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- March 5th, 2024 - This Week in Real Estate
March 5th, 2024 - This Week in Real Estate
Adam Katz
March 05, 2024
This issue is brought to you by The Motley Fool, who have helped millions of people attain financial freedom
Headlines
What’s new in the world of Real Estate
Could the AI boom save commercial real estate?
The U.S. housing market gained $2 trillion in 2023
Hedge funds are long real estate
The top luxury real estate markets
Plus: Forever renters, pending home sales are down, quiet luxury, and more.
Listing of the week: A $10,000 tiny house you can buy on Amazon.
Performance
Freddie Mac 30 Year Fixed | Dow Jones Real Estate Index |
S&P U.S. REIT | FHFA House Price Index - Dec. |
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Market Updates
Data centers are booming, owing in large part to the rapidly-growing AI industry. As other areas of the commercial sector have struggled, this subset of industrial real estate is seeing outsized demand as big tech and AI companies need huge spaces to house their computing power. Companies like OpenAI, Microsoft, Google and Meta are competing to lease space at data centers and to build new ones on land across the country. There is even the potential for vacant office buildings to be converted to data centers as global data center capacity is projected to double within the next decade. Investing in properties like data centers could be a way to ride the AI wave while still investing in real estate.
The U.S. housing market is now worth $47.5 trillion. The total value of residential buildings in the country rose by $2.4 trillion in 2023, a gain of 5.3%, with a gain of 13.3% over the past two years. This gain comes even as housing demand and housing sales remain stagnant, due largely to high mortgage rates. However, a historic shortage in homes on the market has been keeping it a seller’s market and leading to rising prices. The three markets that saw the biggest gains in 2023 were all New York-adjacent - Newark, NJ, New Haven, CT, and Camden, NJ, as people want to be close to New York but in more affordable areas.
Hedge funds are betting on a rebound in parts of the commercial and industrial real estate sectors. A report from Goldman Sachs found that real estate was the most net bought stock sector last week, and it is the sixth straight week that hedge funds have gone long on real estate. Investors are anticipating that REITs will see strong buying opportunities as office building owners look to offload buildings that are facing default and foreclosure. However, hedge funds were still short on REITs that focus on hotels, retail and health care.
Miami and New York are poised to be the best performing luxury markets in the U.S. in 2024. This is according to a report on ultra-high net worth (UHNW) individuals - worth $30 million or more - from Knight Frank, a London-based property broker. The report also found that of the more than 600,000 people in the UHNW population, 22% are planning to invest in residential real estate this year. In addition to the U.S. markets, the most in-demand markets globally are Auckland, Mumbai, Dubai, Madrid, Sydney and Stockholm.
Listing of the Week
A property that caught our eye
Tiny houses have been increasing in popularity the past few years and the Zolyndo Portable Prefabricated Tiny Home went viral on TikTok this week, largely in part to its affordable price, which is currently listed at $10,490. Of course, any buyer will already need the land to put it on before purchasing. The house measures 13.8 feet long, 20 feet wide, and 8.3 feet tall, with room for two small bedrooms, a living room, kitchen, and bathroom. Though it is wired for electrical, no plumbing is included and a buyer will need a crane ready upon delivery to place it in the right spot on their land. For those wanting a little more room, a 19 × 20 model is available for a couple thousand more at $12,600.
Explore
More stories worth checking out
Want to invest in clean energy? The New River Solar Project, an affiliate of Energy Shares, is now open for funding. When you invest early, you are rewarded additional units.**
Speaking of tiny homes, here are the top 10 towns where they are seeing the most traction, along with average prices and sizes.
As younger generations embrace the idea of being “forever renters,” the rental market has expanded and there are more opportunities in urban areas for developers and investors.
Pending home sales fell by 4.9% in January and are down 8.8% year-over-year as mortgage rates ticked back up.
The trend towards “quiet luxury” is changing the market, according to the Christie’s Global Luxury Real Estate Report, which also named Malta, Nicaragua and Park City, Utah, as markets to watch in 2024.
Chicago is moving forward with a $1 billion plan to renovate vacant office buildings for other uses, including affordable housing, to try and revitalize a stagnant downtown area.
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