I got some blowback last week when I suggested that while quite clearly the housing market is in the throes of a strong correction, life and real estate continues on.
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
This news release constitutes a “designated news release” for the purposes of the REIT’s prospectus supplement dated December 8, 2021, to its short form base shelf prospectus dated December 1, 2021.
LITTLE ROCK, Ark. and TORONTO, Oct. 3, 2022 /CNW/ – BSR Real Estate Investment Trust (“BSR” or the “REIT”) (TSX: HOM.U) (TSX: HOM.UN) announced today the Toronto Stock Exchange (the “TSX”) has approved the REIT’s intention to make a normal course issuer bid (“NCIB”) for a portion of its trust units (“Units”) as appropriate opportunities arise from time to time. The board of trustees of the REIT believes that purchases of Units at prices below the REIT’s view of its intrinsic value are in the best interests of the REIT and a desirable use of the REIT’s capital.
Pursuant to the NCIB notice filed with the TSX, the REIT intends to acquire up to a maximum of 3,322,107 of its Units, or approximately 10% of its public float as of September 29, 2022 for cancellation over the next 12 months. As of September 29, 2022 the REIT had 37,388,788 issued and outstanding Units.
Purchases under the NCIB will be made through the facilities of the TSX and/or through alternative Canadian trading systems and in accordance with applicable regulatory requirements at a price per Unit representative of the market price at the time of acquisition. The number of Units that can be purchased pursuant to the NCIB is subject to a current daily maximum of 15,900 (which is equal to 25% of 63,603, being the average daily trading volume from April 1, 2022 to September 30, 2022), subject to the REIT’s ability to make block purchases of Units that exceed such limits. All Units purchased under the NCIB will be cancelled upon their purchase. The REIT intends to fund the purchases out of its available resources.
The REIT may begin to purchase Units on October 6, 2022 and the NCIB will terminate on October 5, 2023 or such earlier time as the REIT completes its purchases pursuant to the NCIB or provides notice of termination.
The REIT has adopted an automatic securities purchase plan in connection with its NCIB that contains strict parameters regarding how its Units may be repurchased during times when it would ordinarily not be permitted to purchase Units due to regulatory restrictions or self-imposed blackout periods. The automatic securities purchase plan is effective immediately.
ABOUT BSR REAL ESTATE INVESTMENT TRUST
BSR Real Estate Investment Trust is an internally managed, unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT owns a portfolio of multifamily garden-style residential properties located in attractive primary and secondary markets in the Sunbelt region of the United States.
Additional information about the REIT is available at www.bsrreit.com or www.sedar.com.
This news release contains forward-looking information within the meaning of applicable securities legislation, which reflects the REIT’s current expectations regarding future events, including statements about the number of Units to be acquired under the NCIB and related matters. In some cases forward-looking information can be identified by such terms as “will”, “may”, “would” and “expected”. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the REIT’s control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. The REIT’s estimates, beliefs and assumptions, which may prove to be incorrect, include those relating to future events and financial trends that it believes may affect its financial condition, financial performance, business strategy and financial needs. Although the forward-looking statements contained in this news release are based upon assumptions that management of the REIT believe are reasonable based on information currently available to management, there can be no assurance that actual results will be consistent with these forward-looking statements. The risks and uncertainties that may impact such forward-looking information include, but are not limited to the factors discussed under “Risk Factors” in the REIT’s annual information form dated March 8, 2022 and other disclosure documents available on SEDAR (www.sedar.com). There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. The REIT does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law. This forward-looking information speaks only as of the date of this news release.
SOURCE BSR Real Estate Investment Trust
For further information: Susan Koehn, Chief Financial Officer, BSR Real Estate Investment Trust, Tel: 501.371.6335, Fax: 501.374.3383
Real Estate Trends: Homebuilder Sentiment Drops Along With Housing Prices
- Home builder sentiment, measured by the National Association of Home Builders, fell in October.
- The report indicates that home builder sentiment has fallen for 10 consecutive months.
- The housing market is facing multiple challenges, including relatively high mortgage rates and inflationary pressure on household budgets.
If you’ve been paying attention to the housing market, you’ve likely noticed the relatively bumpy ride it’s had over the last couple of years. After rock-bottom mortgage rates contributed to seemingly endless bidding wars throughout 2020 and 2021, the lightning-hot market has cooled in recent months.
The latest homebuilder sentiment report reflects a slower housing market. Let’s take a closer look at the highlights of changing homebuilder sentiment and falling housing prices.
Homebuilder Sentiment Drops
The National Association of Home Builders (NAHB) takes the temperature of home builders’ sentiment on a monthly basis. In the latest report, home builder sentiment dropped again. The confidence was reflected at 38 in October, which means it’s at half the level it was 6 months ago.
That represents 10 consecutive months of dropping home builder sentiment. With the exception of the uncertain times of spring 2020, this confidence reading is the lowest it has been since August 2012.
“This will be the first year since 2011 to see a decline for single-family starts,” said Robert Deitz, NAHB Chief Economist in a press release. “Given expectations for ongoing elevated interest rates due to actions by the Federal Reserve, 2023 is forecasted to see additional single-family building declines as the housing contraction continues.”
