The Canovo Report - December 19, 2023

🗞️ The Canovo Report: Utah Small Multifamily to End 2023 Flat and Record Low in Sales

December 19, 2023

Happy Tuesday! I want to wish you all an amazing Christmas Holiday this week. Thanks for being a subscriber to The Canovo Report and for your support this year!

This week in the Canovo Report…

Small multifamily values look to end 2023 flat, a rare 14-unit in St.George comes available, and the FED interest rate pivot has begun…

…Will they be able to avoid a recession in 2024?

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Happy Investing,

David Robinson

Featured Multifamily Listings This Week

> Our team has analyzed these deals using our custom bulk property analyzer. If you’d like more detail regarding any of these listings, click the links below. If you’d like to learn how we help exclusive investor clients find and acquire top-performing multifamily, click here.

$2,175,000.00

600 N 2450 E #101 St. George Utah , 84790

Type: 14

Est Proforma Cap: 5.60%

Total Monthly Expenses: $3,583.98

Gross Monthly Income: $14,154.00

$749,900.00

1103 25th St Ogden Utah , 84401

Type: 4

Est Proforma Cap: 5.81%

Total Monthly Expenses: $1,260.28

Gross Monthly Income: $5,044.00

$575,000.00

2820 Adams Ave Ogden Utah , 84403

Type: 3

Est Proforma Cap: 5.67%

Total Monthly Expenses: $953.66

Gross Monthly Income: $3,783.00

$499,900.00

4433 S Garden Dr Millcreek Utah , 84124

Type: 2

Est Proforma Cap: 7.31%

Total Monthly Expenses: $954.07

Gross Monthly Income: $4,122.00

$599,000.00

6736 S Oquirrh Ridge Rd West Jordan Utah

Type: SFR+

Est Proforma Cap: 5.97%

Total Monthly Expenses: $1,020.63

Gross Monthly Income: $4,122.00

$575,000.00

6108 W Vista Mesa Dr. West Valley City Utah

Type: SFR+

Est Proforma Cap: 6.25%

Total Monthly Expenses: $1,004.51

Gross Monthly Income: $4,122.00

Canovo Group may not be the listing brokerage for the above properties. The information provided is not guaranteed and should not be relied upon to make investment decisions. Buyers should complete their own analysis and due diligence before making any investment.

Sold Multifamily Listings Last Week

> Here's a roundup of multifamily properties sold over the past week. We've estimated their selling cap rates using our bulk analyzer. Curious about your property's value? Request a complimentary broker's opinion of value.

What is Your Property Worth? Request a Free Valuation.

Utah Market Data

> Utah's Small Multifamily Market: Ending 2023 with Stable Values and Record Low in Sales/Listings

As 2023 draws to a close, we delve into the year-to-date figures for multifamily properties in Utah, comparing them with the trends observed from 2019 to 2022. The previous four years were marked by an exceptional average growth of 17.6% year-over-year. However, this year has been a stark contrast with no growth in values.

In terms of new listings, the market reached its zenith in 2021 with 1,240 properties. Since then, there has been a significant drop of 34%, bringing us to just 820 new listings for the current year.

The decline in properties sold is even more pronounced. From a high of 942 sales in 2021, the numbers have plummeted by 55% to a mere 425 sales this year.

Looking ahead to 2024, with anticipated rate cuts by the Federal Reserve, we are cautiously optimistic. We expect to see a moderate increase in both sales and listing activities, along with a ore pronounced increase in median sales prices.

> Multifamily Year to Date - Median Sold Price

> Multifamily Year to Date - New Listings

> Multifamily Year to Date - Number Sold

Source: wfrmls

Interest Rates and Financing

Sponsored: Spencer Allen | Trillion Mortgage NMLS #2296408

 > Mortgage Rates Drop Below Seven Percent

Potential homebuyers received welcome news this week as mortgage rates dropped below seven percent for the first time since August. Given inflation continues to decelerate and the Federal Reserve Board’s current expectations that they will lower the federal funds target rate next year, there will likely be a gradual thawing of the housing market in the new year. (more)

Other Top News, Reports and Insights

> FannieMae Economic Expert Predictions for 2024

Summary: Fannie Mae Economic and Strategic Research (ESR) Group predicts that single-family home sales, which reached their lowest point in the fourth quarter of 2023, will begin a gradual recovery in 2024, aided by a recent decrease in mortgage rates. This recovery is expected to coincide with an increase in mortgage origination activity. However, the challenges that plagued the housing market in 2023, such as affordability issues, the lock-in effect, and a limited supply of homes for sale, are expected to continue into 2024, leading to a slow recovery. The ESR Group also forecasts a modest economic downturn in 2024, followed by growth in 2025. Despite improvements in the economic outlook and lower inflation expectations, concerns remain about consumer spending, restrictive monetary policy, and the overall pace of economic growth.

Key Takeaways:

  • Single-family home sales are projected to recover slowly in 2024 following a significant downturn in 2023, with this recovery partly driven by a decrease in mortgage rates.

  • Challenges such as affordability, limited housing supply, and the lock-in effect will continue to impact the housing market, contributing to the slow pace of recovery.

  • The overall economy is expected to experience a mild downturn in 2024, but with growth resuming in 2025. Concerns remain about stretched consumer spending, the impact of restrictive monetary policy, and maintaining a balance between economic growth and inflation control. (More)

> Mortgage Rates and Housing Payments Drop to Lowest Level Since Spring - Redfin.com report

Summary: Mortgage rates have fallen to their lowest since spring, with a significant drop in the daily average to 6.82%. This reduction follows the Federal Reserve's announcement of a potential decrease in interest rates. Additionally, there's an increase in new listings and a 20% rise in mortgage-purchase applications from their November low. However, the market remains dynamic, with the median U.S. home-sale price increasing and the total number of homes for sale still declining.

Key Takeaways:

  • Drop in Mortgage Rates: The daily average mortgage rate has decreased to 6.82%, the lowest since May, influenced by the Federal Reserve's plans to lower interest rates. This reduction is likely to continue into 2024, making it a favorable time for mortgage applications.

  • Increase in Homebuying Activity: There's a notable rise in new listings and mortgage-purchase applications, up 19% from the November low. This trend is a positive sign for the housing market, reflecting growing buyer interest and potential investment opportunities.

  • Price Dynamics: Despite the drop in mortgage rates, the median U.S. home-sale price has risen by 4.5% year over year, indicating that demand continues to outpace supply. This trend is critical for investors to consider, as it impacts the overall affordability and investment returns in the housing market. (More)

We hope you found this weeks report valuable. If you have any questions, feedback, or if we can serve you in any way, don’t hesitate to reach out!

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