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Canovo Group Newsletter - June 2023

Canovo Group Newsletter - June 2023

Utah Market At-A-Glance 📈, Will the Fed Hike Again?, 7% Cap Ogden Duplex,

June 05, 2023

Dear ,

I hope this message finds you well. As the policymaking body of the Federal Reserve System, the Federal Open Market Committee (FOMC) plays a crucial role in shaping monetary policy. The FOMC typically convenes eight times per year to discuss various economic indicators and consider adjustments to interest rates. The next FOMC meeting is scheduled for June 13-14, 2023. This month's meeting is anticipated to mark the end of a 10-meeting streak of interest rate hikes. While it is uncertain whether the FOMC will provide clear guidance on future policies, the updated economic projections may offer valuable insights into their intentions.

Shifting our focus to the Utah real estate market, we observe a continued dampening of median sales prices. Specifically, for 2-4 unit properties, the median sales price has decreased by 6.3% from $710,000 in May 2022 to $683,000 in May 2023. Year-to-date, there has been a decline of 7.5%, with prices dropping from $646,000 in 2022 to $557,000 in 2023.

Similarly, the median sales price for single-family properties has seen a decrease of 8.9% from $545,000 in May 2022 to $497,000 in May 2023. Year-to-date, the change amounts to a decline of 7.7%, with prices dropping from $520,000 in 2022 to $480,000 in 2023.

Considering the drop in median sales prices across the board, this presents an ideal window of opportunity to acquire investment real estate at a discount. While elevated interest rates are keeping many investors on the sidelines, opportunistic investors see this as a chance to take advantage of discounted pricing that can be locked in now and improving performance in the future with a refinance when rates come down.

If you have any questions about buying or selling investment property in Utah, you can schedule a brief strategy call with me here.

Best regards,

David Robinson

DOWNLOAD INFOGRAPHIC

Utah Market Statistics Summary for May 2023

Top Multifamily Listings!

*Estimated cap rate based upon fair market rents published by HUD and estimated expenses. Buyer should conduct their own due-diligence to verify all assumptions and information

Click here to request more detail on the listings above.

Top Headlines, Reports, and Articles

Fed rate-hike pause still likely despite strong data

Federal Reserve officials, whose hike, skip or pause messaging on interest rates has become a high-stakes word puzzle for investors, seem ready to end the U.S. central bank's run of 10 straight rate increases later this month while leaving the door open to a future rise in borrowing costs.

Key takeaways:

The Federal Reserve is expected to end its 10-meeting streak of interest rate hikes at its June meeting.
The Fed may not provide any clear guidance on future policy at the June meeting.
Instead, the Fed may use its updated economic projections to signal its intentions.

Source: reuters.com - Howard Schneider

WARNING: Souring commercial real estate loans could threaten some banks

Deposit runs have led to the collapse of three U.S. banks this year, but another concern is building on the horizon. Commercial real estate is the area most likely to cause problems for lenders, JPMorgan Chase CEO Jamie Dimon told analysts Monday.

Key takeaways:

JPMorgan Chase CEO Jamie Dimon is warning that the bank is bracing for a wave of soured loans tied to commercial real estate.
The bank has $15 billion worth of exposure to commercial real estate loans, and it is prepared for a "significant" increase in loan losses in the coming quarters.
The commercial real estate market is facing a number of headwinds, including rising interest rates, inflation, and supply chain disruptions.

Source: CNBC.com - Hugh Son