BlackRock Says to Invest In These Asset Types:
Plus, Assumable mortgages grow in popularity and 5 more Real Estate Insights
-
Mortgage rates soared past 7% for the first time since December, influenced by unexpectedly strong economic reports. The average rate on the popular 30-year fixed mortgage hit 7.04%, marking a sharp increase after the January employment report exceeded forecasts.
-
The surge in mortgage rates complicates affordability, especially as the spring housing market approaches. High rates, combined with low housing inventory and rising home prices, made 2023 the worst year for home sales since 1995, despite a recent uptick in buyer interest and home inventory.
-
Future mortgage rate trends hinge on economic data and inflation. If upcoming reports mirror the recent job market strength or if inflation cools less than anticipated, rates could struggle to dip below 7% again, affecting home affordability and the housing market's recovery in 2024.
​
Real Estate Trends
BlackRock Says to Invest In These Asset Types
​
-
The real estate market is seeing a surge of investor interest, driven by the availability of capital and the anticipation of market bottoming. BlackRock's 2024 outlook highlights a window of opportunity for buying high-quality assets at attractive prices, despite falling valuations and rents across various property types.
-
Financing challenges and a significant drop in transactions signal a tough environment, yet non-bank lenders are finding opportunities. Investors are advised to focus on asset quality and types, with a preference for properties that offer cash-flow durability and rent pricing power.
-
BlackRock suggests targeting apartments in key suburban locations, necessity retail close to metropolitan areas, and logistics hubs near major cities. These areas offer growth potential, attractive entry points, and resilience in the face of e-commerce expansion and supply chain diversification.
-
Home prices in the U.S. rose by 6.6% from November 2022 to November 2023, according to the Federal Housing Finance Agency's House Price Index. This increase is slightly above the historical average, indicating a robust housing market.
-
The FHFA's seasonally adjusted monthly index for November also saw a rise of 0.3% from October. This continuous growth reflects a steady demand in the housing market despite economic fluctuations.
-
All nine census divisions reported positive price appreciation over the last 12 months. However, five of these divisions showed a deceleration in price growth compared to the previous year, suggesting a potential normalization in the housing market's rapid growth phase.
Assumable mortgages grow in popularity, but hurdles remain link
​
​Assumable mortgages have seen a resurgence due to high interest rates, with FHA and VA handling over 6,400 assumptions in 2023, doubling from 2022. These mortgages allow buyers to take over sellers' loan terms, offering lower fees and no need for appraisal.
Despite their benefits, assumable mortgages face significant barriers, including restrictions to FHA and VA loans and servicers' reluctance due to low profitability. Regulatory caps on assumption fees, currently at $900, are deemed insufficient, leading to calls for an increase to $3,500.
Innovations aim to streamline the assumable mortgage process; Roam, a new platform, facilitates transactions and offers a closing guarantee to mitigate delays. However, challenges like down payment gaps and stringent credit requirements for secondary financing options remain.
READ MORE: https://www.zeroflux.io/p/blackrock-says-invest-asset-types?
​
REFERENCES : Zero Flux News Letters, February 6, 2024 -
Disclaimer: The article content above is derived from Zero Flux Feb 6, 2024 newsletter and is used here for informational purposes. [DSPrecapital.com] is an independent entity and not officially affiliated with Zeroflux.