All Forum Posts by: Demetrius Brown

According to CNBC,
The price index rose 3.7% in the 12 months through September, unchanged from August, the U.S. Bureau of Labor Statistics said Thursday.
Pandemic-era inflation peaked at 9.1% in June 2022, the highest rate since November 1981.
The Federal Reserve aims for a 2% annual inflation rate over the long term. Fed officials don’t expect that to happen until 2026.

A shopper peruses the meats section of a grocery store on September 12, 2023 in Los Angeles, California.

Inflation was unchanged in September, but price pressures seem poised to continue their broad and gradual easing in coming months, according to economists.

In September, the consumer price index increased 3.7% from 12 months earlier, the same rate as in August, the U.S. Bureau of Labor Statistics said Thursday.

The latest reading is a significant improvement on the Covid pandemic -era peak of 9.1% in June 2022 — the highest rate since November 1981.

“The speed of the decline is always going to be uncertain,” said Andrew Hunter, deputy chief U.S. economist at Capital Economics. “But anywhere you look, [data] suggests inflation should be falling rather than rising.”

The CPI is a key barometer of inflation, measuring how quickly the prices of anything from fruits and vegetables to haircuts and concert tickets are changing across the U.S. economy.

Despite recent improvements, economists say it will take a while for inflation to return to normal, stable levels.

The Federal Reserve aims for a 2% annual inflation rate over the long term. Fed officials don’t expect that to happen until 2026.

“Ultimately, inflation is still the most menacing issue in the economy right now,” said Sarah House, senior economist at Wells Fargo Economics. “We’re edging our way back [to target], but there’s still quite a bit of ground to cover”.

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Artificial Intelligence (AI) has emerged as a transformative force across various industries, and real estate is no exception. The integration of AI into the real estate sector is altering the landscape in ways that were previously unimaginable. A recent CNBC segment shed light on the key themes that are shaping this evolution. Let’s explore these themes and understand how AI is revolutionizing the way we interact with properties.

Theme 1: Enhanced Property Search and Analysis

Finding the ideal property has always been a significant challenge for buyers and investors. However, AI is changing the game by offering advanced property search and analysis capabilities. Machine learning algorithms can process vast amounts of data, helping individuals pinpoint properties that align with their preferences, budgets, and needs. These algorithms take into account factors such as location, amenities, market trends, and historical pricing data to provide personalized property recommendations.

Theme 2: Predictive Analytics for Investment

Investing in real estate involves a certain level of risk, but AI is reducing uncertainty through predictive analytics. By analyzing historical market data, AI algorithms can predict future property values and rental income potential. This empowers investors to make informed decisions and optimize their portfolios for maximum returns.

Theme 3: Streamlined Transactions and Customer Experience

The traditional real estate transaction process can be complex and time-consuming. AI-powered platforms are simplifying this process by automating tasks like document processing, contract reviews, and even virtual property tours. This streamlines the buying and selling experience, making it more efficient and convenient for all parties involved.

Theme 4: Personalized Marketing Strategies

For real estate agents and property sellers, AI offers a new dimension of marketing. Through data analysis, AI can identify potential buyers and create personalized marketing strategies tailored to their preferences. This targeted approach increases the likelihood of successful sales and accelerates the overall selling process.

Theme 5: Property Management and Maintenance

AI is not only transforming the way properties are bought and sold, but it’s also reshaping property management. Smart home technology, powered by AI, enables remote monitoring of properties, predictive maintenance, and energy optimization. This contributes to cost savings for property owners and enhances the overall value of the property.

In conclusion, the integration of AI into the real estate market is introducing a wave of innovation that promises to redefine the industry. From enhanced property searches to predictive analytics and streamlined transactions, AI is making the entire real estate experience more efficient, convenient, and personalized. As we embrace these changes, it’s clear that the future of real estate is intertwined with the capabilities of AI.

So, whether you’re a buyer, seller, investor, or simply someone curious about the evolving real estate landscape, it’s essential to stay informed about these key themes and the exciting potential they hold. As we move forward, AI will continue to shape the way we interact with properties, ushering in a new era of possibilities.

All the best!

Demetrius L. Brown

1 Vote

[The Transformation of Office Spaces into Apartments] A Potential Solution for Urban Housing Woes!

