Rent spiked again in April, expected to keep climbing through the year

The pace of rent price growth was more than double what it was a year ago, reaching 14 percent for a single-family home in April, according to a report released Tuesday by CoreLogic.

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The price of rent continues to climb at a record pace, with single-family homes renting for 14 percent more this year than a year ago.

And if that’s not bad news for a growing pool of renters, many of whom have already been priced out of the buyer’s market, it gets worse.

“We expect single-family rent growth to continue to increase at a rapid pace throughout 2022,” said Molly Boesel, principal economist at CoreLogic, a real estate data company that tracks home price growth.

The cost of a single-family rental was 14 percent higher than a year ago in April, a report released Tuesday by CoreLogic said. That’s more than double the rate of growth from April 2021, and six times higher than April 2020. It was the 13th consecutive month of record-breaking annual price gains.

The sustained and rapid growth is due to a shortage of rental properties in the market and a thriving job market, the report said.

“Single-family rents continue to increase at record-level rates,” Boesel said. “In April, rent growth provided upward pressure on inflation, which rose at rates not seen in nearly 40 years.

Miami continued its break-neck pace of rent growth, with single-family rentals going for 40.8 percent more in April 2022 than a year ago. (In April 2021, rent grew at an annual rate of 5.6 percent.)

Orlando, Florida and Phoenix followed Miami with the second- and third-highest price growth. Rent grew 25.8 percent in Orlando and 17.8 percent in Phoenix.

Rent grew slowest in Honolulu (7.7 percent) and Philadelphia (7.8 percent), according to the report.

“Phoenix’s April 2.7% unemployment rate is likely helping drive demand and rental cost gains,” the report said, “while Philadelphia’s 6.2% unemployment rate could be causing more tenants to stay put to avoid incurring additional expenses.”

CoreLogic says the growth of multi-family rentals has been more moderate than single-family because of a rush of demand for the latter, created by the COVID-19 pandemic. The gap is starting to close.

The sources of rental income properties, foreclosed homes, all but dried up in that same time, and forecasters don’t expect there to be a backlog of distressed properties that will come on the market any time soon.

April 2022 single-family rental price chances

  • Lower-priced (75 percent or less than the regional median): 13.7 percent, up from 4 percent in April 2021
  • Lower-middle priced (75 percent to 100 percent of the regional median): 14.4 percent, up from 4.4 percent in April 2021
  • Higher-middle priced (100 percent to 125 percent of the regional median): 14.6 percent, up from 4.6 percent in April 2021
  • Higher-priced (125 percent or more than the regional median): 13.5 percent, up from 6.4 percent in April 2021


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US existing-home sales prices tally new record after topping $400K

Total sales of existing homes, condos and co-ops dropped 3.4% between April and May to a seasonally adjusted rate of 5.4M, according to new data from the National Association of Realtors.

Sales of existing homes fell for the fourth-straight month in May, according to data released Tuesday by the National Association of Realtors.

Total sales of existing homes, condos, and co-ops dropped 3.4 percent between April and May nationwide to a seasonally adjusted rate of 5.4 million in May. Sales were down 8.6 percent year over year from their rate of 5.92 million in May 2021.

The decline is the latest sign that the once red-hot housing market has cooled as mortgage rates and record high prices push more buyers out of the market. The median home sale price clocked in at $407,000, marking the first time median prices exceeded $400,000. The median price of an existing home increased 14.8 percent from the previous year, when prices hovered around $355,000, marking 123 consecutive months of price increases.

May’s numbers may represent an end to the pandemic housing market, said NAR experts, which saw elevated competition and a migration of buyers from city centers to outlying suburbs.

“Home sales have essentially returned to the levels seen in 2019 – prior to the pandemic – after two years of gangbuster performance,” NAR Chief Economist Lawrence Yun said in a statement. “Also, the market movements of single-family and condominium sales are nearly equal, possibly implying that the preference towards suburban living over city life that had been present over the past two years is fading with a return to pre-pandemic conditions.”

While sales are down and will likely continue to go down, home price appreciation will likely continue unabated without any significant increase in supply, Yun predicted.

“Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year,” Yun said. “Nonetheless, homes priced appropriately are selling quickly and inventory levels still need to rise substantially – almost doubling – to cool home price appreciation and provide more options for home buyers.”

Homes stayed on the market for 16 days in May, down just one day from April and March when typically stayed on the market for 16 days according to the NAR.

All cash buyers made up about 25 percent of all transactions in May, down one percent from April but up two percent from May 2021.

16 percent of homes were purchased by individual investors or second-home buyers, who typically purchase in all cash, according to the data.

Less than 1 percent of sales were made up of distressed sales — foreclosures and short sales.

