First Helene, now Milton?

Another week, another hurricane hit Florida. This week we will be covering the potential damages from Milton as well as some updates with overall housing and inventory levels.

This week’s letter is 735 words, a 2.9-minute read.

Mortgage Rates

Immigrants and Housing Prices🏠

It’s been no secret that housing prices have been pushed to unaffordable heights causing housing to be brought to the front of headlines and political platforms. This week we saw the Republican vice president nominee Vance point to the influx of immigrants as the reason behind it which is possible.

Immigration definitely plays a role in increasing competition for housing/rents and therefore affecting prices, but the timing seems slightly off for them to be directly correlated. Rents surged 12% in 2021 when immigration was at a regular rate of 1.17 million people. Then in 2023 when immigration upticked to 3.3 million, rents modestly increased by 2.8%.

Speaking of renting prices, a new report from the U.S. Census Bureau says over 21 million renter households spent more than 30% of their income on housing costs in 2023, representing nearly half (49.7%) of the 42.5 million renter households in the United States for whom rent burden is calculated. According to HUD, households are considered cost-burdened when they spend more than 30% of their income on rent, mortgage payments, and other housing costs. Households spending more than 50% of their income on housing costs are considered severely cost-burdened.

Inventory Levels

Important metrics to track when looking at market pricing are active listings, and months of supply (aka inventory levels). If active listings start to rapidly increase as homes remain on the market for longer periods, it may indicate potential future pricing weakness. Conversely, a rapid decline in active listings could suggest a market that is heating up.

7 states are back above pre-pandemic inventory levels with Florida leading the charge, and all of them being in the Sun Belt and Mountain West. Reason being is that in these regions, like places in Texas and Colorado, home prices surged during the pandemic. Meanwhile, many people moved to these areas, driving prices up even more. However, once the rush of people slowed down and interest rates went up, some of these places became too expensive for locals to afford.

As a result, people started selling their homes, and inventory levels (the number of homes for sale) began to increase again. This has allowed these markets to bounce back more quickly to their pre-pandemic levels compared to some Midwest and Northeast markets, where the price growth wasn’t as extreme.

In the Lab🧪

Of the 21.2 million square feet of lab and R&D space under construction, 72% remains unleased, reflecting the sector’s slow absorption and developers' cautious approach. Leasing activity picked up slightly in Q2 2024 but still faces hurdles.

Construction costs for life science projects have risen 20-25% over pre-pandemic levels, driven by complex requirements like advanced HVAC systems, emergency power generators, and more specialized designs. This cost inflation is impacting project timelines and feasibility.

Major markets like Boston, San Francisco, and San Diego are experiencing high vacancies, with San Francisco seeing nearly two million square feet of negative absorption in the past year. This oversupply is pushing developers to pause speculative builds. link

Milton Makes Landfall

“If Milton stays on its course, this will be the most powerful hurricane to hit Tampa Bay in over 100 years,” the National Weather Service warned. “No one in the area has ever experienced a hurricane this strong before.”

In a worst-case scenario of a direct hit on Tampa, a 1-in-100-year event could result in insured losses of up to $175 billion, according to analysts for financial firm Jefferies. That high-end estimate would far surpass the insured losses caused by Hurricane Katrina in 2005.

Our hopes and prayers go out to those with friends and families in Florida.

That wraps it up for this week’s update! If you enjoyed please subscribe and share with a friend! Copy and paste this link to share → www.pool.beehiiv.com

See you all next week!