Happy Monday,

In recent years, a notable trend has emerged in certain U.S. cities, as mayors begin to embrace a more flexible approach towards developers converting office buildings into residential apartment complexes. This shift has gained momentum in the wake of the Covid-19 pandemic, which triggered a widespread remote work phenomenon that profoundly impacted the urban landscape. As the demand for office spaces dwindled, it resulted in reduced leasing activity, thereby leading to financial constraints for critical services such as education and public transit.
Faced with this conundrum, many local leaders have recognized the urgent need to revitalize underutilized spaces and address the dearth of affordable housing options within their regions. Consequently, some have opted to prioritize the conversion of dated office buildings into residential units, seeking to tackle the pressing issue of housing shortages.
By easing regulatory constraints and introducing favorable rule changes, these mayors hope to encourage developers to repurpose outdated office structures into viable apartment complexes. Such initiatives hold the potential to inject much-needed housing supply into regions, especially those along the U.S. East Coast, where urban populations continue to grow, and affordable accommodations remain scarce.
However, while the prospect of turning office spaces into apartments presents a promising solution, it is essential to approach this transformation thoughtfully. Adapting commercial buildings for residential purposes comes with its own set of challenges, including ensuring compliance with safety codes and retrofitting spaces to meet residential standards. Striking a balance between preserving the architectural heritage of these structures and creating modern, livable apartments is vital to the success of such initiatives.
As we delve deeper into this transformational phase, it becomes crucial for city officials and developers alike to collaborate effectively and navigate potential roadblocks. Proper planning and thoughtful execution are paramount in realizing the full potential of these conversions, providing urban dwellers with more housing options and contributing to the overall growth and development of our cities.
In conclusion, the evolution of office spaces into apartments signifies an innovative response to the changing urban landscape. As cities adapt to the post-pandemic era, embracing this conversion trend could be a step towards addressing housing challenges and fostering sustainable growth. By leveraging the vast potential of repurposed office buildings, we may create more opportunities for affordable housing and breathe new life into our urban centers.

All the best!

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HERE ARE THE KEY POINTS

According to CNBC, the consumer price index was up 3% in June from 12 months earlier, the U.S. Bureau of Labor Statistics said Wednesday in its monthly inflation report.
It’s the smallest increase since March 2021, around the time when pandemic-era inflation began rising quickly.
The moderation in inflation has been broad-based, and there are encouraging signs looking ahead, economists said.
The Federal Reserve is still expected to raise interest rates at least one more time.

Inflation slowed sharply in June to its slowest pace in more than two years, translating to less of a pinch on the average consumer’s wallet thanks to price relief across categories like energy, groceries and housing.
Inflation measures how quickly prices are changing across the U.S. economy.
The consumer price index increased 3% in June relative to a year earlier — a slowdown from 4% in May, according to the U.S. Bureau of Labor Statistics.
The CPI is a key barometer of inflation, measuring prices of anything from fruits and vegetables to haircuts and concert tickets. June’s reading is the smallest 12-month increase since March 2021 — around the time when alarm bells started sounding about fast-rising prices in the pandemic era — and a significant pullback from 9.1% in June 2022.
The report “makes a strong case that inflation is headed back into the bottle,” said Mark Zandi, chief economist at Moody’s Analytics.
Easing price pressures thus far are largely attributable to the fading effects of supply shocks caused by the Covid pandemic and the Russian war in Ukraine, Zandi said.
The decline in the inflation rate doesn’t mean household expenses have fallen in aggregate; it means they aren’t rising as quickly.
And that’s good news for consumers: The average worker’s earnings growth is now outpacing inflation, translating to an increase in their standard of living after two years of declines. Hourly earnings increased 0.2%, on average, from May to June after accounting for inflation, according to BLS data.
While inflation is on a downward trajectory, it remains above the Federal Reserve’s long-term target of around 2%.
“I think inflation is moving to a better place, but we’re not in the Promised Land of the 2% target,” said Mark Hamrick, senior economic analyst at Bankrate. “We know the journey is progressing, but it’s not yet over.”

Encouraging’ inflation signals moving forward

The inflation slowdown has been broad-based, Zandi said.
“It’s food, it’s energy, vehicle prices, the cost of housing is slowing,” he said. “Pretty much across the board, we’re seeing a moderation in price increases.”
Gasoline prices have fallen dramatically from a spike in the first half of 2022 that was a result of Russia’s invasion of Ukraine. Prices at the pump are down almost 27% in the past year, according to the BLS. They rose slightly — by 1% — from May to June.