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It seems like every day I’m reading fearful articles about a looming housing crisis.

Forbes wrote: “Pending Home Sales Plunge to Lowest Level in Nearly a Decade.”

Seeking Alpha posted: “The Air Is Coming Out of the Housing Bubble.”

Fortune warned: “The Cooling Housing Market Enters Into the Great Deceleration.”

Many Americans are looking for answers. Google searches for “housing crash” have surged in recent years.

Interest over time

(Source: Google Trends.)

Although I don’t see a housing crisis on the horizon, I can understand the fear.

When looking at the median net worth of Americans, home equity accounts for 65% of that wealth.

Couple that with what happened in the 2007-2008 crash, and it’s easy to see why many are concerned.

Despite these fears, we’re still looking at higher prices for the foreseeable future.

And the latest data shows why that’s the case.


For some, U.S. home prices appear to be on the verge of cracking.

After new and existing home sales both reached a 14-year high in 2020, sales have been trending back to normal levels.

Considering rising mortgage rates and housing prices, this was expected.

But homebuilders got a wake-up call last month. New home sales fell 16.6% between March and April.

This was a huge surprise for economists, who only expected a 2% drop.

The slowdown in sales has created the largest inventory of new homes since 2010. It would take nine months to sell out inventory at last month’s sales pace.

Although this warrants some concern, the inventory problem isn’t nearly as bad as it seems.


New home inventory doesn’t tell the whole story. You also have to look at existing home inventory.

U.S. existing home inventory has been trending lower for several years. At its current level, it would take just over two months to sell out inventory.

I expect low levels of existing home inventory to continue into the foreseeable future.

With mortgage rates nearly doubling since early 2021, existing homeowners are likely satisfied to remain in their current homes.

This should continue to keep supply in check.

Mortgage payments are rising

(Sources: National Association of Realtors, Bankrate.)

And what about demand?

Even though the media talks about declines in home sales, the big picture isn’t too concerning.

Existing home sales are still above their 10-year average.

US Existing Homes Sales

(Source: Bloomberg.)

Future demand should remain strong thanks to rising rents.

According to, the median rent for a two-bedroom apartment has risen 45% over the past two years.

Although this only accounts for the top 50 metro areas in the U.S., it serves as a good barometer for the state of the national rental market.

I expect rising rents will drive demand from first-time homebuyers who are currently renting and have cash on the sideline.

Couple this demand with the tight supply we’re still seeing in existing homes, and the stage is set for higher prices.

But keep in mind the rapid growth we’ve seen since 2020 is an anomaly.

I wouldn’t bank on growth of that magnitude to continue.

By, Steve Fernandez


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Real Estate and Your Estate Plan: How Does It Work?

It’s a subject most people don’t like to talk, read, or even think about. But it’s a necessity to be dealt with: What happens to your home when you die?

When you pass away or become incapacitated, managing your final wishes can be devastatingly emotional and messy for your loved ones. So it’s important to sit down and make key decisions about a lot of things. High on the list: how to pass down your assets—mainly property—to your heirs.

To explore the ins and outs of incorporating real estate into your estate plan, we talked to Lucy Marsh, professor of law at the University of Denver in Denver, CO. Marsh specializes in property law and estates and trusts, so if you heed her advice, you can rest easy knowing your affairs are in order.

Q: Do you really need to make a will to pass down real estate?

No, but it’s a good idea. The intestate statute will automatically pass your land, and your other assets, to your closest relatives, in accordance with the laws in your state. But if you want the land to stay together or go to a particular person then, yes, you need to write a will.

Or let’s say, for various reasons, you don’t want your heirs to inherit your property or other assets. Without a will, you can’t allocate where you do want the property to go in lieu of not-so-favored relations, and that’s where things get messy. If you don’t have any kids (and don’t plan to), you can choose nieces, nephews, siblings, or even charities as beneficiaries, but make sure you provide primary and backup names and spell out that certain individuals shouldn’t profit from your estate.

Q: What happens when a homeowner doesn’t have a will?

Without a will, the person’s estate is considered intestate and goes into probate, which is the legal proceeding by which someone’s assets are sorted out by the courts.

The land, and everything else the person owns, will be distributed according to the intestate statute in the state where the person was living when he or she died. It typically takes up to a year (or more) for a probate case to work its way through the system and can get expensive since you almost always need to hire an estate attorney. Probate does have the benefit of cutting off creditors’ claims by the end of the process.

Q: How is a home, whether it’s a primary or vacation property, tackled in a will?

The first question to ask: Is it designated as a joint tenancy or tenancy in common? In a joint tenancy, two people co-own the property in equal shares. So if one person dies, the ownership of the property automatically gets transferred to the surviving owner without a will. This is considered right of survivorship. All you have to do is record a copy of the death certificate for the deceased joint tenant.

