Headlines

What’s new in the world of Real Estate

• Price gains for U.S. homes beat expectations

• The 20 hottest housing markets

• CRE debt sales are way up

• The $1.6 billion student housing deal

Plus: NYC rents keep rising, WeWork’s new owner, Florida’s insurance issues, and more.

Listing of the week: A private island in the Great Barrier Reef.

Performance

Market Updates

U.S. home prices continued setting record highs. After a slight decline in January, the FHFA House Price Index rose by 1.2% in February, well above expectations, and is up by 7.0% year-over-year. All nine census divisions saw positive appreciation, both monthly and yearly. Meanwhile, the S&P CoreLogic Case-Shiller national home price index rose by 0.6% in February and 6.4% year-over-year. Of the top twenty metro areas, San Diego, Chicago and Detroit were the three biggest gainers, with Portland bringing up the rear. The rise in prices came despite persistently high mortgage rates, though the March numbers will be worth watching as rates increased even more during that period.

The hottest markets in the country saw “more substantial price growth” than other markets. This is according to Realtor.com which ranked the top 20 hottest markets purely based on how quickly listings sell and how much viewing activity properties see. Those twenty metro areas saw over twice as much price growth on average compared to the rest of the country. Manchester-Nashua, NH topped the list, followed by Rochester, NY and Springfield, MA. The list was entirely populated by affordable cities from the Northeast and Midwest, as previously hot markets in the West and South have fallen off dramatically.

Sales of commercial mortgage-backed securities are up 170% so far in 2024. After a stagnant 2023 market, investors have now bought $24.6 billion worth of newly issued CMBS this year. This includes a $2.35 billion issuance by Blackstone, which was backed by a portfolio of 186 industrial properties across 11 states. Even the struggling office sector has started to see more deals, and overall projections put 2024 issuances in line with the average for the last eight years. However, it does look like the Fed may not cut interest rates anytime soon, so borrowers in need of refinancing might elect to wait longer and cause the market to slow down. Overall, though, this news is bullish for commercial real estate, as investors are confident enough in the stability of the sector to start investing in its debt again.

Global investment firm KKR bought $1.64 billion of student housing from Blackstone’s BREIT. The deal includes 19 properties located across 14 different universities in 10 different states, and in total, the portfolio contains over 10,000 beds. BREIT has been struggling to fundraise, and has been searching for liquidity to meet investor redemption requests, but still remains the largest owner of student housing in the country. The sector has become one of the hottest in real estate in the past few years, as demand has risen far quickly than supply, vacancy rates remain low, and the tenants are not price-sensitive as their parents are usually paying their rent.