Supply chain backups for materials continue to hit the new-home market and are causing some new owners to have to move into unfinished homes, The Wall Street Journal reports.

The problems stem from ongoing factory closures caused by the pandemic, transportation delays, and port capacity limits. The shortages are especially popping up in the lack of windows, garage doors, appliances, and paint.

The shortages have been occurring since the pandemic began. Home builders say there’s been little improvement and it is still taking weeks longer than normal to finish homes because of widespread shortages.

About 90% of home builders surveyed in November 2021 said they were experiencing supply disruptions, up from 75% in January 2021, according to Zonda, a real estate research firm.

To try to help counter the delays, some builders are stocking up on products or trying to find suitable substitutes for some materials.

The builder Epcon Communities in Dublin, Ohio, said that some of their buyers moved into their new homes before gutters and downspouts were installed because of shortages. Meanwhile, city officials in Sacramento, Calif., established a policy in November 2021 that allowed builders to close on homes with temporary garage doors due to delays.

Builders with Homes by WestBay LLC in Riverview, Fla., say they’ve started ordering windows six months in advance. Prior to the supply chain issues, they could order them just 60 days ahead of time.

“About the time we’re getting ready to pave streets in a new subdivision … we’re ordering windows for 100 homes,” Willy Nunn, president and CEO of Homes by WestBay, told The Wall Street Journal. He says the homes are about a month to two months behind their normal schedule.

Materials aren’t just taking longer to arrive but are also costing more. Builders are passing along those increases mostly on to home buyers. The median price of a newly built home in November reached a record high of $416,900, nearly 19% higher than a year earlier.

©National Association of REALTORS®
Reprinted with permission

When you hit the usual sales slump during the cold months, here’s what you can do to keep your business from freezing until spring.

It’s that time of year again when most real estate professionals are bracing for a dip in sales in the cold winter months and many home buyers and sellers go into hibernation. Even if you don’t have a lot of active clients during this time, there’s plenty you can do to keep your business from freezing while you wait for consumers to return to the market in spring.

The winter downtime is perfect for taking stock of your marketing techniques and assessing what you can do differently for your overall business. By the time you’ve identified and incorporated some changes, you’ll be ready to hit the ground running when the busy spring selling season emerges again. Here are five items to put on your winter checklist.

1. Clean up your contact list. You’ve built a healthy list of contacts who you sincerely believe will be interested in your newsletter, blog, and social media content. But it takes hard work to keep the list as clean and up-to-date as possible. Look at the bounce rates of recent messages you’ve sent to your customer base, and when possible, track down a new email address for contacts whose information is outdated. You’ll be surprised what you can learn about a client when you follow up to find out why their email address changed. You might discover, for example, that they have a new job that requires a move in the near future. Keep in mind, though, that when it comes to keeping your contact list tidy, if people unsubscribe, you should honor their request immediately.

2. Test email marketing services. There are many options out there, but a lot of practitioners still rely on their personal email addresses to send bulk messages. What you might not realize is that when you send bulk email from your personal account, those messages are more likely to get caught in spam filters. But even if your message does reach your customers, you won’t get insights into what they do once they receive it. Email marketing providers can keep track of your contact list, let you know which emails were opened and when, and tell you which articles were clicked on and shared. (Not to mention that most have a deliverability rate of more than 95 percent, meaning your message won’t get stuck in a spam filter.) So use this time to check out different services and take advantage of a free trial. Find what works for you now, and by the time spring comes, you’ll be engaging customers and driving referrals through your newsletters.

3. Practice curating content that informs. Creating newsletters becomes more difficult than it needs to be when you think you need to produce all the content yourself. That’s why many real estate professionals end up just featuring listings in their newsletters, which doesn’t offer customers anything they can’t easily look up online for themselves. Instead, spend some time this winter researching relevant blogs and collecting trend pieces and news stories your clients will find interesting. Then make them your own by adding your views on the topic as the lead to the story. (Just be sure to give credit to the original source.) You’ll learn that this will save you time and boost your credibility as a trustworthy and knowledgeable resource. By spring, you’ll have collected enough perennial content to launch your reimagined newsletter.