Common tenancy means that two or more people can own a property in varying parts. Unlike joint tenancy where ownership must be assumed in equal shares at the same time, common tenancy can occur at different times where owners are added (or removed) from the property’s ownership. Tenants in common, unlike joint tenants, have no rights of survivorship unless the deceased’s will specifies that his or her interest in the property is to be divided among the surviving owners. Otherwise, the owner’s share of the property belongs to his or her estate, and a will directs where that share goes.


Q: What happens after an heir inherits the property?

The person who inherits the land takes it, subject to whatever mortgage exists. That person needs to make a will immediately, if they don’t have one already, to make it clear what should happen to the property in the event of his or her own death. The heir can choose to keep or sell the property.

Q: Can you allocate portions of your property to go to different people?

The short answer is yes. Property can be split up any way you want; you can give one heir a larger percentage than another heir if you wish. If you have considerable real property assets, you might decide you want one house to go to one child and another to go to your second child. You can split up land into tracts, too. It’s always a good idea to name contingency heirs in the event that your heirs die before you do (and before you have a chance to update your will).

Q: If both spouses die at the same time, what happens to their property?

If two people own land and die at the same time, uniform probate code states that each half of their ownership would go into their own estate. And that means each person could designate their own heirs or beneficiaries to inherit their half of the property.

Q: How does a trust work and how does real estate factor into it?

For starters, a trust is not a will; a final will comes into play after you die and it states your final wishes. On the other hand, a trust is a legal document that essentially puts your assets into a box and asks someone to manage it while you’re still alive but incapacitated. You select a trustee and a back-up trustee in case your first choice is unable (or unwilling) to act on your behalf.

There are two types of trusts: a testamentary trust, which is included in your will, and a living trust, which is created while you’re alive. Both types of trusts can include land.

A living trust, which is another way to keep your assets out of probate, can be either revocable or irrevocable. Once assets are placed in an irrevocable trust, the property no longer belongs to the homeowner/grantor but rather the trust. Just like renting a house or leasing a car, the assets are still there for your benefit, and a trust can sell the house and buy another. The great disadvantage, though, is you can’t change your mind and you’re stuck with your original decisions.

An irrevocable trust can provide the best possible protection of assets from claims by creditors, as the assets have literally changed ownership from the grantor to the trust. This is very different from a revocable trust situation where the grantor retains complete ownership of the property until his or her death. The major practical issue with a living trust is you might forget to put assets into it, which subjects those forgotten assets to probate.

It’s smart to put your wishes in writing so your children or other beneficiaries are not left trying to sort everything out while they’re grieving, too. A lack of a will or unclear directions can complicate relationships and cost thousands of dollars in attorneys’ fees. Have a frank discussion about your estate plans with people who should be in the know, and you’ll (hopefully) avoid confusion and bitter squabbles down the road.


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Almost all estate planning clients own real estate in one form or another – a residence, a vacation home, or a rental properties. Real estate presents unique challenges in estate planning because debt is often associated with the property and because it may be difficult (or not desirable) to sell the property.

Primary Residence
The most common property ownership is a client’s residence. A residence is often sold as part of the administration of an estate and the net sale proceeds are then distributed as part of the residue of the estate. Your residence, however, may be given to a particular beneficiary and if that is your desire your Last Will and Testament should clearly provide for his disposition. If there is a mortgage, you can condition the beneficiary’s receipt of the residence on the assumption of the mortgage or provide in your Last Will and Testament for the pay off of the mortgage.

Clients sometimes will jointly or solely title real estate with a child to “avoid probate”. Although titling the property this way may simplify or avoid an estate settlement, the sale of the property likely will have adverse income tax consequences. Most homeowners take for granted that a primary residence can be sold without the recognition of a capital gain provided the capital gain is less than $250,000 for one resident or $500,000 for joint residents. This exclusion, however, only applies to a property that is a primary residence of the seller for two of the last five years. For example, if you purchased your house for $100,000 and sell it for $300,000, then the $200,000 capital gain does not result in any capital gains tax. However, if the residence was gifted to a child during the parent’s lifetime, the child will not satisfy this rule if the child’s primary residence is elsewhere. The tax due would be $47,600 (20% for the capital gain and 3.8% for the net investment income tax, if it applies).

Vacation Properties
Vacation properties present special planning challenges. There is often a desire to keep a vacation property within a family but this may not be practical. Joint ownership among heirs can create a variety of issues. How are the costs of ownership to be divided? What happens if an owner fails to contribute his or her share of the costs? How is the use of the property determined? Should the property be rented to third parties? What happens if an owners wants out of the arrangement? What if an owner goes through a divorce or bankruptcy? It is important that a client has realistic expectations. Although a trust can own a vacation property instead of individual heirs, these issues must still be addressed and ultimately resolved by a trustee.

