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Levine Capital Newsletter August 2021

Levine Capital Newsletter AUGUST 2021

Real Estate Update August 2021

Find out what’s happening in the market now, what’s driving trends and investor choices, as well as the latest updates from Levine Capital…

The State Of The Markets

Key factors at play right now…

The Office Is Extinct

Giant employer Google has become the latest to announce that it will keep employees working from home until at least 2022. 

Google, which has at least 139,000 employees is just one of the massive employers who have again put off, or rolled back plans to return to the office. 

As employers find that remote teams are just more efficient and profitable and that the overhead and risks associated with old school offices and workplaces are stealing their competitiveness, we can expect more headlines like this. 

We’ve seen a similar trend across many types of commercial real estate. Even McDonald’s has been instructing its franchisees to close dining rooms. Others have permanently closed them due to a lack of ability to find workers. Travel also appears to have been impacted long term, with far less need to accommodate business travel. 

This is becoming a massive glut of millions and millions of square feet of unneeded buildings. 

The one exception seems to be multifamily housing, and perhaps some logistical facilities helping to fuel the new surge in online shopping as well. 

Many of those buildings now finding themselves without a purpose may be transformed into residential living accommodations. Though high construction costs may also favor existing multifamily properties for investors. 

Consumer Confidence Levels

Consumer confidence levels fell sharply again according to the latest readings at the end of August 2021. 

This time to a new 6 month low, and even below pre-pandemic levels. 

This may be attributed to several factors, including inflation, fresh rounds of restrictions attributed to COVID, and uncertainty over the future. 

This could lead to a weak 2021 holiday shopping season, and more of a focus on spending at home, and in getting comfortable in place. 

Disaster Season Is Here: Severe Weather, Fires & More

Until November we continue to be in the heart of disaster season. That means hurricanes, tornadoes, wildfires, flooding, and other storms. 

It happens every year. Though some may argue these disasters have been intensifying in the amount of damage and cost of damage in recent years.

This is a fresh reminder to make sure that your investment portfolio is well-diversified, geographically, in the number of units, and sources of income. 

Insurance is an important way to reduce these risks. As is forward planning for before, during, and after disasters like these. 

The State Of The Real Estate Market

Everyone knows that the real estate market has been on fire over the past year. Here are some of the most influential trends impacting the space now, and the outlook ahead.

Home Prices Surge At Record Pace

Home prices have continued to surge through the summer. 

According to NAR, 94% of markets have seen double-digit price growth. At least a dozen markets have seen prices up in excess of 30% year over year. 

Pittsfield, MA led the pack with a 47% price increase as of the second quarter of 2021. Nationally house prices are up almost 19% according to the S&P Case Shiller Index.

Home sales volume is also strong, at close to a record pace of 6M units for the year. 

However, pending home sales fell again in July, by 1.8%. Some analysts have calculated that would be home buyers in some markets will now need to save up for 20 years to be able to afford a reasonable down payment. 

On the bright side, this has created massive wealth for those holding real estate. This shift in direction of trends suggests we will see more demand in rentals over the next year, propping up rental rates, and giving landlords more choice of the best renters.

Rental Rates Keep On Growing

CoreLogic reports that rent growth in single-family homes now exceeds its previous highs of 2005, and is well above pre-pandemic levels. 

SFR rent growth has grown fivefold over the past year.

The higher you go up in price range, the higher the growth rate of rents. 

We expect these trends to continue for the foreseeable future. 

Federal Disaster Housing Stability Act of 2021

Some just can’t seem to let go of the idea of permanent foreclosure moratoriums and eviction bans. This seems exactly the mentality of the proposed Federal Disaster Housing Stability Act of 2021. 

The bill aims to automatically institute new bans whenever a disaster is declared. What exactly will be deemed a ‘disaster’ seems very unclear. Without specific language, it could be used to apply to storms, fires, climate change, the inability to pay the rent, homelessness levels, or simply that eviction would impact a non-performing renters’ reputation. 

While this bill may not pass, it certainly may not be the last attempt at similar legislation. 

While in reality rentals are performing extremely well, and it is estimated that around 94% of emergency funds for renters and landlords are still waiting to be paid out, smart landlords are wise to stay ahead of the curve with forward-thinking property management and leasing practices. 

What’s Most Important In Investing Now

It’s all about taking action. 

If you are kicking yourself for missing out on all of the incredible recent gains, it’s not too late.

You’ll only miss out on more the longer you procrastinate. 

Talk to one of our experts to answer all the questions you still have about the market, what’s smart for your portfolio, and where the best opportunities are now. 

Levine Capital Updates

As a company, Levine Capital continues to be extremely bullish on single-family homes and multifamily investments. 

We’ve had great success with our recent funds. Hopefully, you’ve already taken the opportunity to check out the case studies and property tours. 

Be sure to check our site for the latest developments here

Also, be sure to check out the latest news and insights on the market in our news section.


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