Housing price trends
As of November, Redfin reported the national median home sale price at $397,549. That’s a 4.9% year-over-year increase. While that might seem like a steep climb, housing price growth has actually slowed down quite a bit.
Home builders aren’t the only ones warning of a potential fall in home prices. Some economists are predicting a sharp fall. The Federal Reserve is warning that home prices might fall, but it doesn’t expect anything like the unforgettable housing market crash that happened during the Great Recession.
Potential reasons for housing market changes
With home builder sentiment dropping like a rock, it’s helpful to understand what factors are at play. There are many factors contributing to a changing housing market. Here’s a closer look at the reasons that stand out.
In recent months, inflation has been a main feature of the economy.
The Consumer Price Index (CPI), a popular measure of inflation, was sitting at a 7.7% year-over-year increase in the October 2022 report. Although this reflects a gradual decline from the peak earlier in the year, we are still living in highly inflationary times.
But you probably don’t need to look at a special report to know that inflation is present in a big way. You’ve likely noticed inflation as it hits your household budget. Individuals and families across the nation are forced to spend more on basics like food and electricity.
With this pressure on household budgets, it’s difficult for many would-be homeowners to pull together the funds necessary for a down payment on a home. Plus, the increased costs in other areas of their budget might make shelling out for an expensive monthly mortgage payment impossible.
Rising interest rates
In response to sky-high inflation, the Federal Reserve has been aggressively tackling the problem. Although the central bank prefers to have some level of inflation in the economy, the current inflation rate is well above the 2% target.
The Federal Reserve increases the federal funds rate when it wants to tame inflation. Throughout 2022, the Fed has instituted a series of rate hikes. As the federal funds rate increases, so do borrowing costs for homeowners.
Mortgage interest rates hit a 2022 peak of 7.08% for a 30-year fixed-rate mortgage. Since then, mortgage rates have fallen a bit. As of November 18, mortgage interest rates are down to 6.61%. But regardless of this small tumble, mortgage rates are still significantly higher than this time last year when the average interest rate on a 30-year fixed-rate mortgage was 3.10%.
Higher mortgage interest rates lead to higher monthly payments for borrowers. The National Association of Realtors reported that the average monthly payment for a homebuyer in the third quarter of 2022 was $1,840. That’s significantly more than the $1,226 average in the third quarter of 2021.
Higher mortgage costs often mean that buyers can’t afford as high of a sales price. With this factor in play, the possibility of falling housing prices seems to make sense as would-be homebuyers are getting priced out of the market.
How This Impacts Your Investment Portfolio
The housing market isn’t the only sector of the economy impacted by a combination of hot inflation and rising interest rates. As the real estate market shifts around us, you might be interested in adding this exposure to this asset class to your portfolio. But you might not be interested in monitoring the minutiae of the up-and-down housing market trend.
One way to add exposure to real estate trends is by harnessing the power of artificial intelligence through a Q.ai Investment Kit. For example, the Global Trends kit takes real estate into account when making trades that align with your portfolio goals. Consider using this new style of investment technology today.
Buyers in driver’s seat as sellers ride out real estate rough seas
But notable to me is the fact that even amidst all of the scary headlines and all of the well-founded doom and gloom, there are still real estate deals happening in this city. And while as far as I can tell, the who and the how and the why has shifted from the who and the how and the why that drove that wild market that already feels like a distant memory, I’m not sure what we’re seeing should be written-off as anecdotal outliers.
Transaction volume is down by half compared to this time last year. Interest rates currently stand at levels inconceivable less than a year ago. New homeowners are stressed, would-be home buyers are spooked, and everyone else is trying to figure out how worried they need to be.
But here’s what I am observing in real time: buyers are absolutely still out there.
Our transaction volume may be down by half, but the remaining half of what was truly record-levels is not inconsequential. It maybe just feels that way.
Case in point: I listed an adorable house in a central Toronto neighbourhood last week. The perfect starter home for first-time buyers. It would have been an absolute bun fight last winter.
I wasn’t sure how it would go. And because of that, I left nothing to chance. We shined her up, I spent a small fortune on staging, the photos were perfect. We did all the things.
Never would I have guessed that we would end up with twenty-five groups braving the miserable cold to come to the open house. And these weren’t people just out killing time on a Sunday. These were buyers, with parents in tow, and home inspection reports in hand, armed with their questions and their critical eye. The same buyers that are supposedly priced out or debilitated by the fear of catching falling knives.
Offer night yielded four offers. But unlike the offer nights of days prior, these prospective buyers weren’t armed with letters to the sellers and waving their bank drafts around. They were cool. They had conditions. And their numbers were conservative. Even in competition.
And this experience tracks with what I am hearing from my colleagues: the buyers still out there will participate at the right price. They will come forward when they’re good and ready. There is no FOMO. They will offer on things, sure, but will walk if it’s not right for them.
And this will be how the prices continue to grind downwards.
So while yes, the market has slowed right down, I wonder if the stasis is also due to the logjam of sellers determined to wait out these unfavourable conditions.