One advantage of a vacation property is that a property located outside of Pennsylvania generally can avoid a state level inheritance tax or estate tax upon the death of an owner. Pennsylvania taxes all transfers of property at death (transfers to spouses are taxed at 0% and transfers to children are taxed at 4.5%) with no amount of property transferred being exempt. Pennsylvania’s inheritance tax, however, does not apply to property located in another state. New Jersey does not tax transfers at death to children. Delaware has a tax but provides for an exemption of over $5,000,000. Therefore, ownership of real estate in these jurisdictions is a way to avoid Pennsylvania inheritance tax.

Investment Properties
A client with investment properties (whether residential, commercial, or industrial) has a variety of issues to consider in his or her estate plan. These issues generally consist of (1) planning for payment of estate tax and inheritance tax, (2) planning for the transfer of ownership of the investment, and (3) dealing with debt.

As with a family-owned business, real estate presents the problem of being valuable but not liquid. A client with a significant portfolio of investment properties will need to plan carefully to create liquidity in the estate in order to pay the inheritance tax and the estate tax, if applicable. Many clients will address this issue through the ownership of life insurance. Life insurance is not subject to the Pennsylvania inheritance tax and life insurance ownership can be structured so the death benefit is not subject to federal estate tax (generally speaking, the life insurance is owned by an Irrevocable Trust). If there is sufficient equity in the properties, then consideration can be given to borrowing against the equity.

A client will need to give consideration to how a real estate investment will be disposed of at death. There is sometimes a desire to continue ownership for the benefit of a surviving spouse so the surviving spouse can continue to benefit from the cash flow of the investments. If there is bank debt, however, the transfer to a surviving spouse or to a trust for the surviving spouse’s benefit often will require the consent of the lender. If the investment is owned with other investors, then any agreement governing the transfer of ownership (a “buy-sell” agreement) must allow for such a transfer.

Often, the buy-sell agreement requires the sale of the investment in the event of death. Careful attention needs to be given to the terms of a required sale. Is a down-payment required? Is seller-financing required? If there is seller financing, then is the debt secured or unsecured? How long is the financing term and how frequently will payments be made (monthly, yearly, etc.)? What happens if the other investors cash out of the investment (that is, will the surviving spouse be paid in full if there is such an event)?

Another key consideration with buy-sell agreements or retaining the real estate investment in-kind is the payment of death taxes. Generally speaking, if there is a transfer to a surviving spouse (or in trust for the surviving spouse’s benefit) there is no federal estate tax or Pennsylvania inheritance tax due. If taxable heirs (children) are to receive the real estate investment in-kind or are to receive installment payments under a buy-sell agreement, then your estate’s liquidity must be analyzed to ensure that the death taxes can be paid at that time. For example, if the real estate or buy-sell payments have a $2,000,000 value, this value could trigger $90,000 of inheritance tax and $800,000 of federal estate tax. From the buyer’s perspective, will there be sufficient cash flow to meet the payment obligations? For example, cash flow from a residential development project may be years away or unpredictable.

Real estate is and will continue to be a valuable asset for most clients. Residential real estate, vacation properties, and investment real estate all provide clients with potential for capital appreciation and, in the case of rented vacation properties and investment properties, the potential for income. Clients should give considerable thought to the disposition of these assets in the event of death to make sure that taxes are minimized and the client’s intent is carried out.


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What Is the New Corner Office?

Changing our offices means changing the ways that we perceive success in an organization. Having an office, a permanent place to put your things or be alone, is a universal signal of value. It is an acknowledgment of commitment from employer to employee. It tells them that they belong, that they deserve a place. We even have a hierarchy for offices, particularly when it comes to the kind of people that are allowed to use them. The pinnacle of which is the corner office. “Corner office” has even become slang of its own, akin to “C-Suite” and “Higher-Ups.”

If we want to take that affirmation away from people, if we have to get rid of corner offices, we need to find out what else it can be replaced with. We have to think about what not aspiring to be the one in the office means for the way that achievement and belonging are perceived in the organization. That means that the first step in the path toward rethinking a workplace starts with introspection. “Before you decide what your office will be you first have to understand the corporate culture,” said Mahesh Vidyasagar, Head of Real Estate at Robert Half, a staffing and recruiting firm.

Vidyasagar has spent his career in real estate and he accepts the emotional connection people have with it. “Real estate is personal, if you mess with it there are always tensions,” he told me. When he was brought in to help Robert Hall rethink their office footprint he started by first understanding the organization. Soon he came to realize that they had the type of flat hierarchy and open culture that would lend itself well to flexible work. Then he started to ask what the employees thought about having a flexible office and, of course, losing the corner offices.