Grocery price inflation is also down significantly from its peak around 14% last summer, which had been the highest rate since 1979. “Food at home” prices are up about 5% in the past year and were flat from May to June, according to the BLS.
But food and energy prices can be volatile. That’s why economists use a measure that strips out such categories to get a better sense of inflation’s trajectory going forward.
The measure — so-called “core CPI” — hit a 20-month low of 4.8%, according to Andrew Hunter, deputy chief U.S. economist at Capital Economics. And it’s “potentially even more encouraging than it looks,” as wholesale auction data for used cars points to a sharp decline in prices over the next couple of months, he said in a research note.
The “core” measure also includes housing, which is the biggest expense for the average consumer.
The “shelter” index was the largest contributor to inflation in June, accounting for 70% of the monthly increase, according to the BLS. Shelter prices are up nearly 8% in the past year, but moderated from May to June. Economists say it’s a near certainty that housing prices will continue to fall through the second half of the year.
At the current pace of inflation, the core CPI metric should fall back to the target level by this time next year, Zandi said.
“Notable” increases in annual inflation rates include motor vehicle insurance (up 16.9%), recreation (4.3%), household furnishings and operations (3.6%), and new vehicles (4.1%), according to the BLS.
However, several categories actually saw deflation — meaning consumers saw average prices fall — in the month from May to June, the BLS said. They include airline fares (which declined 8.1% in that period), which followed declines in April and May, too. There was also a 0.5% monthly decline in the “communication” index, which includes expenses such as phones and computer software.

Inflation is a ‘complicated phenomenon’

Inflation during the pandemic era has been a “complicated phenomenon” stemming from “multiple sources and complex dynamic interactions,” according to a paper published in May and co-authored by Ben Bernanke, former chair of the U.S. Federal Reserve, and Olivier Blanchard, senior fellow at the Peterson Institute for International Economics.
At a high level, inflationary pressures — which have been felt globally — are due to an imbalance between supply and demand.
It’s largely a three-pronged story in the U.S., said Stephanie Roth, senior markets economist at J.P. Morgan Private Bank.
The first is inflation among physical goods.
Consumer prices began rising rapidly in early 2021 as the U.S. economy reopened after its Covid-induced shutdown. Americans unleashed a flurry of pent-up demand for dining out, entertainment and vacations, aided by savings amassed from government relief, months of curbed spending and rock-bottom borrowing costs.
Meanwhile, the rapid economic restart snarled global supply chains. The supply of goods couldn’t keep up with consumers’ zest to spend. The result was fast-rising prices.
The second prong is war in Ukraine, which exacerbated backlogs in the global supply chain and fueled higher prices for food, energy and other commodities, said Roth.
The third is inflation for “services,” a category that includes housing and labor-intensive service businesses like restaurants and hotels.

As the economy reopened after the pandemic, businesses rushed to hire workers, and job openings surged to record highs. That demand tilted the job market in favor of workers, who had ample opportunities. They saw wages grow at their fastest pace in decades as employers competed to hire them.
That strong wage growth has nudged employers, especially labor-intensive service businesses, to raise prices to help compensate for higher labor costs, economists said. There are signs that labor dynamic is easing, though — which should put downward pressure on overall inflation.
The Federal Reserve has been raising borrowing costs aggressively since early 2022 to rein in demand among consumers and businesses, and ultimately help bring inflation back to its 2% annual target. The central bank is expected to raise interest rates at least once more.

All the best!

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May peace, love, and happiness always be with you!
Wishing you a very Happy 4th Of July!

All the best!

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Wishing all the hard-working, loving fathers out there a very happy day!

All the best!

Demetrius L. Brown

1 Vote

According To Yardi Matrix, These Metros Accounted For 40 Percent Of The National Pipeline.

Key Highlights

The top 10 most active metros in the country by volume of units under construction account for 40 percent of the national figure, amounting to 421,972 units.
Texas maintained the lead in multifamily construction, with three metros—Austin, Dallas and Houston—making the top 10.
Shifting and moderating demand is indicated by new construction starts figures, trending down everywhere except New York, where the volume almost doubled.
The largest declines in new construction starts—drops in the 60-70 percent band—were recorded in Phoenix, Houston and Los Angeles.
U.S. multifamily construction was robust at the start of a new leasing season, with the pipeline amounting to nearly 1.1 million units underway across 4,910 properties, according to Yardi Matrix. However, deliveries were slow, with just 73,506 units coming online this year through April. That’s less than 7 percent of the national pipeline, and accounts for 20 percent of last year’s 369,827-unit total.
National multifamily construction figures have lowered substantially, affected principally by more stringent financing conditions. This nearly halved the number of new projects that broke ground across the U.S. to just 62,741 units between January and March, half the 122,134-unit volume of construction starts registered last year during the same interval.
Here’s our list of top markets for multifamily development in the U.S., using Yardi Matrix data. Our primary criterion was the volume of units under construction as of early May 2023; we coupled this data with metrics such as new construction starts and completions.
Top Markets for Multifamily Development

