A housing cost crisis in America?

It’s safe to say, considering one-in-three “cost-burdened” households spent above the recommended 30% of gross household income on housing costs in 2019, according to a recent report by Apartment List.

Housing affordability has remained a concern in the U.S., long before recent spikes caused by COVID-19, leaving millions of families priced out. Renters have especially felt the sting.

More niche, renters who work on-site jobs.

Economic division continues to polarize on-site workers and their remote-friendly counterparts. Apartment List found that 15% of Chicagoans in remote-friendly occupations are cost-burdened, compared to 22% whose jobs must be performed on-site. It’s roughly the same divide at the national level.

The correlation? On-site workers are significantly more likely to be renters. Thirty-two percent of on-site workers in Chicago are renters, based on the report, a notably higher rate than 28% of those who work from home. Cost burden rates for the two groups are 35% and 22%, respectively.

Analyzing the data for both on-site and remote workers separately, Apartment List also found notable imbalances in cost burden rates between races. Among remote-friendly workers in Chicago, 19% of Black workers and 18% of Hispanic workers are cost-burdened, as opposed to just 13% of White workers, regardless of occupation type.

It’s interesting to consider how these numbers have evolved since 2019. Housing costs have continued to increase, according to the report, apart from a 1.4% decrease in 2020. The median rent increased by nearly 18% in 2021. Average hourly wages have increased by 10.4% over the same period. Good news, but still, this growth in earnings has not been enough to bridge the divide.

And rents are growing fastest in the markets where on-site jobs are more prevalent.

In Chicago, 32% of all workers were employed in remote-friendly occupations in 2019, while rents have jumped by 6% since the start of COVID-19. For comparison, around San Jose, California, 46% of workers are employed in remote jobs (largely because of Silicon Valley) and rents have decreased by 7% since March 2020.

This makes sense. Because on-site workers have less flexibility to move in search of more affordable housing, they’re left to find a way to pay.

Here’s a startling statistic: More than 47 million Americans quit their jobs last year, according to the U.S. Bureau of Labor Statistics. But why? What has led to what many are calling the Great Resignation?

Real estate company Clever has come up with some answers. The company surveyed 1,000 people who resigned from a job since January of 2021. Clever found that everything from the COVID-19 pandemic to bad company culture inspired these respondents to make a job change.

According to Clever, 31% of survey respondents said they left their jobs because of toxic company culture. An additional 30% said they left because they didn’t agree with their company’s response to the COVID-19 pandemic. And another 30% said they moved on because they had changed their career goals.

These employees often made their decisions to leave quickly. Clever found that 60% of respondents considered leaving their jobs for just one month before they resigned. And one in four respondents debated leaving for one week or less before quitting.

November of last year saw an especially high number of resignations. The Bureau of Labor Statistics said that a record-setting 4.527 million workers quit their jobs in that month.

Of course, the pandemic played a big role in these resignations. A total of 80% of respondents to Clever’s survey said that the pandemic influenced their decision to quit. And of those employees who said that they quit because of the pandemic, 41% did so because they said their employer didn’t enforce health and safety protocols while 28% said they didn’t want to follow their employer’s COVID-19 protocols.

Respondents weren’t shy about leaving quickly, either. Clever found that 49% of respondents gave their employers one-week notice or less when they quit. One in four gave no notice at all.

Employers struggled to convince respondents to change their minds. Clever found that 80% of respondents received a counteroffer from their employer when they resigned but still decided to leave.

We’ve said it before—2021 was a remarkable year for CRE. And the latest research on the continued demand that foreign investors have for commercial real estate? That just provides even more evidence of how unusual last year was.

The steady rebound of CRE came as somewhat of a surprise last year. According to the National Association of Realtors’ 2022 Commercial Real Estate International Business Trends report, foreign investors can be credited as at least one reason for the busy year.

Cross-border inflows of at least $2.5 million for the acquisition of U.S. commercial real estate have recovered to pre-pandemic levels, increasing by 44% to $52.9 billion in 2021, compared to $36.6 billion during the same period in 2020.

The largest sources of cross-border flows came from Canada and Asia, according to NAR. Canada acquired $19.2 billion of CRE in the U.S. in the four quarters ending 2021 Q3—up 63% from the prior four quarters—followed by Singapore, South Korea and Saudi Arabia, respectively.

Drawing the highest share of these flows? Non-major markets, given recent migration trends and the cheaper cost of acquiring property. Seattle, Atlanta and Dallas dislodged Manhattan as the top destinations among foreign U.S. investors, according to NAR. In fact, the share of cross-border capital of the six major markets continued to decline throughout 2021.

