder’s analysis. Small metro areas are those considered as having less than one million total population.

©National Association of REALTORS®
Reprinted with permission

Employees are headed back to the office. After the pandemic caused many companies to encourage work-from-home policies for office workers, real estate indicators signal a reversal. As they return, companies want more space.

As of February, office occupancy continued to increase, with 84% of 390 metro areas seeing a rise, according to CoStar data. Since the third quarter of 2021, 30 million square feet of office space has been absorbed, which is on par with prepandemic levels, the National Association of REALTORS® reports.

Still, vacancies remain. About 100 million square feet of office space nationwide have been vacant since the start of the pandemic in the U.S. in 2020. Gay Cororaton, an NAR research economist, predicts that reabsorbing that office space could take through the end of 2024.

Over the past year, office occupancy gains were highest in Boston. On the other hand, New York, Chicago, and Washington, D.C., continue to see high vacancies.

“Occupancy is increasing in major tech metro areas,” Cororaton says on the blog. “The rising occupancy in these tech metro areas indicate that tech companies are contributing to the demand for office space, even as nationally, 45% of mathematical and computer workers work from home for at last some part of the time.”

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