4. Review and analyze your performance. Winter is the best time to look back on your year and compare your performance with the past three years to spot patterns. Also, take a closer look at the source of your sales, and break it down by referral, direct mail, email, open house, advertising, and other criteria. This insight is critical to knowing which avenues deliver the strongest ROI. You’ll be armed with knowledge and know where to focus your efforts come spring.

5. Prepare for tax season. This is about your overall business. Don’t wait until the last minute to find a great accountant with terrific bookkeeping skills. Use the winter to find the right accountant for you and to find those missing receipts for entertainment, postage, gas, and marking materials. Also, don’t forget to dig into your files to prepare your tax documents, including bills, medical costs, and donations. Depending on your relationships with your accountant, you might want to give them relevant files every two weeks so that you always know where you stand with sales, estimated taxes, budget, and savings. Use the winter to pick up this habit. Once it becomes part of your routine, it’s a huge relief when April rolls around, and it’ll allow you to focus on what you do best at a critical time in the year: sell houses!

Just because sales slow down in winter doesn’t mean your business has to stall. Use these next few months to build or reinforce the foundation of your business and shore up solid leads for a successful spring season.

©National Association of REALTORS®
Reprinted with permission

The office sector’s rents have essentially recovered from the huge hit they took during the beginning of the pandemic. But it may be due to property owners’ cash gifts and months of free rent offerings that may be winning tenants back and motivating them to sign leases for high-dollar rents. Never have the incentives and offerings for office space been so commonplace in the urban office market, real estate brokers told The Wall Street Journal.

Office building owners are not just offering free months of rent, but they may offer to pay moving expenses and customized alterations to spaces in order to sign new tenants. But in return, tenants are being charged higher rents. Ensuring office rents stay high is also crucial to creating confidence in the sector, agents say.

“For many office landlords, the pandemic is a lethal threat that requires cutting whatever deals it takes to survive as vacancy rates reach levels not seen in decades,” The Wall Street Journal reports. “Paying money to inflate rents helps keep building prices high despite the rise of remote work, meaning landlords can expect to profit when they sell a building or take out a mortgage.”

Ever since the pandemic began, hybrid and remote work have reduced the demand for office space. To avoid rents from falling, building owners are taking steps to keep their buildings leased. They may be willing to agree to longer rent-free periods to do that too.

For example, Roku Inc. is leasing a 240,000-square-foot office near Times Square for more than $90 a square foot. But the company is receiving some incentives too, like more than $30 million for construction work and a rent-free period of 18 to 24 months, The Wall Street Journal reports.

©National Association of REALTORS®
Reprinted with permission

Florida shone as home to many of the hottest commercial markets in the country in the fourth quarter of 2021. The state boasts nine of the top 15 commercial real estate markets, according to the National Association of REALTORS®’ 2021 Q4 Commercial Real Estate Metro Market Reports.

NAR’s Commercial Real Estate Market Conditions Index reflects market trends in the multifamily, office, industrial, retail, and hotel sectors in 390 metro areas. The index factors in economic and demographic conditions such as employment and wage growth and commercial indicators such as net absorption, vacancy rates, rent, inventory, and transaction price.

The top markets reflected on the list “generally have strong job growth, are experiencing net domestic in-migration, have low vacancy rates, and greater absorption of commercial property, and are experiencing strong rent growth compared to nationally,” Gay Cororaton, an NAR research economist, writes on the association’s Economists’ Outlook blog.

For example, the Miami-Miami Beach-Kendall metro area’s commercial sector is showing vibrancy in multiple commercial sectors. Its office vacancy rate was 10.5% in the fourth quarter compared to 12.2% nationally, NAR says. Asking rents for multifamily apartments have surged 17.4% year over year there compared to 11.3% nationally. Industrial rents in the metro also have surged 15.3% annually compared to 8% nationally.

