The Canovo Report - May 29, 2024

Mortgage Rates Surge; Fed Rate Hikes Possible; Single Family Sales Down YTD and more

May 29, 2024

This week in the Canovo Report…

  • Fed Signals Possible Rate Hikes

  • Mortgage Rates Surge

  • Single Family Sales Down YTD

  • Clearfield Duplex sells at an 8+% Cap Rate

If you find value in our weekly report, please consider forwarding it to a friend!

If this is your first time here, you can subscribe here.

Happy Investing,

David

// 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.

// FAIR MARKET RENT RATES

> Below you will find the current Fair Market Rents for each Metropolitan Area in Utah as published by HUD.

Fair Market Rents, as defined in 24 CFR 888.113 are estimates of 40th percentile gross rents for standard quality units within a metropolitan area or nonmetropolitan county.

// UTAH MARKET SNAPSHOT

> Utah Multifamily (2+ Units): Total Sold and Price Per Sq Ft

  • The median sold price/sf for multifamily property is up 11.90% year to date going from $227 last year and $254 this year to date.

  • The total listings sold for multifamily property is up 12.05% year to date going from 166 last year and currently at 186.

> Utah Residential Homes: Total Sold and Price Per Sq Ft

  • The median sold price/sf for multifamily property is up 4.77% year to date going from $221 last year and $231 this year to date.

  • The total listings sold for multifamily property is down .25% year to date going from 13,844 last year and currently at 13,810.

Source: wfrmls

// INTEREST RATES & FINANCING

> Mortgage Rates as of 5/29/2024

Sponsored by: Spencer Allen | Trillion Mortgage NMLS #2296408

// TOP HEADLINES, REPORTS, & INSIGHTS

Mortgage rates experienced a notable increase, reaching their highest point since May 3rd, influenced by economic data and federal communications.

Main takeaways:

  • Fluctuating Day for Rates: Mortgage rates began lower than the previous Friday but spiked to a three-week high by the end of the day.

  • Economic and Federal Influences: The rate increase was driven by economic data, remarks from Federal Reserve officials, and underperforming U.S. Treasury auctions.

  • Narrow Rate Range: Despite the rise, the overall rate fluctuation remains within a narrow range, indicating that the increase, while significant, is part of a constrained pattern.

The 10-year U.S. Treasury yield increased as investors reacted to a mix of weak auction results and anticipations about economic data influencing Federal Reserve policies.

Main takeaways:

  • Yield Increase Details: The 10-year yield climbed over 5 basis points to 4.596%, while the 5-year note auction showed lower than average demand.

  • Investor Focus: Market participants are closely monitoring upcoming economic data, including the personal consumption expenditures price index, which could impact Fed decisions.

  • Fed's Stance on Rates: Federal Reserve officials have signaled a cautious approach to rate cuts, emphasizing the need for clear signs of inflation moving towards the 2% target before considering policy easing.

Federal Reserve officials, including Minneapolis President Neel Kashkari, hint at the potential for rate hikes if inflation continues unchecked, despite previous expectations for rate cuts.

Main takeaways:

  • Ongoing Rate Hike Possibility: Kashkari emphasized that while the likelihood of increasing rates is low, it's not entirely off the table, echoing sentiments from recent FOMC minutes.

  • Cautious Approach Advocated: Fed officials advocate a cautious approach to lowering rates, with a focus on more conclusive inflation data before making decisions.

  • Inflation and Rent Pressures: Upcoming economic reports and recent increases in rent growth suggest that inflation pressures remain, potentially delaying any planned rate cuts by the Fed.

April 2024 saw a downturn in both existing and new home sales, as climbing interest rates began to impact buyer demand across the U.S. housing market.

Main takeaways:

  • Existing Home Sales Drop: Sales fell 1.9% to a seasonally adjusted annual rate of 4.14 million, with inventory levels reaching the highest point since October 2022.

  • New Home Sales Also Decline: Sales of new single-family homes decreased by 4.7%, with the supply of new homes on the market rising to levels not seen since January 2008.

  • FOMC's Policy Outlook: Federal Reserve minutes indicate a likely continuation of a 'higher-for-longer' interest rate policy, suggesting that rate cuts may be postponed if inflation and labor market conditions do not align with expectations.

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!

David Robinson

Principal Broker/Managing Partner

> Whenever you’re ready there are a few ways we can help you:

1. Buy Off-Market Multifamily Properties:Skip the competition and discover exclusive off-market multifamily properties tailored to your investment goals.

2. Broker's Opinion of Value:Curious about your property's worth? Request a free, no-obligation valuation of your rental property.

3. Discreet Private Sale:Prefer a simple, private transaction? Offer your multifamily property discreetly to member’s of our investor database and minimize broker commissions.

" target="_blank">unsubscribe