New home sales have diverged from new home construction; we have a growing inventory problem.

The job openings are mostly in small to mid-sized companies. Of course, one of the factors that no discusses is the JOLTS survey has about a 30% response rate – about half the response rate of the Establishment survey. And small firms are probably the least likely to respond.

Nominal wage growth does appear to be strong – at 4.59% for the 12 months ending in November.  But in real terms wages continue to fall, outpaced by inflation. Nominal wage growth actually slowed in December according to the new BLS numbers, so unless the inflation rate suddenly collapsed to below 4.5 percent in December—which is unlikely—we will find that real wages fell in December for the twenty-first month in a row.  November wage figures were also revised lower:

Households are increasingly tapping credit cards to make ends meet.

APARTMENT DEMAND IS EVAPORATING

RealPage Chief Economist Jay Parsons said this week that "We've never before seen a period like this – weak demand for all types of housing despite robust job growth and sizable wage gains.” Of course readers will note that we’ve challenged the “robustness” of job growth for months. In December 2022, apartment traffic fell to its lowest level in 12 years. According to Parsons, the big change was a drop in household formations among recent college grads who chose to live with family or friends instead of new apartments. This suggests that when the economy recovers, there should be pent-up demand for apartments and ultimately new houses.

The multifamily rent growth in Texas markets fell from record performances over the past year. The pace of growth slowed through the second half of 2022 due to weaker demand and elevated economic uncertainty. As a result, Dallas-Fort Worth took the lead in rent growth while Austin saw the fastest descent. Both Houston and San Antonio ended the year with growth closer to pre-crisis norms. The outlook for each market is influenced by individual, localized demand drivers and expected supply. In Dallas-Fort Worth, rent growth ended the year at 4.2% driven by weak demand. Houston's multifamily market saw demand reverse course throughout 2022, with net absorption falling into negative territory in the third and fourth quarters. In Austin, the pace of rent growth decelerated consistently throughout the year to 2.3%. San Antonio experienced its worst year for multifamily rent growth since the financial crisis, with the market ending the year with a growth rate of 1.8%.

The multifamily rent growth in Texas markets fell from record performances over the past year. The pace of growth slowed through the second half of 2022 due to weaker demand and elevated economic uncertainty. As a result, Dallas-Fort Worth took the lead in rent growth while Austin saw the fastest descent. Both Houston and San Antonio ended the year with growth closer to pre-crisis norms. The outlook for each market is influenced by individual, localized demand drivers and expected supply. In Dallas-Fort Worth, rent growth ended the year at 4.2% driven by weak demand. Houston's multifamily market saw demand reverse course throughout 2022, with net absorption falling into negative territory in the third and fourth quarters. In Austin, the pace of rent growth decelerated consistently throughout the year to 2.3%. San Antonio experienced its worst year for multifamily rent growth since the financial crisis, with the market ending the year with a growth rate of 1.8%.

SINGLE FAMILY RENTALS PROJECTED TO BE RECORD SHARE OF SINGLE FAMILY HOME STARTS

In keeping with trends from past recessions, the share of single-family rental starts will increase in 2023, as mortgage rates reach multi-decade highs. During most recessions since 1980, the share of single-family starts built for rent has increased relative to other types of single-family residences. Developers delivering into a weak home-buying market will seek alternatives for their product, as purchase demand evaporates. Furthermore, single-family rentals have grown in popularity over the last cycle, rising from 2.6% of all single-family starts in 2009 Q4 to 6.3% today. Single-family rental growth has been driven by heightened interest from institutional investors, particularly in the past few years as their performance excelled.

LOWEST PRICE HOMES HAVE APPRECIATED THE MOST

PEOPLE AND BUSINESS HAVE CONTINUED TO MOVE OUT OF BIG CITIES

JOBS!

Anywhere

• Director of Real Estate Asset Management
• Director of Real Estate
• Sr Director Real Estate and Facilities

Houston

• Global Real Estate Director
• Land Superintendent – BTR
• Director of Forward Planning – Land Development
• Real Estate Manager

Dallas

• Vice President Asset Management
• Director of Real Estate
• Director of Acquisitions
• Director of Real Estate Finance
• Division President
• Land Acquisition Director
• Vice President of Construction