Metro	Units Under Construction	Units Completed Year-to-Date	Construction Starts/Units January – March 2023
Austin	61,873	2,547	6,013
Dallas	60,532	2,016	5,864
Miami	44,533	2,732	3,612
Atlanta	41,204	2,679	4,120
Phoenix	39,875	3,811	1,985
New York City	38,859	137	3,304
Denver	35,893	1,696	1,580
Houston	34,709	1,686	1,660
Los Angeles	32,306	1,926	814
Charlotte	32,188	1,538	1,459

1. Austin, Texas
Austin had the hottest multifamily construction activity in the country, counting 61,873 units underway as of May 2023, taking the first spot from fellow Texas metro Dallas by just 1,341 units. In addition, the metro had more than 106,000 units in the planning and permitting stages. Austin developers are building larger communities compared to other metros in this ranking as, by number of properties under construction, the metro occupies only a third place, behind Dallas (229 properties) and Los Angeles (239 properties).
During the first four months of 2023, developers delivered 2,547 units in Austin, ranking fourth among the markets in this list, trailing Phoenix, Miami and Atlanta. The number of units that came online accounts for 3.5 percent of Austin’s existing multifamily stock, only behind Miami (3.8 percent), Atlanta (3.7 percent) and Phoenix (5.3 percent). In 2022, the metro’s multifamily inventory added 16,093 units (4.4 percent of total stock), behind Dallas and Houston.
In most metros, new construction starts dropped and Austin was no different. During the first quarter of 2023, 6,013 units (22 properties) broke ground in the metro, well below the 8,481 units (31 properties) that began construction during the same period in 2022.
2. Dallas
Dallas lost the leading position for multifamily construction that it has held in past years, but not by much. At the start of May, developers had 60,532 units under construction and another 163,000 units in the planning and permitting stages. Meanwhile, deliveries totaled 2,016 units (2.8 percent of existing stock), which places it at the middle of this ranking, behind Phoenix, Miami, Atlanta and Austin.
DFW’s strong demand helped maintain a robust construction pipeline, coming in second by number of new construction starts, trailing only Austin. During the first quarter of the year, developers started construction on 5,864 units across 22 properties, only slightly below (-7.6 percent) the 6,347-unit volume (26 properties) recorded during the same period last year.
3. Miami
Miami rounded out the top three with 44,532 units across 159 properties under construction as of May. Another 259,000 units were in the planning and permitting stages. Deliveries through May amounted to 2,732 units (3.8 percent of existing stock), a volume that placed the metro behind Austin and Dallas on this list.
Developers began construction on 3,612 units across 14 properties during the first quarter of 2023, behind Austin, Dallas and Atlanta. This volume marks a 38.1 percent drop from the 5,833 units in 20 properties that broke ground during the same interval last year.
4. Atlanta
Atlanta ranked fourth with 41,204 units under construction across 173 properties, as of May. There were another 147,000 units in the planning and permitting stages. Meanwhile, deliveries totaled 2,679 units, the equivalent of 3.7 percent of total stock, earning it another fourth rank among the metros on this list.
During the first quarter of 2023, developers started construction on 4,120 units, 17 percent below the unit volume that broke ground during last year’s first quarter—4,962 units. Given the current economic landscape, investor confidence in Atlanta remained strong, topped by only two metros on this list, New York and Dallas.
5. Phoenix
