Pending Home Sales Crash - Will Commercial Follow?

Jun 5, 2024

Ask episode

Chapters

Transcript

Episode notes

In this episode, we discuss the surprising drop in pending home sales with Jonathan Twombly, a commercial real estate expert. Despite predictions, pending home sales have significantly declined, prompting a deeper look into both residential and commercial real estate markets. We explore the impact of rising interest rates, the behavior of cash buyers, and the significant differences between residential and commercial real estate transactions. Jonathan provides valuable insights into the current market conditions, potential future trends, and strategic advice for navigating this challenging environment.

[00:00:00] Introduction to the significant drop in pending home sales: Expected -1%, actual -7.7%.
[00:01:11] Impact of interest rates above 7% on residential demand and the broader market.
[00:01:36] Comparison of interest rate impacts on residential versus commercial real estate.
[00:03:03] Challenges in commercial real estate: Reduced buyer willingness and high seller price expectations.
[00:05:05] Difference in cash transactions between residential (30%) and commercial real estate.
[00:06:50] Importance of 30-year fixed-rate mortgages in residential versus short-term covenants in commercial.
[00:07:42] Commercial real estate's dependency on NOI (Net Operating Income) and cap rates for valuation.
[00:10:29] Current market conditions: Volume of sales at a four-year low, reflecting early COVID-19 levels.
[00:14:00] Impact of new Class-A apartments on the rental market and the misconception about Class-B and C properties.
[00:18:11] Discussion on the differences in market cycles between residential and commercial real estate.

Thank you for tuning into this insightful episode with Jonathan Twombly. If you enjoyed the discussion, please rate, follow, share, and leave a review. Your feedback helps us continue to provide valuable content. For more in-depth discussions and to stay updated on real estate trends, follow Jonathan on LinkedIn or visit the Apartment Investors Club. See you next time!

📖 BUY One Rental at a Time https://amzn.to/3jt3JFx 📣 Audible Version Here https://amzn.to/3jtLDTQ OR 🏆 Buy 15 Conversations with Real Estate Millionaires https://amzn.to/3JwEsVm Dion from Dion Talk is Narrator!!! NOW ON AUDIBLE https://www.audible.com/pd/B0BDPSZW3Y/?source_code=AUDFPWS0223189MWT-BK-ACX0-322007&ref=acx_bty_BK_ACX0_322007_rh_us 📸 INSTAGRAM: Please follow. Daily original content! https://www.instagram.com/onerentalatatime/ 📬 (MUST JOIN!) PRIVATE Facebook Group: One Rental at a Time Works This is a VERY private group that is only available to my students of "How to Get Started One Rental at a Time" In the group, you will be around hundreds of other students all doing the work. Please introduce yourself when you join! JOIN HERE: https://bit.ly/3tEQhRm TEACHABLE COURSES: Join the THOUSANDS of students changing their financial future with DAILY execution! 💎 How to Get Started One Rental at a Time: This course is changing lives! Investors focus and do the daily work required to learn their market and only do GOOD Deals. JOIN HERE: https://bit.ly/3uDrkHq 💸 Get Money Right: This course is about making you the CFO of your money. It shows you how choices can keep you poor or set you free. It highlights your Financial Health Score and provides a monthly budget to help you track spending. JOIN HERE: https://bit.ly/3wbN9yr 📲 MENTORING OPTION: I built my courses to run without me but some folks find themselves in interesting situations and they want to ask questions directly. So after much thought I have created this option that includes one “30 Minute Mentoring” session that can be used at students request. JOIN HERE: https://bit.ly/3hivsc5 ✍️ FREE COURSE: I put together a Free Course so people can get to know me a little more and have fun getting started with no cost. JOIN HERE: https://bit.ly/3hdMbgK 📣AUDIOBOOK: https://amzn.to/3jtLDTQ PLEASE LEAVE 5 Stars! *** Tag me on IG with a book selfie! 🧢 MERCH: I have created some fun merchandise designed by my daughter. Check out Merch Page here: https://one-rental-at-a-time.myshopify.com/