Listed in alphabetical order, the following metro areas with populations of at least 250,000 had the strongest overall commercial real estate markets in the fourth quarter of 2021, according to NAR’s findings:

• Charleston, S.C.
• Durham, N.C.
• Fort Myers, Fla.
• Jacksonville, Fla.
• Kennewick-Richland, Wash.
• Miami
• Naples, Fla.
• Nashville, Tenn.
• North Point-Bradenton-Sarasota, Fla.
• Orlando, Fla.
• Olympia, Wash.
• Palm Beach, Fla.
• Port St. Lucie, Fla.
• Seattle
• Tampa, Fla.

©National Association of REALTORS®
Reprinted with permission

Seeking to expand in the strong rental market, investors face many of the same challenges as would-be home buyers.

About 63% of real estate investors recently surveyed cited the availability of inventory as the top challenge for the residential real estate investing business, according to the Winter 2021 RealtyTrac Investor Sentiment Survey, which measures investors’ perspectives on real estate investing.

Rising home prices were cited as the second biggest challenge today. Sixty percent of investors see them as a concern.

“Similar to our last two surveys, the problems of low inventory and rising home prices are those most often cited by individual investors across the country,” says Rick Sharga, executive vice president at RealtyTrac, an ATTOM company. “Together with supply chain disruptions which have caused product shortages and increased material costs, it is not surprising that individual investors think that the market is not as healthy today as it was a year ago.”

Investors believe they’ll continue to face the same challenges over the next six months in the market: the lack of inventory (57%), rising home prices (46%), increased material costs (35%), and rising interest rates (34%).

The National Association of REALTORS®’ latest housing report showed the inventory of existing homes for sale reached the lowest number on record in December. As are home buyers, investors are seeing a shrinking number of housing options.

Concerns over increasing inflation are also growing among investors, the survey shows. About 39% of respondents said they believe that higher inflation will increase the cost of labor, materials, and supplies and make it more difficult for them to generate adequate profits. Thirty percent of investor respondents also said that they believe more inflation could lead to higher mortgage rates, which could hurt affordability and weaken demand.

“A looming concern is that of inflation,” Sharga says. “About 88% of the investors surveyed were concerned about inflation having an impact on their business, whether that was due to higher material and labor costs, higher interest rates, or rising consumer prices that might weaken demand from potential home buyers and renters.” Still, 54% of the real estate investors surveyed say they aren’t backing off and plan to continue to buy and rent properties.

©National Association of REALTORS®
Reprinted with permission

Investment management company Blackstone this week reported that high returns in its real estate investments fueled record-setting fourth-quarter results.

“Blackstone reported the most remarkable results in our history on virtually every metric,” Stephen Schwarzman, co-founder and chief executive, said as the company released its earnings results this week.

Its $280 billion real estate business generated nearly half of its earnings last year, Blackstone officials said on the earnings call.

The areas of rental housing, logistics, and life science offices comprise more than 70% of its equity portfolio. Rents in these sectors are growing at two to three times the rate of inflation, Blackstone says. All three sectors have seen rapid growth during the pandemic.

E-commerce has driven a rush to logistics spaces and warehouses, and vacancies are becoming more difficult to find. Blackstone also continues to make an aggressive push into rentals. It has focused on acquisitions of multifamily real estate investment trusts, affordable housing, and rental buildings, The Real Deal reports. Recently, Blackstone reported it would acquire $1 billion worth of affordable single-family rentals, adding 4,000 homes to its portfolio over the next two years.

About 80 percent of the firm’s real estate portfolio is comprised of logistics and rental housing, which the company says it believes is more insulated from market and inflationary pressures with its shorter-term leases.

“Blackstone’s fourth-quarter results represented a remarkable finish to a record-breaking year,” Schwarzman said.

Blackstone nearly doubled its net income to $2.9 billion since the fourth quarter of 2020. Its real estate investment trust and its Core+ business accounted for the majority of those increases. Its real estate ventures appreciated by 12% and its Core+ segment by 7.2%, The Real Deal reports.

©National Association of REALTORS®
Reprinted with permission