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The Cal State Companies:  Center for Real Estate Studies ¨ Cal State Properties ¨ Cal State Investment LTD Partnership

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Leading Residential Income Markets

2nd Quarter 2020

            LOS ANGELES, CA. The Center for Real Estate Studies (CRES) has just released their second quarter 2020 issue of “Market Cycles".  It gives a forward look at more than 150 residential income markets with “buy, sell or hold” recommendations. This publication gives the real estate investor a two-year head start on where and when to invest in residential income properties.

            The current number of markets in the “Sell Phase” is thirty-three, according to Eugene E. Vollucci, President of calstatecompanies.  The number of markets in the “Buy Phase” is fifteen. Mr. Vollucci states, “This quarter the three top buy recommendations are Atlanta, GA, Greenville, SC and Portland, OR. The three top sell recommendations are Bellingham, WA, Denver, CO and Newark, NJ. The other markets are currently in a hold phase,”

according to Mr. Vollucci. 

            In this edition of our Market Cycles, we find the first quarter 2020 rental vacancy was highest outside Metropolitan Statistical Areas (MSAs), which was higher than the rate in the suburbs, and the rate in principal cities. The rental vacancy rate in principal cities was not statistically different from the rate in the suburbs. The rental vacancy rate inside principal cities was lower than first quarter 2019, while the rates in the suburbs and outside MSAs were not statistically different from the first quarter 2019 rates.

Unemployment rates were higher in May than a year earlier in all 389 metropolitan areas, the U.S. Bureau of Labor Statistics reported today. A total of 109 areas had jobless rates of less than 10.0 percent and 16 areas had rates of at least 20.0 percent. Nonfarm payroll employment decreased over the year in 357 metropolitan areas and was essentially unchanged in 32 areas. The national unemployment rate in May was 13.0 percent, not seasonally adjusted, up from 3.4 percent a year earlier           

The level of uncertainty in our economy is currently at an all-time high with the path of the recovery difficult to predict. Our government has taken major steps to try to cushion us and our economy through these difficult times. According to Zumper’s National Rent Report for April, Google search volumes for apartments for rent were down between 10% and 35% last week in its top cities, while long-term inventory dropped by about 12% last week.

We are keeping an eye on the real estate investments outlook created by the spike in coronavirus and policy steps that are being taken, but we would advise against putting too much weight on a specific-point forecast until the future pathway becomes clearer.

ABOUT THE AUTHOR: Eugene E. Vollucci, is considered to be one of the foremost authorities on real estate taxation and investing and has authored books in these fields published by John Wiley & Sons of New York. He is the Director of the Center for RE Studies, a real estate research organization. To learn more about the Center, please visit our web site at http://www.calstatecompanies.com

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