“What I learned was that for many, flexibility is the new corner office,” he said. Now he believes what makes people feel valued and trusted is allowing them to choose their own schedules. Losing a personal office isn’t so impactful when it allows people to use an office when and how they want. Allowing for flexible work arrangements shows a type of trust that is hard to replicate, even with a dedicated office.

What works for some organizations might not work for others. The personal impacts of a change to a workplace vary greatly from person to person and team to team. But, using a bit of empathy to understand people’s jobs goes a long way, according to Vidyasagar. As head of Corporate Real Estate for Comcast’s West Division, he was faced with the hard decision of whether or not to invest in standing desks in their call centers. “They were so expensive at the time and we didn’t know if it was worth it,” he said.

After spending time in a call center, seeing what they did every day, and talking to them about their job he realized that the work was very hard and often seen as unhealthy both mentally and physically. So, his team decided to make the investment in the standing desk, despite the costs. “We instantly saw benefits, both in morale and in productivity,” Vidyasagar said. Besides the obvious health benefits of not being forced to sit all day at a desk, employees appreciated the thought that went into the investment as well, “they just liked knowing that we cared about them enough to invest in them.”

The connection between employee happiness and productivity is well studied in academia. But as much as many office and facilities managers would like to use employee morale and employee output as metrics for office success, the subjective nature of both of the concepts makes it nearly impossible. The metric for success that Vidyasagar likes to use instead was a bit surprising to me, both for its freshness and its simplicity. He boiled down the office’s impact on an organization into market share per square foot. He thinks that only by comparing an office footprint to the overall strength of a company can you really understand the intrinsic value of an effective workplace.

Rather than merely thinking about office density or trying to peg it to something as subjective as productivity, Vidyasagar thinks that the office should be seen for its entire benefit to the company. Sometimes those benefits, like morale, creativity, and culture are hard to fully measure. But what can be easily understood is how the company is performing against its competitors. If the organization is able to increase its market share without the need for more office space, that equals an improvement.

When employees are no longer tied to the office, their work shouldn’t be either. As organizations look to overhaul their workplaces they also need to answer an important question, “In the modern office, how can we give employees what makes them feel valued?” Only by learning this can they really create a space that helps boost an organization. Companies that ask that question might be surprised by what they find. Priorities have shifted and based on the new way that people are thinking about their work life, it might be that flexibility is actually the new corner offices.

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Why Combining the Physical and Virtual Office Makes Better Salespeople

With the pandemic showing signs of winding down and a potential return to normalcy on the horizon, the decision of whether or not to “return to the office” is at the forefront of everyone’s mind.

Unsurprisingly, the verdict of that decision varies depending on who you ask. A recent study found that 75 percent of executives currently working from home say they want to work from the office three to five days per week, compared to only 34 percent of employees. Clearly, there are some differences of opinion on the importance of returning to an office environment.

While a return to the office may not be necessary (or desired) for all employees, the office is a good thing for salespeople. Here’s why.

Friendly competition never hurt

As early as September 2020, companies like JPMorgan Chase were already beginning to ask some of their sales staff to return to the office. While there are various reasons salespeople have been the first to be brought back into the office, most of them boil down to this: salespeople need competition.

Competition, both amongst external competitors and internal peers, is frequently cited as one of the primary motivations for salespeople. Whether it be trying to make one more call than your desk neighbor or being the highest earner on your team next quarter, this type of friendly competition is difficult to foster in a virtual environment. There is a significant difference between competing against your peers as you all sit at home alone versus doing the same next to each other in an office. Many salespeople discovered this first-hand over the last two years.

The competitive environment fostered in an office is also helpful for training and motivating new salespeople. New team members can see first-hand how senior team members conduct themselves, and the value of overheard conversations, body language, and impromptu lessons cannot be understated. Working alongside the team’s top sellers also acts as a great motivational tool for new salespeople, giving them common goals to aspire to and confirming that success is attainable. Seeing is believing in the sales world, and being in an office is what makes that possible.

Art Markman, professor of psychology and marketing at the University of Texas at Austin, agrees that working alongside others in an office environment can lead to “goal contagion.”

“When you observe the actions of other people, you often adopt their same goals,” said Markman. “Being around a group of people who are working toward a common mission reinforces that goal in everyone in the workplace.”

For employers considering a return to the office for their sales team, highlighting the benefits of this competitive environment could be an excellent way to encourage them to return (if they haven’t done so on their own already). Implementing new sales competition ideas, such as prizes, bonuses for hitting certain milestones, or a leader board posted in the break room, and promoting an atmosphere of friendly competition at the office could also help sales managers motivate their teams and encourage a return to in-person work.

