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- The Canovo Report - December 5, 2023
The Canovo Report - December 5, 2023
🗞️ The Canovo Report: 2-4 unit property values up 3.3% in November,
Happy Tuesday! This week in the Canovo Report…
2-4 unit property values up 3.3% compared to last year but down 4% on the year, interest rates drop for fifth consecutive week,
and the top 10 real estate markets for 2024 ranked by Realtor.com might surprise you.
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Happy Investing,
David Robinson
Utah Market Data
> 2-4 Unit Property Summary: The median sales price for 2-4 unit properties dropped by 9% in November when compared to the previous month but is up 3.3% when compared to last November. Year-to-date, 2-4 unit properties are down 4%.
Median sales prices peaked in May of 2022 at $707,450 and bottomed out in February of 2023 at $450,000 representing a 57% drop from peak to trough. This dramatic declined was followed by a strong recovery of 25%.
Closed sales for 2-4 unit property is down 64% year-to-date.
New Listings for 2-4 unit property is down 31% year-to-date.
November Median Sales Price (2-4 units)
November Closed Sales (2-4 units)
November New Listings (2-4 units)
> Single Family Property Summary: The median sales price for single family properties increased by 1.4% in November when compared to the previous month and is up 2.2% when compared to last November. Year-to-date, single family properties are down 4.9% when compared to last year.
Median sales prices for single family peaked in May of 2022 at $545,000 and bottomed out in January of 2023 at $460,000 representing a 18% drop from peak to trough. This dramatic declined was followed by a strong recovery of 7.4%.
November Median Sales Price (Single Family)
New 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.
$699,000.00
1730 N 550 W Provo Utah , 84604
Type: 2 Unit
Est Proforma Cap: 4.74%
Total Monthly Expenses: $1,060.20
Gross Monthly Income: $3,938.00
$258,000.00
240 N 500 W Price Utah , 84501
Type: 2 Unit
Est Proforma Cap: 5.49%
Total Monthly Expenses: $421.09
Gross Monthly Income: $1,652.00
$524,990.00
482 E Burton Salt Lake City Utah , 84115
Type: 2 Unit
Est Proforma Cap: 4.83%
Total Monthly Expenses: $803.82
Gross Monthly Income: $3,008.00
$600,000.00
345 N 300 E Logan Utah , 84321
Type: 4 Unit
Est Proforma Cap: 4.10%
Total Monthly Expenses: $851.80
Gross Monthly Income: $2,992.00
$510,000.00
8671 S State St Sandy Utah
Type: Mother In Law
Est Proforma Cap: 7.15%
Total Monthly Expenses: $960.85
Gross Monthly Income: $4,122.00
$309,000.00
6026 S Zen Trail Way St. George Utah
Type: Mother In Law
Est Proforma Cap: 10.24%
Total Monthly Expenses: 727.75
Gross Monthly Income: $3,468.00
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.
Interest Rates and Financing
> Mortgage Rates Drop for the Fifth Consecutive Week
Market sentiment has significantly shifted over the last month, leading to a continued decline in mortgage rates. The current trajectory of rates is an encouraging development for potential homebuyers and investors, with purchase application activity recently rising to the same level as mid-September when rates were similar to today’s levels. The modest uptick in demand over the last month signals that there will likely be more competition in a market that remains starved for inventory. (more)
Source: freddiemac.com
Other Top News, Reports and Insights
> Utah State Prison Transformation Moving Forward
The Point is a massive $2.3 billion project transforming the old Utah State Prison site in Draper into a vibrant community area. It will feature a mix of homes, offices, shops, and spaces for innovation and technology.
Key Takeaways:
Diverse Development: The core area of The Point covers 98.5 acres and will be packed with office buildings, hotels, and shopping areas. It plans for 3,300 new homes, with some being affordable for average earners. A special feature will be the "river to range" promenade, focused on walking, with unique shops and eateries, plus a big venue for events like concerts and sports.