As of May, Phoenix had 39,875 units in 167 properties under construction. The pipeline comprised another 98,000 units in the planning and permitting stages. While it lags in volume of units under construction, the metro led by far in completions as of early May; during this four-month period, 3,811 units came online, representing 5.3 percent of existing inventory.
Construction starts-wise, the trend is less promising—only 1,985 units broke ground during the first quarter of 2023, a substantial 70 percent decline from the 6,580-unit volume posted during the same interval last year.
6. New York City
New York City was not far behind with 38,859 units in 124 properties under construction and more than 95,000 units in the planning and permitting stages. Inventory expansion through May was very limited, with just 137 units delivered, 0.2 percent of existing multifamily stock, the lowest rate on this list.
However, New York City’s multifamily market continues to improve and was the only market in this ranking to record increases in construction starts during the first quarter of 2023. Specifically, 3,304 units broke ground—the fifth-largest volume among the metros in this list—nearly double the 1,678-unit volume posted during the corresponding period of 2022.
7. Denver
Denver was seventh on the back of 35,893 units under construction in 162 properties, as of May 2023. In addition, it had nearly 143,000 units in the planning and permitting stages. Deliveries during the year’s first four months amounted to 1,696 units, 2.4 percent of the metro’s total stock.
New construction starts dwindled in the first quarter of 2023 compared to the year prior, marking a 31.7 percent decline, to 1,580 units. Although significant, the rate is the third smallest among the values displayed by the metros in this ranking. The number of properties also decreased, from 11 to nine.
8. Houston
The third Texas market in this list, Houston’s multifamily construction pipeline had 34,709 units underway across 132 properties and 71,000 units in the planning and permitting stages. Meanwhile, developers delivered 1,686 units through May, or 2.3 percent of the metro’s total stock, and the third lowest volume among metros in this ranking.
Coming at the heels of last year’s 5.1 percent inventory expansion—which placed it second in the nation for deliveries as a percentage of existing stock—the number of new projects breaking ground in Houston plummeted. During the first quarter of 2023, just 1,660 units started construction across the metro, a considerable 62.2 percent drop from last year, when 4,394 new construction starts were recorded during the first quarter.
9. Los Angeles
The only California metro on this list, Los Angeles gained a spot with 32,306 units under construction and another 160,000 in the planning and permitting stages. By the number of properties underway, it ranked first in this list of metros with 239 properties. Meanwhile, deliveries amounted to 1,926 units, the equivalent of 2.7 percent of existing inventory.
Just 814 units broke ground in Los Angeles during the first quarter of 2023, the lowest volume in the top 10. The volume marked a 61.4 percent decrease from the 2,110 units that started construction during the same time last year.
10. Charlotte
Rounding out our top 10, Charlotte’s pipeline consisted of 32,188 units under construction across 137 properties, and another 100,000 in the planning and permitting stages. The 1,538-unit volume of deliveries through May, placed the metro second lowest on this list, only outperforming New York City.
Construction starts through March declined to 1,459 units, from 3,287 units in the first quarter of 2022. This marked a 55 percent drop in new construction, trailing the 48.6 percent national contraction rate.