Work environment matters

If competition is the primary motivator for most salespeople, a sense of camaraderie is the second. Salespeople are frequently team players and thrive in environments where they feel connected to their teammates. Considering a recent study conducted by the Pew Research Center found that 60 percent of employees felt less connected to their coworkers when working from home, it’s no wonder so many salespeople have been itching to get back into the office.

A physical office is the best work environment for most salespeople because it offers them a dedicated space to form bonds with their coworkers in a professional setting. Sure, a sales team could work virtually from home and promise to meet up for a happy hour once a quarter, but it’s hard to replace the day-to-day interactions that an office provides. From the stereotypical “water cooler” conversations to the high fives after a successful call with a client, the office environment offers the little touch of teamwork and connection that salespeople are after.

Plus, think about it this way, if you had the opportunity to close a massive sale, would you prefer to do it at home alone or in an office surrounded by your team? Lone-wolf sellers might do financially well for themselves, but the sales team’s performance and morale make a company thrive.

The other benefit of a physical work environment is the legitimacy it brings to a company, both in the eyes of its employees and its customers. Whether an employee wishes to return to the office full-time or not, knowing that a physical office exists and is available to them if they need to hold meetings, take important calls or grab the occasional free snack is reassuring and convenient. From a client perspective, being brought into the office to meet with the sales team face-to-face is a traditional (and still often expected) part of the sales process. While taking video calls from a home office is undoubtedly more convenient, there’s still something to be said about meeting in person.

Sure, office space can be expensive for an employer, but the benefits of the office’s work environment to sales teams are well worth the cost.

Virtual tools improve the customer experience

Although the past two years have been a struggle for many salespeople, the technological innovations related to remote work can help give sales teams the competitive edge they need.

Zoom, the videoconferencing platform many of us were using (even before the pandemic), has led the charge in this regard. Zoom’s recent Work Transformation Summit touched on a number of topics related to how work and the sales process have changed due to the widespread adoption of virtual tools in the professional world. In the summit’s keynote, Oded Gal, Zoom’s Chief Product Officer, took the time to point out that even customers themselves have changed.

“Customers have changed the way they consume. They expect instant access to 24/7 support and have grown increasingly frustrated with wait times,” Gal said. “Customers want to feel valued and want a business relationship that feels less transactional and more like a partnership. If your company does not offer them the experience they desire, they will go elsewhere.”

To make this partnership experience a reality, sales teams can draw on virtual tools to streamline their sales process and offer more transparency to their clients. Rather than the occasional in-office visit or bi-weekly phone call, salespeople can now regularly check in with their clients via video calls, collect feedback through online customer portals and help solve and reduce complaints with advanced customer support options. Better yet, an in-office sales team may even be able to close more sales at a lower overall cost by cutting back on the travel and meals that would have been required had these virtual tools not been available.

Combining the benefits of an in-office environment with virtual tools to improve the customer experience will be critical for sales teams if they wish to remain competitive in the post-pandemic world moving forward. Offices make better salespeople, and adopting virtual tools can only make them better.

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Cushman & Wakefield Report Highlights the Inflation Challenges Facing Real Estate Tenants

Rising interest rates could lead to reduced commercial real estate leasing for certain property types for the next several years, according to a new Cushman & Wakefield report on inflation’s impact on real estate occupiers. Most measures of inflation are at levels not seen in decades, and the report notes that the increased costs of labor, materials, energy, and other inputs for companies are unlikely to slow down anytime soon.

A significant imbalance between labor supply and demand has led to shortages across multiple sectors, leading to fast wage growth, one of the inflationary challenges that real estate tenants face. Real estate rent growth is a lesser problem for tenants, though. The report says real estate costs are primarily driven by local market conditions, as rent growth is a function of local fundamentals and vacancies more so than national or local inflation pressures. But costs associated with buildouts have risen sharply, and construction labor shortages create challenges for tenants. “Planning further in advance is more important than ever,” Cushman & Wakefield’s report advises.

Wage growth and retaining employees is perhaps real estate tenants’ most significant challenge right now. Labor costs for real estate occupiers are rising more quickly than any time in recent memory, with median wage growth in the first quarter of 2022 spiking 6 percent from a year earlier. Escalating labor costs may not ease as quickly as other forms of inflation unless a recession happens, which some are ominously predicting. Either way, the economic climate for real estate occupiers from office to retail is tumultuous at the moment, and it will probably stay that way for the time being.

