The self-storage industry is seeing rapid growth as a result of the pandemic spurring more people to reorganize their homes, to find extra space as they work from home, and to move to the suburbs or move in with more family members.

Thirty-eight percent of Americans reported being self-storage users, according to a newly released StorageCafe survey of about 17,000 survey responses.

The report identified some of the latest self-storage trends, including:

• Gen Xers (54%) and baby boomers (51%) are the most likely to use self-storage. Millennials are also showing increased interest at 40%.
• Living in a spacious home doesn’t negate the need for self-storage. About 42% of residents of homes sized from 1,500 to 2,499 square feet use self-storage, along with the same percentage of residents in larger homes, from 2,500 to 3,500 square feet.
• About one-third of Americans say they put furniture in self-storage, the most common item to store. That is followed by clothing, home appliances, sporting items and hobby gear, and business items.
• Downsizing is the main reason Americans rent a storage unit. Next are moving or needing more storage space at home.
• By state, Idaho has the highest percentage of the population that uses self-storage, at 59%; next is Utah at 54%, then New Mexico at 53%, New Hampshire at 49%, and Wisconsin at 48%.
• The most popular storage size unit is 10’ x 10’, followed by 5’ x 10’.

©National Association of REALTORS®
Reprinted with permission

The commercial real estate market is roaring back. U.S. commercial real estate investment volume in 2021 totaled a record high of $746 billion, a newly released CBRE report shows. That marks an 86% increase over the previous year.

In context, however, that is a comparison to when the COVID-19 pandemic struck the U.S. in 2020 and sparked significant declines across the commercial sector.

But 2021 marked the commercial industry’s comeback. Multifamily led all sectors for investment volume in the fourth quarter as well as for the year. It saw $136 billion in the fourth quarter and $315 billion for the year, according to CBRE. The industrial real estate sector came in second for the most commercial investments, up 55% year over year and reporting $64 billion in the fourth quarter alone.

Sun Belt markets showed some of the strongest annual growth rates, led by Las Vegas (232%), Houston (191%), and South Florida (179%). However, Los Angeles and New York continued to have the overall highest level of commercial investments in 2021, CBRE’s report shows.

Real estate investment has long been investors’ favored way to combat inflation, CBRE’s Todd Tydlaska told the Commercial Observer. “It’s a defensive move to go into real estate,” he said. “Investors are trying to find yield, and real estate offers relatively attractive yield on a risk-adjusted basis.”

©National Association of REALTORS®
Reprinted with permission

Have a Happy, Healthy and prosperous New Year.

Photo courtesy of FlashBuddy and pixabay.com

Seeing the opportunity and high demand, institutional investors are snatching up as much U.S. real estate as they can. Investors purchased 18.4% of homes in the fourth quarter—a record high, according to housing data from Redfin.

Investors are seeing opportunities in turning homes into rentals and commanding higher rents or have plans to flip homes to take advantage of rising prices. Investors were defined in the study as any institution or business that purchases residential real estate.

Investors are snatching up the highest amount of properties in Atlanta, Charlotte, N.C., and Jacksonville, Fla.

Investors purchased 80,293 homes in the fourth quarter, up nearly 44% from a year earlier, according to Redfin’s data. Limited housing inventories are constraining investors from purchasing even more.

Invitation Homes CEO Dallas Tanner told CNBC that after buying 1,500 homes in the last quarter, “we wish we could buy more. Demand is so large.” Tanner says the housing supply is tight. He says the properties they’re buying they plan to hold onto over the long haul within their ever-expanding portfolio of properties.

“While record-high home prices are problematic for individual home buyers, they’re one reason why investor demand is stronger than ever,” says Sheharyar Bokhari, Redfin economist, about the study’s findings. “Investors are chasing rising prices because rental payments are also skyrocketing, incentivizing investors who plan to rent out the homes they buy. The supply shortage is also an advantage for landlords, as many people who can’t find a home to buy are forced to rent instead. Plus, investors who ‘flip’ homes see potential to turn a big profit as home prices soar.”

©National Association of REALTORS®
Reprinted with permission

Renter confidence over their finances is on the rise. That is good because that coincides with a recent survey finding that shows property owners plan to increase rents higher still this year.

Sixty-one percent of property owners say they plan to raise the rent on at least one of their rental properties within the next 12 months, a new survey from realtor.com® shows. The most common increase will be between 5% and 10%, according to the survey.

Here’s a breakdown of property owners’ planned rent hikes for this year:

• Less than 5% increase: 38%
• 5 -10% increase: 45%
• 10-15% increase: 9%
• 15-20% increase: 5%
• More than 20% increase: 3%

As rental prices are expected to continue to rise, the majority of renters don’t seem to be shaken up over recent increases. They seem to have gotten a better grasp over their finances compared to a year ago. Eighty-two percent of renters said they have not missed a rental payment over the past 12 months, which is up significantly from 57% in September 2021. More than three-quarters of renters—77%—say they don’t expect to miss a rent payment in the next three months either.

“As the pandemic dragged on longer than expected, many renters struggled to make payments, as jobs in a number of industries including travel and hospitality were hard to come by,” says Danielle Hale, realtor.com®’s chief economist. “Even those with jobs grappled with pandemic-related work disruptions that left many feeling unsure about their finances. However, we are seeing a light at the end of the tunnel. The job market has made a dramatic comeback and despite rising prices across the board, renters are feeling more financially stable and overwhelmingly confident in their ability to pay their rent.”

©National Association of REALTORS®
Reprinted with permission

Housing was on a roller coaster this year, going from a homebuying frenzy to a standstill. These market dynamics will carry into 2023.