All the best!

Demetrius L. Brown

1 Vote

Wishing all the hard-working, loving fathers out there a very happy day!

All the best!

Demetrius L. Brown

0 Votes

Advisers, bankers, and analysts weigh in on the impact of the Fed’s planned hikes, but the consensus is an increase in the cost of capital.

Investors in Multifamily Real Estate are bracing for an uptick in mortgage rates and other forms of real estate finance as the Federal Reserve bumps up interest rates in 2022. As an inflation-fighting move, the Fed plans three hikes of 25 basis points each. And in December, the Fed announced that it would wind down its bond-buying program.

But the consensus among mortgage bankers and economists is that increases in the cost of capital will be modest and will not dampen the availability of financing or the surge of investment. Multifamily lending volume will rise 3 percent to $421 billion this year as the economy continues to rebound, the Mortgage Bankers Association projects.

“The change in interest rates is not expected to reduce demand for multifamily housing this year. A lot of demand is driven by property values and fundamentals, both of which are extremely strong right now,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. Strong property income and low vacancy are combining to push valuations upward, he added.
Another key factor is the national housing shortage. Construction is expected to increase by 5 percent this year to nearly 500,000 units, reports Robert Dietz, chief economist at the National Association of Home Builders. “Demand is especially strong in growing southern cities such as Austin, Nashville and Phoenix as urbanites in high-cost markets move to less densely populated areas,” he noted.
All things considered, multifamily rent growth is unlikely to repeat the performance of 2021, when rents increased 13.5 percent year-over-year through November, according to Yardi Matrix. Yet lenders will be underwriting deals against the backdrop of a market with solid—if less sensational—potential. For 2022, CBRE forecasts 6.5 percent rent increases and continued low vacancy in both urban and suburban markets.
Ripple Effect
Now mortgage bankers are assessing the impact of the Fed’s actions in the months ahead. Predictions vary as to how much the average 30-year fixed rate mortgage (currently at 3.05 percent) will rise in 2022. Some bankers predict a 25- to 30-basis-point uptick. Fannie Mae, for example, expects the average 30-year fixed rate to come in at 3.3 percent by the end of the year. In contrast, MBA forecasts a 4 percent increase.
But student and senior housing, in particular, could see more of an uptick if the omicron variant stalls those sectors’ recovery. Any lockdown could hurt the short-term outlook for those sectors, say observers. Affordable housing, which is highly attractive to banks and the government-sponsored enterprises, should get the most aggressive rates this year.
That’s largely because Freddie Mac and Fannie Mae are on a mission to help alleviate the housing shortage and are incentivized to give the best terms on these deals. Each agency raised its 2022 cap for multifamily loans to $78 billion. Banks also earn a community reinvestment credit for arranging packages.
A $107 million Fannie Mae credit facility arranged by PGIM Real Estate last fall for a national affordable housing operator exemplifies the trend. The deal financed nine properties that will offer more than 1,200 affordable units in Colorado, New Mexico and Texas.
It was structured as a 30-year fixed-rate loan that the operator intends to use to repay existing debt and provide capital for expansion. PGIM Real Estate’s client hopes to increase the credit facility by $100 million over the next three to five years to pay for property acquisitions.
Fixed or Floating?
While mortgage rates should not soar this year, there will be a spillover effect in the real estate finance market.
“The general expectation is that interest rate hikes will most directly affect short-term borrowing and floating rate finance and have less of an effect on the cost of longer-term fixed-rate mortgages,” said MBA’s Woodwell.
Floating-rate finance will probably rise to 75 basis points above the federal funds rate, predicts Michael McRoberts, chairman of agency lending at PGIM Real Estate. “That will drive a migration of investors to fixed-rate finance in 2022,” he said. As a result, investors will have to weigh the pre-payment flexibility of a floating-rate structure against the cost, he adds.
.TD BankThe choice between fixed-rate and floating-rate loans hinges on the borrower’s investment strategy and circumstances, points out Gregg Gerken, executive vice president & head of commercial real estate at
“If an investor plans to sell the asset in the near term, they may opt for a floating-rate loan and put a cap like an interest rate hedge on it to take advantage of the current low rates with some upside protection for the future,” he said. That’s a good approach for a buyer planning a three- to five-year hold for a property that isn’t yet fully leased, Gerken added.
Moreover, there are multiple tradeoffs to consider. “It all depends on the type of asset you are financing and what your investment plans are,” observed Jeff Wilcox, a principal at Gantry. “If you are a generational holder, a fixed-rate product with a rate certainty might make sense.”
One trend that may emerge, experts say, is that more investors will opt for shorter five- to seven-year fixed-rate terms for acquisition loans, rather than three-year, floating-rate bridge loans.
Cap rate trends
Another concern is whether rising interest rates will affect cap rates, and if so, how much. “We don’t believe rising interest rates will have any impact at all,” said Matt Vance, Americas head of multifamily research at CBRE, noting that cap rates and bond yields don’t necessarily move in tandem.
“Considering the amount of capital targeting this real estate sector, there is sufficient spread between the cap rate and bond yield to allow for modest continued compression in cap rates as we saw in 2021,” when rates declined about 10 basis points.
An encouraging sign is that rising interest rates probably won’t significantly impact key loan-to-value or interest-only provisions. “Over the last 18 months, many nonbank lenders have been lending over LTV, since rental rates are moving up so rapidly and the overall debt service ratio is getting better,” Gerken noted.
As an example of interest-only trends, PGIM cites a $44.5 million loan for a property in Georgia. With a spread of 258 basis points over SOFR, the 10-year Freddie Mac financing starts with five years of interest-only. “We were able to get a good spread since it’s 100 percent mission business” for the GSE, noted Lee McNeer, PGIM Real Estate’s executive director of agency originations.

All the best!

Demetrius L. Brown

1 Vote

A big key to success in any aspect of life is having positive mentorship, Coaching, & Masterminds. From Aristotle, who was famously influenced by his mentor, Plato, to Oprah Winfrey, who was mentored by Maya Angelou, many who have made an impact on this world have often been impacted by a mentor figure.

