More Real Estate Data To Digest – If You Can

Yesterday, I highlighted some of the housing market’s biggest hurdles including:

  • Rapid inflation
  • Rising interest rates
  • Inventory shortages
  • A decline in new construction numbers.

Typically, the U.S. residential real estate market is a good indication of its economic strength. If you remember back to 2008, it was the housing market that set the stage for the perfect storm.

These days, the circumstances might be very different. But there’s still a lot we can learn from our real estate sector. Which is why I’m focusing on it again today.

Now, the National Association of Realtors (NAR) yesterday released its “Existing Home Sales Snapshot for June” report. It found that the U.S. housing market is beginning to cool due to record-high home prices mixed with an increase in mortgage rates.

The median sale price for an existing home shot up to $416,000 last month, mind you – a 13.4% increase year-to-date and the highest amount ever recorded. Concurrently, existing home sales dropped for a fifth straight month, falling 5.4% to an annualized rate of 5.12 million.

The organization's chief economist, Lawrence Yun, had this to say on the matter:

“Falling housing affordability continues to take a toll on potential home buyers. Both mortgage rates and home prices have risen too sharply in a short span of time…

“Finally, there are more homes on the market. Interestingly though, the record-low pace of days on market implies a fuzzier picture on home prices. Homes priced right are selling very quickly, but homes priced too high are deterring prospective buyers.”

After all, real estate is perhaps the most prominently affected market when it comes to interest rate increases. Yet the question remains on how this problem will affect the broader economy.

The Federal Reserve wants to get inflation down to 2%, where it was before the pandemic. So it’s elevated its short-term interest rate target by 1.5% so far.

But what if 2% isn’t going to happen? What if prices continue to climb along with interest?

If the housing market is any indicator, our rising cost discomfort could just be getting started. This is why simple trends in the real estate market can be canaries for the coal mine that is our current economy.

More Non-REIT News to Know About 

As I’ve shared before, Netflix (NFLX) – the world’s premier streaming platform – was on the ropes for a little while now. That was to be expected since it endured two straight quarters of waning subscribers… the first time this has happened in its history.

In the last quarter, it lost 970,000 paid subscribers. That’s really not good, but it expected to lose over a million more. So investors ultimately celebrated the results.

Even so, Netflix very well knows it has some work cut out for it. So it’s now betting a lot on a two-pronged approach.

“We’re talking about losing 1 million instead of losing 2 million, so our excitement is tempered by the less-bad results,” Chairman Reed Hastings admitted. “Losing a million and calling it success is tough. But really, we’re set up very well for the next year.”

That’s quite the hopeful statement everything considered. For one thing, Netflix’s stock has shed nearly two-thirds of its value since the beginning of this year. And it’s facing growing competition from rival streaming services like Amazon Prime and Hulu.

To combat that, Netflix is launching a lower-price, ad-supported option. It also plans to crack down on password-sharing by charging households to share accounts.

In a letter to investors earlier this week, Netflix explained the ad initiatives are slated to take effect next year. Though they’ll be working to hamper too much sharing much sooner.

Hopefully, these measures will also help it buy more content. Who wants to see The Office featured there again?

The World According to REITs 

Highwoods Properties, Inc. (HIW) tends to be a superstar I keep an eye on.

This real estate investment trust (REIT) owns pristine high-rises and other office environments that truly bring out the best in their business tenants. These are situated in desirable markets like Atlanta, Georgia; Orlando, Florida; Raleigh, North Carolina; and Richmond, Virginia.

Now, this powerhouse is putting down roots in another of the nation’s most prosperous markets… Dallas, Texas.

The Granite Park Six and 23Springs are two brand-new beautiful buildings there with 1.064 million square feet of rentable space. Right now, each property is 50% owned.

Granite Park Six (in the Frisco/Plano area) is 12% preleased and scheduled for completion in Q4-23. And 23Springs (in Uptown Dallas) is 17% preleased and scheduled for completion in Q1-25.

Ted Klinck, president and CEO, stated:

“Today’s announcement is consistent with our long-term strategic plan of owning the highest-quality office buildings in the business districts of markets with favorable economic and demographic trends. With its strong, diverse, and growing economy, Dallas has been at the top of our list for future market expansion. 

“We are excited about the opportunity to build and grow a strong presence in Dallas with our combination of proven development expertise, strong asset management platform, and highly-regarded brand.” 

Seriously, you have to take a look at these incredible buildings. They’re a credit to their creators, their owners, and their tenants alike.

Author’s Note: If you do determine this stock is right for you, make sure to purchase it at a smart entry point. Even the best of companies can burn you badly if you buy in at inflated prices.

More By This Author:

Is Residential Real Estate on the Rocks?
Wall Street’s Workforce Crisis Should Be Taken Seriously
Counting The Costs Vs. The Consumers

Brad Thomas is the Editor of the Forbes Real Estate Investor.

Disclaimer: This article is intended to provide information to interested parties. ...

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