RealEstateNews 9.16.24

Weekly News Roundup

• 3-D Printing Buildings
• Manufacturing Boom Drives Real Estate
• Record Home Prices but No Crash

3-D Printing Buildings

Click Here for YouTube Discussion on the 3-D Printing Buildings

A Walmart Supercenter’s new expansion is one of the largest 3-D printed commercial real-estate projects in U.S. history. Its bumpy road to completion illustrates the new technology’s promise and shortcomings. The retail giant added the 8,000-square-foot space to its Athens, Tenn., location to hold items customers buy online for pickup or delivery. Walmart, which has more than 200 other additions like this in the pipeline, wanted to see if 3-D printing could get the job done faster and more cost-effectively. 3-D printing, also known as additive manufacturing, builds things by layering material via a computer-programmed robotic arm. Traditional manufacturing, by contrast, whittles away from raw materials, such as a sheet of metal.

Venture capitalists have pumped billions into 3-D printing startups in recent years, believing they will soon be able to mass-produce components for the semiconductor and aerospace industries. The technology has been touted as a way to alleviate the U.S.’s housing shortage. Proponents say 3-D printed houses have the potential to be built faster and cheaper than traditional construction. In Texas, a community of 100 3-D printed homes is under construction. But few commercial real-estate projects have been completed using 3-D printing, in part because the technology hasn’t proven to be cheaper and faster than traditional construction.

In Tennessee, Alquist worked alongside FMGI, a longtime general contractor for Walmart projects. Alquist’s original pump was incompatible with the material. The material overheated in Tennessee’s scorching summer heat, forcing them to use water to cool it to the correct temperature for application. And the material’s fast-setting nature left little room for error. The workers eventually found their groove. Printing progressed more efficiently as construction continued. Walmart has hired Alquist for another similar project. Source: Wall Street Journal

Manufacturing Drives Real Estate

Click Here for YouTube Discussion on Manufacturing Driving Real Estate

The U.S. is experiencing a manufacturing revival. More property investors are eager to capitalize on it. American and overseas companies have committed nearly half a trillion dollars to build new factories for electric vehicles, semiconductors and other products in the U.S., according to real estate analytics firm Green Street. Investors are planning to acquire or build warehouses, hotels, office buildings and apartments near coming factories across the Sunbelt and Rust Belt, where most of these so-called onshoring projects are under way. They are wagering that as new manufacturing hubs come online and create jobs they will produce a “multiplier effect,” with growing employment increasing demand for homes, shopping and more.

“Competition for land has become pretty intense,” said Mehtab Randhawa, global head of industrial research at JLL. The biggest site of all is Taiwan Semiconductor Manufacturing Co.’s $65 billion chip fabrication complex, planned for the north side of Phoenix. It is funded by over $11 billion in federal subsidies and loans under the CHIPS and Science Act, which grants money to semiconductor makers. In May, an affiliate of Mack Real Estate Group and McCourt Partners won a state-run bid to purchase more than 2,300 acres of land directly surrounding the site, where New York developer Richard Mack plans a “city of the future.” It calls for housing, hotels, restaurants and office buildings in 28 million square feet of developed space.

Property investors are also filing into other Sunbelt centers of chip and vehicle production, such as Texas and Tennessee. Other hot spots are filling in more quickly. At one of the U.S.’s largest industrial parks in eastern Oklahoma, new apartments for workers have risen next to the expanding hub, which counts EV startup Canoo’s battery-manufacturing facility among recent additions. And close to where Micron Technology is building chip factories near Syracuse, N.Y., a developer released plans to replace a shopping mall with up to 1,700 apartments and six hotels. Source: Wall Street Journal

Record Home Prices But no Crash

Click Here for YouTube Discussion on Housing Crash

To the dismay of would-be homebuyers, property prices just keep rising. It seems nothing — not even some of the highest mortgage rates of the past two decades — can stop the continued climb of home prices. Prices hit a new all-time high in June 2024, with the median sale price for an existing home reaching $426,900, according to the National Association of Realtors (NAR). July’s median price was slightly lower at $422,600, but was still the highest July median on record and marked 13 consecutive months of year-over-year jumps. (Seasonal fluctuations in home prices typically make late spring and early summer the highest-priced times of the year.)

In another reflection of ongoing increases, the S&P CoreLogic Case-Shiller home price index for June was up 5.4 percent from a year earlier, its fourth consecutive all-time high. The main driver of record home prices is a one-two punch straight from Econ 101 — a lack of housing supply coupled with strong demand. Inventories have been growing but remain frustratingly tight, with NAR’s July data showing a 4.0-month supply. Not even high mortgage rates have slowed price appreciation. Taking all this into account, housing economists and analysts agree that any market correction is likely to be modest. No one expects price drops on the scale of the declines experienced during the Great Recession.

Housing economists agree that it will not crash: Even if prices do fall, the decline will not be as severe as the one experienced during the Great Recession. One obvious difference between now and then is that homeowners’ personal balance sheets are much stronger today than they were 15 years ago. The typical homeowner with a mortgage has stellar credit, a ton of home equity and a fixed-rate mortgage locked in at a low rate — in fact, a New York Times analysis from April found that, at the end of 2023, around 70 percent of U.S. mortgage holders were locked in at rates more than three percentage points below the current market rate at the time. What’s more, builders remember the Great Recession all too well, and they’ve been cautious about their pace of construction. The result is an ongoing shortage of homes for sale. Source: Bankrate