I suspect that once reluctant acceptance of new-new normal settles in, we will see inventory rise and sales volume increase. But I feel pretty confident in saying that it will be quite a long time before sellers leave the table feeling like heroes again.
Everything you should know about the metaverse real estate
With an expected CAGR of 31.2% from 2022 to 2028, the metaverse is one of the most rapidly growing economies globally. Developing a virtual world through the metaverse offers infinite possibilities for creating better spatial experiences. Its immersive and engaging virtual environment makes digital interactions feel real. This quality has grabbed the attention of leading tech companies who are now vouching for metaverse as the future of the built environment. Thus, investors and developers are looking at the metaverse as a potential investment for enhancing user experience and the saleability of a place.
What is Metaverse Real Estate?
Real estate in the metaverse refers to land parcels and buildings in the virtual environment. The land in the metaverse is virtual, implying that it has no physical attributes. Land parcels in the metaverse are essentially pixels that act as programmable spaces in virtual reality platforms. These lands can be used to develop workplaces, playgrounds, and meeting rooms.
Investors can buy land plots from multiple metaverse platforms providing unique virtual environments. Each of these platforms provides various functions; hence, no one platform represents the metaverse in totality. The Sandbox, Decentraland, Metahero, Horizon Worlds, and Celebrity Atlas are some of the most popular metaverse platforms for real estate developers to invest in.
Why and How to Purchase Real Estate in Metaverse?
Metaverse real estate provides people with a place to connect with people located in distant locations across the globe. Developers can monetize their virtual properties to advertise services, host events, and provide unique visitor experiences. Similar to physical land, real estate properties can also be rented or leased. Hence, investing in metaverse real estate can be profitable for key players in the AEC industry.
In 2017, during Decentraland’s first LAND auction at the Terraform Event, a plot of land was sold at an average of $20. In 2021, the same parcels of land were sold for an average above $6,000. Further, the beginning of 2022 witnessed a boom in the metaverse real estate prices, with property costs rising to $15,000.
For land purchases in the metaverse, the investor must require a virtual wallet to make all transactions. MetaMask is one of the most trusted browser-based wallets for making digital transactions. The digital wallet will have to be filled with cryptocurrency since it is the virtual world’s currency. Investors can study the features of various metaverse platforms and compare them against each other before registering.
Following this, the investor can create a digital avatar of themselves and take a tutorial on the platform to get acquainted with its virtual environment. After this, the plot selection and buying process can begin. Purchasing a metaverse property involves a deed of ownership, a unique code on a blockchain. This code certifies the ownership rights over a piece of virtual land. The purchased plot can be used to develop a new building or a digital twin of physical space.
Benefits of Investing in Metaverse Real Estate
The key benefit of metaverse real estate is that it compensates for the lack of space in the physical world. For instance, employers can create conference rooms and event halls in the metaverse if an office lacks physical meeting spaces. Further, the metaverse provides a seamless collaboration experience that allows people living in different parts of the world to communicate with each other.
Project marketing and property showcase is other significant benefit of the metaverse in the real estate sector. Developers are creating immersive metaverse experiences for potential buyers to witness their “dream house” in virtual reality. Equipped with VR headsets and compatible smartphones, buyers can take virtual reality tours of various places worldwide.
Many countries such as Germany, Croatia, Hungary, Norway, Mauritius, Iceland, Spain Costa Rica have invested in virtual tourism with the aid of the metaverse. Tourists can look at the most popular public buildings, experience their charm, and indulge in regional activities by weaving VR headsets.
Risks Associated with Metaverse Real Estate
Investing in the metaverse is promising, but it can also pose high risk owing to its relative newness. Although researchers predict that the metaverse has an excellent scope for growth, it is very early to predict how the industry will grow. For instance, if a metaverse platform decides to go offline permanently, the real estate in them would also become non-existent. In this case, the value of investment made by real estate developers would be questionable.
The valuation of physical land gets appreciated or depreciated based on market conditions, environment, and other tangible factors. But, all these factors have no impact on metaverse real estate since the virtual environment can be controlled. So, the only and most important variable that impacts the value of the real estate in the metaverse is the volatility of cryptocurrencies.
Developing and Managing Real Estate in the Metaverse
In the metaverse, developers can assign property development roles to architects. In the case of neighborhood developers, urban planners and urban designers can be involved. Architects can design the virtual world by planning the land parcels to maximize space utilization. Further, the land in the metaverse needs management similar to physical property management. The virtual world can potentially grow real estate through effective virtual property management, rental assortment, dealing with client queries, and general land maintenance.
Investing in metaverse real estate is associated with high risks and equally high rewards. The uncertainties of the virtual world can exponentially multiply to reap enormous benefits or deteriorate into a complete loss of investments. So, before investing, the developer must ensure that they have complete knowledge and understanding of how the metaverse works.
Investors must identify their risk appetite, weigh all their investment options, and speak to experts before investing. Considering all these factors, the fact that the metaverse will define the future of living is undeniable. Therefore, all key players in the AEC industry should prepare themselves for the dawn of this next-generation technology that is empowering, immersive, and engaging.
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