Focus on Innovation and Nature: The project emphasizes creating an innovation hub for research and tech development, aiming to boost Utah's economy. It's also big on green living, planning lots of parks, open spaces, and trails for people to enjoy the outdoors.
Combining New and Old: A chunk of the budget (about $165 million) goes into essential infrastructure, like roads and utilities. The project also honors history by keeping the Chapel by the Wayside, a remnant of the old prison, integrating it into a new park space. Plus, there's a plan for a new train station, linking The Point with other areas. (More)
> Too Early to Talk About Reducing Interest Rates?
Federal Reserve Chairman Jerome Powell stated that it's too early to consider reducing interest rates, emphasizing the need for continued vigilance in managing inflation and suggesting that more rate hikes could occur.
Key Takeaways:
Cautious Stance on Rate Cuts: Powell cautioned against premature assumptions about lowering interest rates. Despite recent positive trends in inflation, he stressed that the Federal Reserve's current focus is on maintaining a restrictive policy stance to ensure inflation consistently moves towards the 2% target.
Market Reaction and Future Outlook: Following Powell’s speech, the stock market responded positively, interpreting his comments as slightly dovish. However, Powell indicated that decisions about future rate changes will be data-dependent, without committing to any immediate rate cuts. Markets anticipate that the Federal Reserve might start reducing rates by March 2024.
Current Economic Conditions: Powell acknowledged the current state of the economy, noting the strength of the labor market and the impact of the Federal Reserve's policy on economic activity. He mentioned the recent decrease in core inflation rates but emphasized that they are still above the desired level, indicating ongoing challenges in achieving the Federal Reserve's inflation goals. (More)
> Top 10 Real Estate Markets for 2024 Ranked by Realtor.com
The Realtor.com® 2024 forecast identifies the top 10 real estate markets expected to see growth in home sales prices and an increase in existing-home sales, even as national trends show a decline. California and Massachusetts are the big winners.
Key Takeaways:
Diverse Geographical Spread: The top 10 markets for 2024 are spread across various states, with a surprising concentration in the expensive states of California and Massachusetts. This includes markets like Oxnard, CA, and Springfield, MA, which are expected to attract buyers due to relatively lower costs and favorable local conditions.
Market Resilience and Growth: These markets, unlike others, did not experience extreme price and sales fluctuations in recent years, contributing to their stability and growth potential. For example, Toledo, OH, is forecasted to see an 8.3% increase in home sales prices and a 14% surge in home sales, attributed to its balanced market and affordable housing.
Impact of Mortgage Rates and Remote Work Trends: The performance of these markets is closely tied to mortgage rates and the growing trend of remote work. Lower mortgage rates are anticipated to attract more buyers and sellers, especially in California markets. Meanwhile, remote work is influencing buyer preferences, with people willing to live farther from urban centers, benefitting markets like the Massachusetts metros. (More)
> Commercial Real Estate Values Expected To Fall 10% Further
A report from PGIM Real Estate predicts a further 10% decline in commercial real estate values, adding to the 8% drop already observed in the first three quarters of 2023, with the national office sector facing a significant 43% decrease from its peak.
Key Takeaways:
Sector-Specific Declines: Different sectors in the commercial real estate market are experiencing varying degrees of value decline. Retail is expected to see a 13% drop, industrial 17%, multifamily 23%, with smaller sectors like senior housing and manufactured housing facing 14% and 16% decreases, respectively.
Impact of Interest Rates: The report highlights the central role of higher interest rates in driving down property values. This increase has led to a significant gap between seller expectations and buyer offers, contributing to a 'frozen' transaction landscape where sales are stalled.
Income vs. Value Paradox: Despite the falling property values, income from properties has remained relatively stable and, in some cases, has even grown. This unusual situation presents a challenging environment for real estate investors, balancing declining values with stable or increasing incomes. (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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