The Blubber

Per WSJ

The real estate market has taken a massive hit as sales of multi-tenant apartment buildings dropped by 74%. The report shared that this happened as the demand for these buildings declined.

The report also shared different reasons why sales of multi-tenant apartment buildings dropped. It highlighted three major reasons why the demand for these buildings has dropped.

• higher interest rates
• regional banking turmoil
• slowing rent growth

These reasons were highlighted causes of why sales of rental apartments dropped at the fastest rate since the 2009 subprime mortgage crisis. To be specific, sales declined 74% to just $14 billion worth of apartment buildings being bought by investors during the first quarter of 2023, per CoStar Group.

In the first quarter of 2009, the annual sales of multi-tenant apartment buildings saw a drop of 77%, per Zero Hedge. RREAF Holdings chief investment officer Graham Sowden, gave a statement regarding how investors are being more cautious about purchasing properties and that they are trying to avoid unwanted losses.

Sowden: "Nobody wants to take a loss when they don’t have to,"

In February this year, multifamily buildings also saw an 8.7% drop compared to the same month in 2022, per the MSCI Real Assets pricing index.

1.9% of multifamily properties that were financed with Commercial Real Estate Collateralized Loan Obligations were not able to earn enough rent to be able to cover debts. It was also noted that due to the high housing prices, even banks are losing money on the mortgages they give out.

Americans think that mortgage rates could go past 8% in the next 12 months. This was compared to 11.5% in February of 2022.

The New York Fed also found that less people thought it was a good idea to buy property in their own state.

See flow at unusualwhales.com/flow.

Other News:

• 1.9% of multifamily properties financed with Commercial Real Estate Collateralized Loan Obligations didn't earn enough rent to cover their debts
• Americans think mortgage rates could increase past 8% in the next 12 months

Resources:

The Wall Street Journal

Zero Hedge