Migration from Urban to Suburban
It is hard to believe that COVID-19 has now been part of our lives for over 4 months. The initial hope of temporary business and school closures with a “V” shaped economic recovery has been replaced with prolonged business closures, lock downs and uncertainty. It now seems like we are going to be in this much longer than anyone anticipated, with some lasting effects. We are constantly surveying the landscape for opportunities as well as potential pitfalls that may lie ahead. We are taking note of some general trends that are happening in real estate, so we are ready to creatively adapt.
One major shift we are witnessing is a steady migration from high cost, high density markets to lower cost, low density markets. The average population density in the U.S. is 93 residents per square mile. To give perspective, the population density in San Francisco is about 17,000 residents per square mile and New York City is almost 27,000! On top of the crowded streets and sidewalks, more than 56% of New Yorker’s also rely on public transportation to get to work. Anxious residents have been fleeing that city since March to places like the Hamptons and Connecticut. Purchase contracts on Manhattan apartments declined 80% in May compared to a year earlier, according to the real estate appraisal firm Miller Samuel. Residents are beginning to re-think the desire to be in high rise rentals with common areas. Large urban cities make it almost impossible to practice social distancing. The death of George Floyd and subsequent protests and social unrest have caused many to question the benefits of urban living. Major cities like Chicago, Los Angeles, Seattle, and Minneapolis are also considering reforms to public safety, as cries to “defund the police” gain momentum.
Some of these migration trends started happening as early as 2017 with the passage of the JOBS Act which limited state and local tax deductions (SALT) to $10,000 per year. People began moving out of high cost states like California and New York to lower cost, lower tax states like Arizona, Texas, and Nevada. We believe this will continue at an accelerated pace. Existing home sales jumped nearly 21% in June, which is the highest monthly gain on record. “The housing market is hot, red hot, based on the data and the anecdotal prevalence of multiple offers,” said Lawrence Yun, chief economist for the National Association of Realtors. “The urban area is less hot. We are clearly seeing trends for smaller towns or suburbs.”
We believe this bodes well for CALCAP’s portfolio which is comprised mainly of 2-story garden style apartments and single-family homes in more suburban locations. Please feel free to reach out to us with any questions. Stay safe and health
y.
Edward M. Aloe
President and CEO
626-229-9057
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Thrilled to have our own Ed Aloe recognized among so many remarkable entrepreneurs as a semifinalist in the EY Entrepreneur Of The Year 2020 Greater Los Angeles Awards program. #EOYGLA
www.ey.com/us/eoy/greaterla
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Single-family rent price growth slowed in May
Due to the pandemic, CoreLogic said
“Some metro areas, especially those that depend on tourism, were hit hardest by job losses,” Boesel said. “With
unemployment rates
predicted to remain high through the end of the year, we can expect to see further easing in rent growth as the economy struggles this year.”
Phoenix had the highest year-over-year rent price increase for the 18th consecutive month, with a gain of 6%. Tucson, Arizona, had the second-highest rent price growth in May, at 3.5%.
Honolulu was the only metro to have a decline in rent prices, with a drop of 0.4%.
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Coastal city exodus continues: Phoenix, Sacramento and Las Vegas now most popular
Redfin finds more than a quarter of users looked to move metros in second quarter
The metros with the most outflow of residents?
New York
, San Francisco, Los Angeles, Washington, D.C. and Chicago. Redfin noted that expensive coastal cities, like these, typically see the most out-migration.
Redfin said users are most often looking to move to inland areas with affordable housing. Most Redfin users looked at listings in Phoenix, Sacramento, Las Vegas, Austin and Atlanta during Q2.
“As we enter the second half of the year, I expect more people to move from one part of the country to another as the pandemic continues to influence people’s priorities and lifestyles,” Marr said. “But it’s also important to note that some pandemic-driven moves are temporary, and the stories about families hiding out in remote cabins won’t all result in home purchases or permanent relocation.”
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NMHC Rent Payment Tracker Finds 91.3 Percent of Apartment Households Paid Rent as of July 20
The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker found 91.3 percent of apartment households made a full or partial rent payment by July 20 in its survey of 11.1 million units of professionally managed apartment units across the country.
This is a 2.1-percentage point decrease from the share who paid rent through July 20, 2019 and compares to 92.2 percent that had paid by June 20, 2020. These data encompass a wide variety of market-rate rental properties across the United States, which can vary by size, type and average rental price.
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About CALCAP
California Capital Real Estate Advisors, Inc., and its affiliate entities (CALCAP Asset Management I & II, CALCAP Properties, CALCAP Lending, and CALCAP Senior Healthcare I, collectively known as "CALCAP"), is a California based investment company founded and 2008 and headquartered in Pasadena, California. The Company sponsors alternative real estate investment opportunities focused on demographically driven housing. CALCAP has been able to consistently provide both individual and institutional investors with outstanding returns over the last 10 years. The Company's core strategies look to actively create alpha for investors while managing risk. CALCAP currently has over $300mm in Assets Under Management. To learn more visit
www.calcapadvisors.com.
Social Mission
CALCAP has created the CALCAP CARES program to encourage employees to find a way to give back to the neighborhoods where we invest. CALCAP has created "GiveTime4Autism" as its initial program which will allow employees the ability to donate unused vacation and sick days for a very worthy cause.
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LOS ANGELES
The Sanborn House
65 N. Catalina Avenue
Pasadena, CA 91106
SAN DIEGO
12626 High Bluff Drive, Suite 360
San Diego, CA 92130
PHOENIX
740 N. 52nd Suite 200
Phoenix,AZ 85008
SANTA BARBARA
1309 State Street Suite A
Santa Barbara, CA 93101
ALISO VIEJO
92 Argonaut Suite 205
Aliso Viejo, CA 92656
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Edward M. Aloe, President & CEO
(626) 229-9057
Patrick A. Wakeman, Principal
(858) 764-4890
Drew Buccino, Principal and COO
(602) 419-3381
Greg Blix
Director of Investor Relations
(805) 896-8500
Len Israel
CEO, CALCAP Lending, LLC
949-439-1044
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Mark A. Mozilo, Principal
(626) 229-9056
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