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October SFR Sector Briefing

November 8, 2022

Welcome to Picket's inaugural Market IQ Brief, a monthly perspective on the single-family rental market through the lens of a variety of supply and demand signals. Neither forecasts nor predictions, these snapshots shed light on the trendlines (and anomalies) affecting the investment opportunity in SFR.

This month, we look at single-family home inventory and prices across Picket's 20+ operating markets with an eye towards the 'golden cross' moment when the effect of lower-than-normal supply outweighs the higher cost of capital.

 

01

Active listings: the long view shows tight supply

Inventory climbed from March '22 through August '22, but compared to historical levels across the last three years (and beyond), current inventory remains well below normal. Taking a look at four of our major market areas, we observed plateauing inventory levels in September '22 and steeper declines beginning in October '22.

Spotlight markets: Atlanta (ATL), Nashville (BNA), Charlotte (CLT), Kansas City (MCI)

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TWAL - Market Aggregate
TAL - Spotlights

 

02

The 30-year mortgage rate overlay: are repeated rate hikes depressing inventory levels?

As 30-year rates continue to climb (with another hike expected in December), would-be sellers and buyers are reacting to disincentives to transact. As expected with initial rate increases, we saw inventory levels rise across markets in the spring and early summer. Do the latest inventory declines reflect seasonality alone or a reaction to rising rates? We will monitor these trendlines closely through the months ahead.

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Interest Rates v Active - One Year-1

 

03

Sale prices: a rapid return to list price parity

After nearly two years of bidding war normalization and sale prices well above asking, buyers are in the driver's seat again (at least in this regard) as sale prices drop back to—and in many cases below—original list prices across our operating markets. In several markets (including the spotlight markets shown below) our clients are submitting successful offers between 5-8% below asking.

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Screen Shot 2022-11-07 at 12.10.44 PM
Screen Shot 2022-11-07 at 12.11.54 PM

 

04

List prices: is price stabilization here to stay?

Where do tightening supply and rising 30-year mortgage rates leave list prices? And when can we expect to hit the lower bound?

Avoiding predictions and looking only at actuals, we're seeing a price plateau across markets from a mix of price growth deceleration and faint—not precipitous—declines. As inventory tightens, we'll be watching closely to see where prices move from here.

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Screen Shot 2022-11-07 at 12.09.49 PM
Screen Shot 2022-11-07 at 12.09.58 PM

 

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Market data brought to you by the Market IQ team

Our team is here with the data you need to make your own assessment of this shifting landscape. For more in-market observations or a complimentary strategy consultation, please reach out to James Newgent at james.newgent@pickethomes.com to continue the conversation.

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Newg
James Newgent

Head of Business Growth and Realty Services

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Leo
Leo Orozco-Mulfinger

Technical Project Manager, Picket IQ

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Aggregate market data comes from 10 of our operating markets: Nashville, Charlotte, Atlanta, Birmingham, Huntsville, Tampa, Jacksonville, Orlando, Kansas City, and Greensboro. Inventory and price data includes only homes with two or more bathrooms and three or more bedrooms priced between $100-$500K.  

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