The real estate market has had a bumpy ride and will continue to be a bit unpredictable sliding into 2023. Here are five market trends that emerged this year.

The Great Housing Slowdown

There was a homebuying frenzy at the start of the year, with buyers frantically snatching up houses for well above list price. Then, late in the summer, inflation and rising mortgage rates put a damper on the real estate shopping spree. Lawrence Yun, chief economist for the National Association of REALTORS®, predicts that existing-home sales will end the year 16% down from 2021, marking their lowest level since 2014. Annual new-home sales likely will be down 17% for 2022, returning to pre-pandemic levels.

While home sales were falling, home prices mostly remained resilient. After climbing 10% this year, home prices likely won’t change next year, Yun forecasts. That said, expensive housing markets where homebuying activity has pulled back the most, like San Francisco, could see “slight price declines,” Yun says.

• 2023 Real Estate Forecast: Market to Regain Normalcy
  But even though mortgage rates and home prices are expected to moderate, home sales may still sag under persistent inventory shortages, housing economists predict.
• Home Sellers Can’t Be Greedy Anymore
  As escalating mortgage rates and home prices shrink the pool of buyers, help your sellers understand why they’ll likely need to readjust their expectations.
• 10 Headwinds the Real Estate Market Faces Next Year
  An annual report from the Counselors of Real Estate identifies the most pressing topics that could have long-term consequences for housing.
• Waiving the Home Inspection: Don’t Blame Me!
  Many buyers who purchased at the height of market competition earlier this year may have skipped the home inspection contingency to sweeten their offer. And now they might regret that decision. If your clients find major property defects after moving in, keep them from pointing the finger at you.

Mortgage Rate Shocker

The Federal Reserve’s aggressive hikes on its benchmark rate, plus 40-year high inflation, put pressure on mortgage rates, which climbed dramatically this fall, doubling from a year ago. The market got a major shock Nov. 10, when the 30-year fixed-rate mortgage broke above 7%. A year earlier, rates had averaged 2.98%, Freddie Mac reported.

The rate increases—mixed with high home prices—have dampened housing affordability and sidelined many buyers. For example, a 30-year fixed-rate mortgage on a $300,000 loan would cost about $1,283 a month at last year’s 3.11% rate. Now, at an average of 6.33%, such a loan would cost an extra $580 a month, or $6,960 a year, according to Jacob Channel, senior economic analyst at LendingTree.

• Mortgage Rates Drop as Inflation Eases Even More
  Recent economic news spelled better news for home buyers who are shopping for a mortgage, even after the Federal Reserve’s latest rate hike.
• Homes Haven’t Been This Unaffordable Since 1989
  Housing affordability hit a 33-year low in June, according to NAR data. But an increase in inventory and stabilizing mortgage rates may stem the tide.
• First-Time Home Buyers Are Vanishing From the Market
  The share of first-time home buyers has fallen to its lowest level on record over the last year as young adults face a longer path to homeownership, NAR data shows.

High Appreciation

Homeowners are enjoying record levels of appreciation. Even as home prices begin to ease at the end of the year, about half of all mortgage holders are still considered “equity rich,” according to ATTOM Data Solutions. That means their estimated loan balance was less than 50% of their property’s estimated market value. In the second quarter of this year, an owner’s annual home equity gain was nearly $60,000 compared to a year earlier, according to CoreLogic.

Equity increases likely will soften in 2023, but even pandemic home buyers, who may have bought at the height of the market, aren’t expected to see much downfall in their home appreciation. A recent study from Redfin showed that only 3.4% of homeowners who bought over the last two years would be underwater on their mortgage if home values were to fall 4% by the end of 2023. Percentages would need to drop by double digits, which economists are not expecting to occur, in order for the typical pandemic home purchaser to lose value on their home.

• Equity Motivates More Sellers
  When they do, they expect to sell for high and anticipate fierce bidding wars for their home, a survey shows.
• Homeowners Tempted to Use Equity
  “As interest rates rise in the coming year, you could see folks using more second-lien products,” says an Urban Institute analyst.

A Resilient Remodeling Boom

Even as the housing market slows, homeowners are still showing high interest in renovating. The high appreciation they’ve accumulated may be fueling the home improvement boom. Further, 22% of homeowners say ROI is their top motivation for remodeling, according to a recent Houzz survey.

• Top Remodeling Projects for Cashing in at Resale
  NAR’s 2022 Remodeling Impact Report offers insights on the costs of specific remodeling tasks and potential paybacks.
• Homeowners Need Your Advice on Renovation ROI
  More people are upgrading their current property rather than moving, and they’re looking for guidance on resale value, surveys show.
• How a Home’s Age Influences Renovation Plans
  A new study identifies the improvement projects homeowners prioritize based on how old their home is.

Housing Bubble Fears Grow

This spring, about 45% of home sellers said they believed the housing market was headed for a crash in 2022, according to a study from Clever Real Estate. There was none. Then, later in the fall, 41% of Americans said they fear a housing crash in the next year, according to a recent survey from LendingTree.

The housing crisis of more than a decade ago, when foreclosures spiked and home values plummeted, may be haunting Americans’ psyches. But housing economists are quick to offer reassurance: The current market is nothing like it was back then.

• 5 Reasons This Isn’t a Repeat of the 2008 Housing Crash
  NAR Chief Economist Lawrence Yun draws the distinctions between today’s real estate market and that of more than a decade ago.
• Talking Points to Calm Consumers’ Housing Bubble Fears
  As concerns about a looming recession mount, help buyers and sellers understand that this market, though volatile, is not on the trajectory of another housing crash.

©National Association of REALTORS®
Reprinted with permission

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

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