Industrial drew the largest share of acquisitions, accounting for 34% of $52.9 billion in total. Office drew the next largest share at $16 billion, or 30% of total acquisitions, based on NAR’s report. Surprising, considering the market’s record-high vacancy.

In the “small” CRE market or sales below $2.5 million, NAR estimates that foreign investor acquisitions facilitated by NAR commercial members more than doubled in 2021 to $4.8 billion from $2 billion in 2020. Foreign transactions made up 3.1% of the estimated transactions of $155.5 billion among NAR commercial members.

While Canadians and Asians were the largest buyers of U.S. CRE valued at $2.5 million or over, the majority of small-market transactions were from Latin America, with Mexico being the top country at 23%, followed by Columbia (10%), Argentina (8%), Venezuela (8%) and Brazil (5%).

Interestingly, NAR found that Florida remained the No. 1 state for U.S. buyers—18%—and no NAR respondents reported a foreign buyer buying in New York, even though it accounts for 3% of NAR commercial members’ business.

Multifamily buildings and land were the preferred small-market property acquisitions, based on the report. Office acquisitions only accounted for 7% of purchases made by NAR commercial members’ foreign buyers, a sharp contrast with the 30% share of large-investor market acquisitions.

Finally, NAR found that investor transactions accounted for 97% of small-market transactions.

As the pandemic continues to wane, NAR members expect foreign acquisitions of CRE to increase for most property types, excluding office and hospitality.

Multifamily is hot in Texas – and across the U.S. – and New York-based Global Real Estate Advisors is pursuing opportunities to buy, sell and finance deals, with new offices.

The company was created as a national platform, combining various local or regional brokerages. Following deals in the Texas cities of Alice, Corpus Christi, Edinburg, El Paso, Harlingen and McAllen, GREA announced it was opening 11 offices nationwide, including three in Texas – Austin, Houston and Dallas – as well as eight cities nationally, including in Miami, New York and Chicago.

Joe James, one of GREA’s founding partners, is currently leading a team of five people working remotely as there is no plan for a physical office in Central Texas. The firm has recruited agents from commercial giants such as Brown Realty Advisors, Greystone SF, HFO Investment Real Estate, National Apartment Advisors and Rittenhouse Realty Advisors. According to a press release from GREA, these brokerages represented more than $4.5 billion in combined sales in 2021.

“This is a market where we are constantly seeing new buyers wanting to get in,” James told the Austin Business Journal. Click to read more at www.therealdeal.com.

Right now we’re not in ordinary times. The covid pandemic still threatens economic recovery, work and living patterns may be permanently altered, and a surge in home prices has disrupted our notions of what a home could be worth or what an investment property should cost.

Despite these difficulties – or rather, because of them – here is our guide using data from Local Market Monitor, Inc. for where and how investors can achieve the best returns with the lowest risk in the coming year. We will identify markets where demand for rentals should be strong but also – because most investors want to stay local – will show how to maximize your return in any local market.

Let’s start with the basics, will there be more or less demand for rentals in the coming years, and what kinds of rentals? The pandemic has soured a lot of people on living in apartments in crowded cities, the recent jump in prices means a lot of them are trying to buy a home. On the other hand, there are still fewer jobs than before the pandemic, and fewer people who can afford a home. Last year household income fell in all income brackets but most for people with modest incomes. Click to read more at www.forbes.com.

Optimism is back for commercial real estate. Property performance through the third quarter of 2021 reflects considerable gains for real estate investors, while interest rates and inflation are of limited concern to the asset class.

Investment returns for institutional-quality properties hit a 15-year high in the third quarter of 2021, according to the National Council for Real Estate Investment Fiduciaries (NCREIF). NCREIF tracks institutional-quality commercial property and fund performance, using data provided by its investment-management members.

The NCREIF Property Index (NPI) total return for Q3 2021 was 5.2%, comprising a 1% income return and a 4.2% capital return (or appreciation). The last time the NPI quarterly total return was over 5% was Q4 2005. For context, the 20-year average quarterly total return is 2%.

Q3 2021 commercial property performance was stunning. But it is also impressive given the very short and shallow depreciation cycle in 2020. Depreciation, as measured by the capital return, lasted only two quarters (Q1 and Q2 2020) and resulted in cumulative depreciation of only 2.7%. As a result, commercial property values in the NPI are already 5% above their pre-pandemic peak. Click to read more at www.nasdaq.com.