Apartment List's quarterly Renter Migration Report (Q4 2020) offers up some interesting insights into what may be playing out in the apartment sector right now. The most striking takeaway seems to be the surge in people looking for short-term rentals (leases of six months or less). And while the data has historically shown that those looking to move to a new metro are more likely to be looking for a short-term rental compared to those searching within their current metro, that spread really widened starting in the spring of last year. See above.
And when you drill even deeper, the most popular inbound destination -- at least according to Apartment List's search data -- seems to be Honolulu. In the second half of 2020, about 26.8% of users searching in Honolulu from somewhere else in the US were looking for a short-term lease. This is compared to 14.9% during the same time period in 2019. Intuitively this makes sense to me. If you're in lockdown and working from home, why the hell not do it from Hawaii? We've all have this same thought.
Apartment List goes on to speculate that this short-term rental spike could be an indication that the inbound and outbound flows we're seeing right now with certain cities may not be all that permanent. People are simply optimizing for the current environment. Though this data is representative of intent, rather than of leases consummated. Either way, that would be my guess. But who knows. Maybe some people will discover that surfing in the morning and working from the beach is a pretty enjoyable way to live.
The Toronto Regional Real Estate Board released its 2020 housing figures this week. And I suspect that the numbers are probably directionally similar for many city regions around the world.
2020 saw more home sales than 2019 with 95,151 homes changing hands. This represents an 8.4% increase compared to last year. December was also a record month with 7,180 sales -- a 65% year-over-year increase!
The average selling price in the Greater Toronto Area also reached a new record of $929,699. This represents a 13.5% increase compared to last year. Once again, December was a record setting month with an average selling price of $932,222.
When you look at sales and average prices by home type, the biggest drivers were low-rise homes outside of the city. No surprises here.
Each quarter, HSH.com publishes a report that looks at the annual income required to quality for a residential mortgage in the 50 largest metropolitan areas in the United States. To do this, they look at the median home price for each city and then apply a 28% debt-to-income ratio (principal and interest payments divided by before tax salary). They also assume a 20% down payment and a 30-year fixed-rate mortgage. In their latest report, that comes with an interest rate of 3.15%.
Below is a chart showing what they consider to be the 10 most affordable and the 10 least affordable metros (chart via the New York Times). I don't think the cities on this list will necessarily surprise many of you (though I didn't think Pittsburgh was this affordable), but it is interesting to see it all quantified. It's also worth thinking about what might happen to these figures as that 3.15% number comes down. Shockingly, the price of highly-levered assets tends to be correlated with financing costs.
Apartment List's quarterly Renter Migration Report (Q4 2020) offers up some interesting insights into what may be playing out in the apartment sector right now. The most striking takeaway seems to be the surge in people looking for short-term rentals (leases of six months or less). And while the data has historically shown that those looking to move to a new metro are more likely to be looking for a short-term rental compared to those searching within their current metro, that spread really widened starting in the spring of last year. See above.
And when you drill even deeper, the most popular inbound destination -- at least according to Apartment List's search data -- seems to be Honolulu. In the second half of 2020, about 26.8% of users searching in Honolulu from somewhere else in the US were looking for a short-term lease. This is compared to 14.9% during the same time period in 2019. Intuitively this makes sense to me. If you're in lockdown and working from home, why the hell not do it from Hawaii? We've all have this same thought.
Apartment List goes on to speculate that this short-term rental spike could be an indication that the inbound and outbound flows we're seeing right now with certain cities may not be all that permanent. People are simply optimizing for the current environment. Though this data is representative of intent, rather than of leases consummated. Either way, that would be my guess. But who knows. Maybe some people will discover that surfing in the morning and working from the beach is a pretty enjoyable way to live.
The Toronto Regional Real Estate Board released its 2020 housing figures this week. And I suspect that the numbers are probably directionally similar for many city regions around the world.
2020 saw more home sales than 2019 with 95,151 homes changing hands. This represents an 8.4% increase compared to last year. December was also a record month with 7,180 sales -- a 65% year-over-year increase!
The average selling price in the Greater Toronto Area also reached a new record of $929,699. This represents a 13.5% increase compared to last year. Once again, December was a record setting month with an average selling price of $932,222.
When you look at sales and average prices by home type, the biggest drivers were low-rise homes outside of the city. No surprises here.
Each quarter, HSH.com publishes a report that looks at the annual income required to quality for a residential mortgage in the 50 largest metropolitan areas in the United States. To do this, they look at the median home price for each city and then apply a 28% debt-to-income ratio (principal and interest payments divided by before tax salary). They also assume a 20% down payment and a 30-year fixed-rate mortgage. In their latest report, that comes with an interest rate of 3.15%.
Below is a chart showing what they consider to be the 10 most affordable and the 10 least affordable metros (chart via the New York Times). I don't think the cities on this list will necessarily surprise many of you (though I didn't think Pittsburgh was this affordable), but it is interesting to see it all quantified. It's also worth thinking about what might happen to these figures as that 3.15% number comes down. Shockingly, the price of highly-levered assets tends to be correlated with financing costs.
But consider the price spread that now exists between condos and detached homes. In the City of Toronto ("416"), we're talking about an average price delta of nearly $850k. That would be an expensive home in many other markets.
Of course, condos tend to be smaller than detached homes. And so different prices per pound. But total price matters a great deal and historically a widening spread has moved many buyers over to the condo market.
I suspect we will see that happen again this year.
But consider the price spread that now exists between condos and detached homes. In the City of Toronto ("416"), we're talking about an average price delta of nearly $850k. That would be an expensive home in many other markets.
Of course, condos tend to be smaller than detached homes. And so different prices per pound. But total price matters a great deal and historically a widening spread has moved many buyers over to the condo market.
I suspect we will see that happen again this year.
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