The 8 Values Of Mentorship, Coaching, & Masterminds Are:
1) Motivation
2) Advice
3) Success
4) Direction
5) 1 On 1 Coaching
6) Support
7) Goals &
8) Training
I know for myself, that mentors, coaches, and Masterminds have played a significant role in my life, and their impact on me is still felt to this day.
There have been big well-known mentors and smaller lesser-known mentors who have profoundly affected me – these mentors vary in terms of their backgrounds and the type of success they’ve achieved, but all share a common thread – they taught me something or imparted wisdom that I’ve been able to incorporate into my daily life.
One of the most impactful people that I’ve ever known was a giving and honest Real Estate Investor.
I remember one day he and I were getting lunch and outside we saw a homeless veteran sitting. My friend/mentor saw this man, he excused himself and walked over to him. I don’t know what he told this homeless veteran, but what I do know is that he began praying with him and treated him like a human, with dignity and respect.
My mentor, who wasn’t obligated to help this person he had just met, decided to change this man’s life. At that moment, I learned something about empathy and compassion in action that has stuck with me ever since.
Mentors come in all shapes and from all walks of life.
A mentor doesn’t necessarily need to be a successful person to make a difference in a person’s life.
A mentorship, Coach, or Mastermind dynamic is formed when someone is open to learning and growing, not just in their craft, but also in life. And that openness starts with being truthful and honest with oneself and others. Acknowledging where one needs improvement, and being diligent in learning from others.
There should be no finish line to your growth path, and it needs to start with being open to learning.

All the best!

Demetrius L. Brown

0 Votes

Demetrius Brown has started 30 posts and replied 33 times.

Happy Monday,

All the best!

HERE ARE THE KEY POINTS

According to CNBC, the consumer price index was up 3% in June from 12 months earlier, the U.S. Bureau of Labor Statistics said Wednesday in its monthly inflation report.

It’s the smallest increase since March 2021, around the time when pandemic-era inflation began rising quickly.

The moderation in inflation has been broad-based, and there are encouraging signs looking ahead, economists said.

The Federal Reserve is still expected to raise interest rates at least one more time.

Inflation slowed sharply in June to its slowest pace in more than two years, translating to less of a pinch on the average consumer’s wallet thanks to price relief across categories like energy, groceries and housing.

Inflation measures how quickly prices are changing across the U.S. economy.

The consumer price index increased 3% in June relative to a year earlier — a slowdown from 4% in May, according to the U.S. Bureau of Labor Statistics.

The report “makes a strong case that inflation is headed back into the bottle,” said Mark Zandi, chief economist at Moody’s Analytics.

Easing price pressures thus far are largely attributable to the fading effects of supply shocks caused by the Covid pandemic and the Russian war in Ukraine, Zandi said.

The decline in the inflation rate doesn’t mean household expenses have fallen in aggregate; it means they aren’t rising as quickly.

While inflation is on a downward trajectory, it remains above the Federal Reserve’s long-term target of around 2%.

“I think inflation is moving to a better place, but we’re not in the Promised Land of the 2% target,” said Mark Hamrick, senior economic analyst at Bankrate. “We know the journey is progressing, but it’s not yet over.”

Encouraging’ inflation signals moving forward

The inflation slowdown has been broad-based, Zandi said.

“It’s food, it’s energy, vehicle prices, the cost of housing is slowing,” he said. “Pretty much across the board, we’re seeing a moderation in price increases.”

Gasoline prices have fallen dramatically from a spike in the first half of 2022 that was a result of Russia’s invasion of Ukraine. Prices at the pump are down almost 27% in the past year, according to the BLS. They rose slightly — by 1% — from May to June.

Grocery price inflation is also down significantly from its peak around 14% last summer, which had been the highest rate since 1979. “Food at home” prices are up about 5% in the past year and were flat from May to June, according to the BLS.

But food and energy prices can be volatile. That’s why economists use a measure that strips out such categories to get a better sense of inflation’s trajectory going forward.

The “core” measure also includes housing, which is the biggest expense for the average consumer.

At the current pace of inflation, the core CPI metric should fall back to the target level by this time next year, Zandi said.

“Notable” increases in annual inflation rates include motor vehicle insurance (up 16.9%), recreation (4.3%), household furnishings and operations (3.6%), and new vehicles (4.1%), according to the BLS.

Inflation is a ‘complicated phenomenon’

At a high level, inflationary pressures — which have been felt globally — are due to an imbalance between supply and demand.

It’s largely a three-pronged story in the U.S., said Stephanie Roth, senior markets economist at J.P. Morgan Private Bank.

The first is inflation among physical goods.

Meanwhile, the rapid economic restart snarled global supply chains. The supply of goods couldn’t keep up with consumers’ zest to spend. The result was fast-rising prices.

The second prong is war in Ukraine, which exacerbated backlogs in the global supply chain and fueled higher prices for food, energy and other commodities, said Roth.

The third is inflation for “services,” a category that includes housing and labor-intensive service businesses like restaurants and hotels.