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How Homeownership Can Keep You on the Right Side of the Widening Wealth Gap

Inflation is being felt in every sector of our economy right now and while the cost of living and basic necessities like gas and food continue to rise, wages are trailing behind. Some experts say we may be headed into a recession which will inevitably widen our wealth gap even further. One of the best ways to be on the winning side of this gap is through homeownership.

Homeownership has always been a primary tenant of the American Dream, fostering stability for families and a stronger sense of community. Homeownership remains the primary means of building wealth in the U.S. and is one of the most effective means of producing a generational financial legacy.

In 2015, the U.S. Census Bureau conducted a study with some shocking results. Homeowners’ median wealth was an astonishing 80 times higher than that of renters. The two biggest factors in the wealth gap were home equity and retirement accounts. Equity is the market value of assets after all debts have been paid off.

Buying a home is not without risks, and no investment is ever guaranteed. But history continues to prove that owning property leads to stable and significant returns. The speculative risk that is taken with stocks, crypto currency, NFTs, art and other investments typically do not apply with most real estate investments, particularly if you hold onto it long enough.

What makes homeownership such a remarkable wealth-builder?

1) It appreciates- On the lower end of the appreciation spectrum, homes average just around 4% annually, on the higher end (as we have experienced over the past couple of years), home values have soared to almost 30% in some locations. Obviously rapid growth like this is an anomaly, but it does happen.

2) It uses the principle of leverage- Equity accrues on not only your down payment amount and monthly mortgage payments, but the entire value of the home. If you put 10% down on a $300,000 home you earn appreciation on the total value of the house, not just your initial $30,000, as if you had personally invested all of that money yourself instead of borrowing from a bank.

3) It is forced savings- Comparable to a 401K or similar retirement plan which deducts money from your paychecks into outside investments, your monthly mortgage payments (especially if auto-debited) act in a related fashion. However instead of building equity through returns from the fluctuating stock market, you’re building equity through the more reliable real estate market. According to a recent analysis by the National Association of Realtors, the average homeowner accumulated $176,123 in home equity in a span of 10 years on a median-priced single-family home. Over 30 years, the wealth gain increased to $307,979.

June is National Homeownership Month. The real estate market is shifting and interest rates will probably continue to rise, but both of these may work to your benefit (referenced in my previous
articles). It is still a great time to build wealth and create a financial legacy for you and your family through homeownership.

If you have any questions or would like to take the next steps, reach out. We would love to help!

By Holly A. Morris, Realtor

The Meridian Real Estate Group

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Order Up! Independent Restaurants Are Recovering From the Pandemic

If you noticed that your local restaurants are looking fuller these days, you’re not alone. After the pandemic plummeted restaurant activity and forced many mom-and-pop eateries to close, a report from The NPD Group shows that independent restaurants are experiencing quite the upswing.

Independent restaurant locations, or restaurants that aren’t associated with a corporate chain (and only have one to two locations in total), represent more than half of the entire restaurant industry. Yet these locally-owned restaurants were less resilient to the stark drop in consumer spending than their chain peers when COVID-19 forced the world into lockdown. Eight percent of independent restaurants, approximately 28,399 locations, permanently shut their doors in 2020. But the sector had inched up 1 percent slightly by the end of the following year when 2,893 units had opened.

Visits to local restaurants, both for in-person dining and online orders, increased by 12 percent during the 12-month span ending in March of 2022. Independent restaurant visits are now only 7 percent beneath pre-pandemic levels, specifically the 12 months that ended in March of 2019. Independent restaurant owners have also increased their orders of food and suppliers from wholesalers by 27 percent in the same one-year period, which ended last March. Those wholesale orders have now eclipsed the March 2018-2019 levels.

Independent restaurants are beginning to bounce back despite record inflation, a pronounced labor shortage, and climbing fuel prices. This revival is also good news for retail real estate as well. Restaurants have long been considered a safer option for a retail anchor as they drive foot traffic, but pandemic lockdowns that forced restaurants to close or only allow take-out orders put that theory to the test. This upswing shows that restaurants are still a dependable means to drive foot traffic into retail centers.

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Thinking about selling your home? This may be the time

Home prices are at record highs and still rising, but there are some early indications that the market may be starting to cool. For sellers looking to get top dollar for their home, the time to sell is now.

But homeowners are still holding back from listing their homes, said Jeff Tucker, senior economist at Zillow. While the inventory of homes for sale has ticked up this spring, he said it has more to do with buyers retreating than a flood of new homes hitting the market.
“Sellers don’t seem to be particularly incentivized by these higher prices, or even about how April and May is the best time to list the house for a quick sale that gets a high price premium,” Tucker said.
The main reason that homeowners aren’t flocking to the market to cash in, he said, is simply because they still need a place to live. “They worry, quite reasonably, that they would need to pay a lot to find another place as good or better.”
Many would-be sellers are waiting for the right moment to strike, said Tracey Murray Kupferberg, an agent with Douglas Elliman in Long Island, New York.
“A lot of people are saying, ‘Am I making a mistake in waiting because I’m never going to get that dream price again?’ There is this fear they might miss the peak,” Kupferberg said.
But there is reason to believe that peak could be now.

