Location Strategy Chartbook 101224

Preliminary estimates of Milton’s insured damages suggest that a relatively larger proportion of the losses will be borne by reinsurers, and less so by primary insurers. These levels likely wouldn’t result in big losses for catastrophe bonds, which are specialized investments that typically bear the risk of loss when extreme events occur.

Fitch Ratings estimates that Milton’s insured losses will range from $30 billion to $50 billion, which would make it significantly more costly than Hurricane Helene, but wouldn’t rise to the level of Hurricane Ian in 2022. The Insurance Information Institute estimates Ian’s inflation-adjusted insurance losses at over $55 billion.

Reinsurance has become more expensive in the past couple of years, driven in part by the impact of Hurricane Ian, as well as the sharp jump in interest rates since then, which reduced the amount of investment capital pouring into the sector, at least for a while. Some recent reinsurance has also come with higher attachment points, or the loss level at which coverage kicks in. As a result, primary insurers have at times been relatively more exposed to losses from events such as hail and severe thunderstorms, which are individually less severe than a hurricane but whose increasing frequency can add up to sizable insurance losses.

Whether the cost of reinsurance pricing continues to rise is also a pocketbook issue for many homeowners. A study by professors now at the University of Pennsylvania’s Wharton School and the University of Wisconsin School of Business estimated that the recent “reinsurance shock” added $375 in 2023 to premiums for homeowners’ policies in the top 10% of zip codes by disaster risk.

U.S. inflation eased to a new three-year low but is cooling more slowly than expected and continuing its uneven path.

The likelihood of a US recession in the coming year has declined amid signs of a still-solid job market, according to Goldman Sachs Research.

There's a 15% chance of recession in the next 12 months, down from their earlier projection of 20%. That's in line with the unconditional long-term average probability of 15%, writes Jan Hatzius, head of Goldman Sachs Research and the firm's chief economist, in the team's report.

The most important reason for the forecast change is that the US unemployment rate fell to 4.051% in September — below the level in July, when the rate jumped to 4.253%, and marginally below the June level of 4.054%. The unemployment rate is also below the threshold that activates the “Sahm rule,” which identifies signals that can indicate the start of a recession. The rule is triggered when the three-month average US unemployment rate increases by 0.50% or more from its low during the previous 12 months.

50% of spend is on housing and transportation. This is a troubling statistic for the next cohort of homebuyers or disposable income for retail.

For private-sector workers in August

The hiring rate held steady at a low level of 3.7%

The layoff rate ticked down to 1.1% from 1.2%, also a low level

The job-quitting rate fell to 2.1% from 2.3%, near a 10-year low

Housing inventories continue to climb

Virginia and Arizona have outpaced the nation as a whole in homeownership gains since the onset of the COVID-19 pandemic, new U.S. Census Bureau data shows.

The two states posted increases in homeownership rates topping 8% from the first quarter of 2020 to the second quarter of this year, the most recent period for which data is available.

Virginia's homeownership rate jumped 8.5% in that time and stood at 73% in the second quarter. Arizona's increased 8.1% to 69.2% from the first quarter of 2020 to the second quarter of 2024, according to the Census Bureau. Nationally, the homeownership was 65.6% in the second quarter.

Oklahoma and Oregon led states that saw the largest losses in homeownership from the start of the pandemic until now.

A glut of natural gas is shaping up to be good news for Americans this winter, likely to keep heating bills down despite forecasts for colder weather.

While apartment move-ins and vacancy rates are showing some of the best performance numbers in three years, a 40-year high in unit openings is keeping rent growth muted, particularly in the Sun Belt.

The third quarter saw move-ins outpace move-outs by 176,000 units nationwide, according to a new report on the multifamily industry from Apartments.com. It was the highest level for the absorption metric the industry has registered since the third quarter of 2021. The move-ins helped push vacancy rates down on a quarterly basis for the first time since the end of that year.

Nationwide vacancies now register at 7.8%, a 10-basis-point decline from the second quarter.

“If not for the record deliveries coming on line this year, the apartment market would be experiencing fantastic rent growth given the well above average demand being created for rental units,” Jay Lybik, national director of multifamily analytics for CoStar Group, said in a statement.

Shea Properties has completed a project in Southern California with a design that wraps an open-air shopping center around an apartment complex.

The Square Cypress and Acadia Apartments opened recently in Cypress, a city in northwestern Orange County. The property includes 251 apartments, 31,000 square feet of retail and a 128-room Homewood Suites by Hilton hotel. The apartment complex and hotel opened last month, and some tenants in the retail portion opened in the spring.

Orange County has seen a spike in multifamily development with about 3,500 units in market-rate buildings forecast for completion this year, according to CoStar data. However, that may fall short of demand as the market’s vacancy rate stands at 4%, second only to New York.

The Orange County, California, multifamily market, where Acadia Apartments is located, is the second-strongest in the U.S. for demand.