📊 Investors Hit Pause in 4Q23 per Burns + CRE Daily Fear and Greed Index. See the full report here.

Investor Home Purchases Plummet 30% in Q3 as Recession Looms

Purchases of homes by investors fell 30% in Q3. While high prices and rising borrowing rates are partly to blame, so is 2021’s homebuying splurge.

Investor Home Purchases Plummet 30% in Q3 as Recession Looms

Purchases of homes by investors fell 30% in Q3. While high prices and rising borrowing rates are partly to blame, so is 2021’s homebuying splurge.

Happy Thanksgiving! In today’s email: After a year-and-a-half-long homebuying splurge, real estate investors put a pin in their purchases until rates and prices drop. Meanwhile, Miami is already paying the price for its ill-advised bet on crypto, but not enough to stop gambling on risky opportunities with huge potential payoffs.

🦃 Tips and tricks for your Thanksgiving spread

🦃 How to carve a turkey like a pro.

🦃 … and why frozen turkeys explode when deep-fried.

Editor's note: The CRE Daily team will be off Friday, spending time with friends and family. Have a great holiday and be safe—we'll see you again Tuesday! 

HOLDING OFF

Investor Home Purchases Plummet 30% in Q3 as Recession Looms

Purchases of homes by investors fell 30% in Q3. While high prices and rising borrowing rates are partly to blame, so is 2021’s homebuying splurge.

What happened: According to Redfin, companies bought just 66K homes this quarter compared to the 94K homes snatched up in Q3 2021. It’s the largest quarterly drop in investor home purchase volume since the subprime mortgage crisis, except for Q2 2020 when the pandemic ground everything to a halt. Home flipping is also losing its luster, chilling the markets even more.

Partied too hard: This time, the writing’s been on the wall. A pandemic-driven increase in home demand led investors to buy homes hand over fist last year, and early this year, in hopes of renting them out and riding a housing market high. Even after the Q3 drop, investor purchases still accounted for 17.5% of all home sales—the biggest percentage in history.

THE TAKEAWAY

Not dead yet: While a recession will dampen investor purchasing power, builders with unsold homes will also desperately try to offload them to bulk buyers at a discount. And bulk buyers are already waiting in the wings. Tricon, JPMorgan, and JLL are all planning to buy and develop billions of dollars worth of homes over the next few years.

SWINGING FOR THE FENCES

Miami's Failed Crypto Bet Doesn't Mean It Should Stop Aiming High

As FTX goes belly up and Bitcoin’s value plummets to 25% of its all-time high, it’s clear that Miami’s big bet to become a global crypto hub hasn’t paid off yet. But for a city built on boom-and-bust cycles, gambles like these may still be worth the risk in the long run.

Swing and a miss: It’s fair to say that the plan to fund Miami’s local government with MiamiCoin proceeds rather than tax dollars was a bad idea—especially since the altcoin has lost 99% of its value since this plan was proposed. And with the Miami Heat’s now-worthless FTX stadium sponsorship deal, it’s hard to see any upside right now.

No one bats a thousand: But making this kind of bet isn’t necessarily a bad idea. Using part of a city’s resources to build a venture capital portfolio that attracts businesses is a smart long-term play. After all, despite Miami’s crypto flop, “Wall Street South” still lured the likes of Elliot Management, Blackstone Group, and Citadel, diversifying the local economy far beyond traditional leisure, hospitality, and real estate.

THE TAKEAWAY

Shoot your shot: With its vulnerability to real estate bubbles and seasonal appeal for snowbirds, Miami has always been a boom-and-bust city. The more broadly it seeks out potential jackpots, the more robust its economy may become. And it’s hard to say that Miami’s long-term DeFi and Web3 aspirations won’t eventually pay off one day.

📰 Editors' Picks

  • Cushion the fall: Promising retail sales and gentler-than-expected CPI and PPI increases suggest there may still be hope for an economic soft landing.

  • Flipping the switch: Three major buyers are nearing the end of a heated bidding war for the data center specialist, Global Switch Holdings.

  • Wining and dining: Law firm Katten Muchin Rosenman LLP has invested in a lavish restaurant-like Manhattan office to win over top industry talent. 

  • Just add renters: The Marriott Bonvoy will offer furnished, serviced apartments with amenities for tenants seeking temporary relocations or longer vacations.

  • Big-time innovation: The NYC Council just overwhelmingly approved Innovation QNS, a $2B, 2.7 MSF, 3,200-unit mixed-use development in Astoria, Queens.

  • Fifth for ballers: According to Cushman & Wakefield, New York City’s Fifth Avenue is currently the world’s most expensive shopping area. But wasn’t it always, anyway?

🤝 Deals & Dealmakers

  • Getting to the point: New York investor TGM acquired the Point at Ashburn, an apartment complex in Ashburn, Virginia, in the suburb’s first multifamily sale of the year.

  • Touching down: Tom Brady’s TB12 training center has signed a lease in SoHo, of all places, to open its first standalone location in Manhattan.

  • REDA redux: Industrial developer REDA just paid $122M for 130.2 acres in LA that it plans to lease to logistics companies.

  • Florida takes Texas: Florida-based firm Morning Calm Management just acquired a three-building highrise office complex in the Dallas-Fort Worth area—and it’s hungry for more.

  • Building communities: Developer CRG is about to break ground on Chapter at Madison, a 534-bed community near the University of Wisconsin-Madison campus.

  • Going south: DC-based developer Kettler has amassed a full acre of land in downtown Tampa’s St. Petersburg neighborhood.

📈 CHART OF THE DAY

Here’s the Property Type Where Buyers, Sellers Differ Most on Pricing

💼 JOB BOARD

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.

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