Is the residential housing market at a tipping point?

Key takeaways

  • Housing continued to be resilient in February, according to the latest Case-Shiller releases, with prices up close to 20% year-over-year.
  • Analysts, however, point to at least a limited cooling down in March, as investors and consumers evaluate the rapid rise in interest rates and – for the latter – mortgage rates. 
  • Yieldstreet’s offerings include both residential and commercial real estate, an opportunity for investors to gain exposure to a diversified set of assets across different geographies within the United States.  

Residential real estate in the US continued to appreciate in February, according to the latest S&P Case-Shiller index release. The index reported a 19.8% annual gain in February, up from 19.1% in the previous month, with several southern cities – namely Phoenix, Tampa, and Miami – showing the highest year-over-year gains, in the 30% territory. According to the press release, “all 20 cities reported higher price increases in the year ending February 2022 versus the year ending January 2022.”

After seasonal adjustment, the US National Index was up close to 2% month-over-month.  

In addition to that, a recent surge in the homeownership cost-to-income ratio, while similar to the one that occurred in the early 2000s, is happening more quickly. And finally, at 38% of gross income nationally, homeownership is now the most expensive in relation to income as any time in the last 32 years.2

According to Greg Lazzara, Managing Director at S&P Dow Jones Indices, “The macroeconomic environment is evolving rapidly and may not support extraordinary home price growth for much longer. The post-COVID resumption of general economic activity has stoked inflation, and the Federal Reserve has begun to increase interest rates in response. We may soon begin to see the impact of increasing mortgage rates on home prices.”

Mitch Rosen, Yieldstreet’s Managing Director of Real Estate Investments. also points to potential speed bumps ahead due to a combination of robust ongoing appreciation – which, according to him, cannot last forever if it outstrips income growth – and rising rates. Rosen mentioned the lagging nature of the Case-Shiller index, with February closings mostly related to year-end 2021 signings, and pointed to June as a good time to get a better sense of the market’s direction. However, he continues to be bullish on both single-family and multi-family rentals – especially “built-to-rent.” 

“We believe southern markets have additional runway” – Rosen added – “as the current rise in demand is still outstripping supply.”

Yieldstreet is offering a number of different housing investment options, including single and multi-family rentals, as well as a REIT product open to non-accredited investors. 

Learn more about the ways Yieldstreet can help diversify and grow your portfolio

Footnotes

1Yieldstreet Data and Calculations.
2Yieldstreet Data and Calculations.

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