2019 ROI First Quarter Edition 2019 - HIS Capital Group | Page 53

The 138 counties (29 percent of the 473 counties analyzed in
the report) where a median-priced home in the first quarter
was still affordable for average wage earners included Cook
County (Chicago), Illinois; Harris County (Houston), Texas;
Wayne County (Detroit), Michigan; Philadelphia County,
Pennsylvania; and Cuyahoga County (Cleveland), Ohio.
Of the top 10 counties where the greatest percent of
annualized wages was needed to buy a home in Q1 2019
Six (6) were in California 3 in New York and one in Hawaii
In Orange County, an average wage earner would need to
spend 82.5 percent of his or her income to buy a median-
priced home in the first quarter of 2019. The annual income
needed to buy was $184,022 which was well above the
$62,478 average annual wage there
Household growth has expanded or has grown at a much
faster rate than supply. Low vacancy rates and increasing
rents display the strength of the demand for workforce
housing, according to Espenshade. The average national
class-C vacancy rate dropped to terribly low 4.0 percent
from 7.0 percent in 2013. Meanwhile, effective rents for
class-C units increased 5.2 percent over the past year, as of
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February 2019, more than rents for class-A and class-B units.
Rents for class-A and – B apartment units grew by 4.4 and
4.5 percent during that span, respectively.
Developers cannot build workforce housing without some
subsidies or assistance from local jurisdictions because of the
high cost of new construction projects, including the high
cost of land, labor and construction materials. It is nearly
impossible in today’s market to build a new apartment
building that is anything other than class-A. You simply
cannot make the numbers work at a class-B or class-C.
In 2018, sales of apartment units built between 1980 through
1999 totaled around $45.5 billion (vs. $15 Billion in2008),
while sales of apartment units built in 1979 or earlier totaled
around $57.5 billion (vs $19Billion in 2008)
More borrowers are raising their mortgage rate to
cash out equity
For several months now, cash-out refinances have been
eating up a greater share of overall refi volume, and it
appears the trend isn’t about to slow down anytime soon.
The latest report from Black Knight reveals that 82% of
refinances originated in Q4 2018 were cash-outs, and that