As the economy reopened after the pandemic, businesses rushed to hire workers, and job openings surged to record highs. That demand tilted the job market in favor of workers, who had ample opportunities. They saw wages grow at their fastest pace in decades as employers competed to hire them.

That strong wage growth has nudged employers, especially labor-intensive service businesses, to raise prices to help compensate for higher labor costs, economists said. There are signs that labor dynamic is easing, though — which should put downward pressure on overall inflation.

The Federal Reserve has been raising borrowing costs aggressively since early 2022 to rein in demand among consumers and businesses, and ultimately help bring inflation back to its 2% annual target. The central bank is expected to raise interest rates at least once more.

All the best!

All the best!

All the best!

Demetrius L. Brown

Key Highlights

The top 10 most active metros in the country by volume of units under construction account for 40 percent of the national figure, amounting to 421,972 units.

Texas maintained the lead in multifamily construction, with three metros—Austin, Dallas and Houston—making the top 10.

Shifting and moderating demand is indicated by new construction starts figures, trending down everywhere except New York, where the volume almost doubled.

The largest declines in new construction starts—drops in the 60-70 percent band—were recorded in Phoenix, Houston and Los Angeles.

Here’s our list of top markets for multifamily development in the U.S., using Yardi Matrix data. Our primary criterion was the volume of units under construction as of early May 2023; we coupled this data with metrics such as new construction starts and completions.

1. Austin, Texas

In most metros, new construction starts dropped and Austin was no different. During the first quarter of 2023, 6,013 units (22 properties) broke ground in the metro, well below the 8,481 units (31 properties) that began construction during the same period in 2022.

2. Dallas

3. Miami

Developers began construction on 3,612 units across 14 properties during the first quarter of 2023, behind Austin, Dallas and Atlanta. This volume marks a 38.1 percent drop from the 5,833 units in 20 properties that broke ground during the same interval last year.

4. Atlanta

5. Phoenix

Construction starts-wise, the trend is less promising—only 1,985 units broke ground during the first quarter of 2023, a substantial 70 percent decline from the 6,580-unit volume posted during the same interval last year.

6. New York City

7. Denver

Denver was seventh on the back of 35,893 units under construction in 162 properties, as of May 2023. In addition, it had nearly 143,000 units in the planning and permitting stages. Deliveries during the year’s first four months amounted to 1,696 units, 2.4 percent of the metro’s total stock.

8. Houston

9. Los Angeles

Just 814 units broke ground in Los Angeles during the first quarter of 2023, the lowest volume in the top 10. The volume marked a 61.4 percent decrease from the 2,110 units that started construction during the same time last year.

10. Charlotte

Construction starts through March declined to 1,459 units, from 3,287 units in the first quarter of 2022. This marked a 55 percent drop in new construction, trailing the 48.6 percent national contraction rate.

All the best!

Demetrius L. Brown

All the best!

Demetrius L. Brown

Ripple Effect

A $107 million Fannie Mae credit facility arranged by PGIM Real Estate last fall for a national affordable housing operator exemplifies the trend. The deal financed nine properties that will offer more than 1,200 affordable units in Colorado, New Mexico and Texas.

It was structured as a 30-year fixed-rate loan that the operator intends to use to repay existing debt and provide capital for expansion. PGIM Real Estate’s client hopes to increase the credit facility by $100 million over the next three to five years to pay for property acquisitions.

Fixed or Floating?

While mortgage rates should not soar this year, there will be a spillover effect in the real estate finance market.

“The general expectation is that interest rate hikes will most directly affect short-term borrowing and floating rate finance and have less of an effect on the cost of longer-term fixed-rate mortgages,” said MBA’s Woodwell.

.TD BankThe choice between fixed-rate and floating-rate loans hinges on the borrower’s investment strategy and circumstances, points out Gregg Gerken, executive vice president & head of commercial real estate at

Moreover, there are multiple tradeoffs to consider. “It all depends on the type of asset you are financing and what your investment plans are,” observed Jeff Wilcox, a principal at Gantry. “If you are a generational holder, a fixed-rate product with a rate certainty might make sense.”

One trend that may emerge, experts say, is that more investors will opt for shorter five- to seven-year fixed-rate terms for acquisition loans, rather than three-year, floating-rate bridge loans.

Cap rate trends

“Considering the amount of capital targeting this real estate sector, there is sufficient spread between the cap rate and bond yield to allow for modest continued compression in cap rates as we saw in 2021,” when rates declined about 10 basis points.

All the best!

Demetrius L. Brown

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