Signs the market is cooling

It is impossible to time the market exactly, but many analysts expect home prices to peak this quarter.
“It is likely the pace of price appreciation will peak some time this quarter, either in April, May or June,” said Tucker. “That will be the high water mark for annual pace of appreciation, then it will decelerate.”
Signs that the market will start to cool can be found across the market. Mortgage rates, which have increased at the fastest rate in decades this year, are now over 5% and are expected to keep rising. The more expensive it is to finance a home, the less purchasing power buyers have and many give up if they can’t afford a house that fits their needs. That, in turn, can lead to less competition and some price easing.
In addition, there’s been a five consecutive months of declines in pending home sales, as well as a drop in newly constructed single-family sales, according to the National Association of Realtors. That means fewer people have been willing or able to buy. And the share of listed homes with price cuts has been increasing over the past two months, according to
The average profits made on selling a median-priced single-family home dipped in the first quarter, according to Attom, a real estate data company. While profit margins often decrease during the slower winter months, the latest dip marked the first quarterly decline since the fourth quarter of 2019 and the largest since the first quarter of 2011.
“Some sellers really made out over the past two years,” said Kupferberg. “Some buyers did, too. It was a win-win then, with rising prices and really low mortgage rates. Now it is different.”
She said sellers can often be slow to recalibrate after the market shifts, still expecting their home will sell in days with manic bidding wars.
“Prices are going to top out,” she said. “Then it takes a while for sellers to realize they have to lower their price. This pool of buyers can’t afford the home because the cost of borrowing has gone up.”

In need of a quick sale

Lotte Vonk was on the fence about selling her home, mostly because she wasn’t sure where her family would go.
Vonk knew that when her second child arrives in a few months, space in her suburban Chicago townhome would get tighter. But she couldn’t find many homes on the market that seemed to be a good fit, plus home prices and mortgage rates just kept rising. Still, like many would-be sellers, she knew that if she and her husband didn’t sell soon, they’d miss getting the highest price for their home.
“We were very aware of the rising interest rates,” she said. “We were thinking we should sell this house and buy now, or renovate so we can stay.”
Even as they considered expanding the three-bedroom townhouse where they live with their toddler, a dog and cat, they still eyed new listings on the market.
Earlier this month they found the perfect five-bedroom house in a nearby suburb. Once their bid was accepted, they raced to put their home on the market in a week. They couldn’t afford carrying both homes, so the offer to buy the new home was contingent on the sale of their current home by mid-May.
They listed their home for $315,000 last week and have already had more than 20 viewings, but no viable offers.
“Everything I know about the market has told me that the houses should be flying off the shelves,” said Vonk. “When things are not selling it is either the price or the product. It was a gut rehab a few years ago, I know it isn’t the product. So it must be the price.”
They are going to reduce the price and see if that brings in a buyer in time.
“I don’t want to lose out on the house I love,” Vonk said. But she added that she’s willing to sell her home for a little less than her dream price, just to be able to buy her next home.

Staying put, for now

When Kupferberg, the agent in Long Island, visited a potential seller’s home recently she told the owners it would sell fast, even if it did need a little work.
The three-level home with five bedrooms, a pool, and a tennis court was becoming too much to manage for the empty-nesters and Kupferberg knew it would be appealing to buyers willing to pay top dollar.
Still, the couple wavered on the decision to sell or stay put.
“They don’t want to miss the mark, they know their house would sell right away,” said. “But if they take the leap right now, where will they live?”
Kupferberg said she doesn’t have easy answers. Many of her would-be clients are homeowners with a large home who would like to downsize, but also want to stay in the community near their grown children or grandchildren, where their church or synagogue is, close enough to go to the same doctor. There aren’t many options.
“I don’t know what to tell people who want to sell but don’t have anywhere to go,” she said. “Unless they have another home or have a relative to stay with so they can benefit from what we’re seeing at the tail end of the selling market.”
Kupferberg said this particular couple was looking for a single-floor home in a vibrant, upscale gated community, but there were few options and not immediately appealing to them.
“There is nothing that is really meeting their needs,” she said. “They have nowhere to go if they sell, so for now they are staying put.”

The Office Hub and Spoke Model is Getting Another Look

The office hub and spoke model is nothing new. Before the pandemic, corporate occupiers experimented with having a central office in a downtown urban area with scattered satellite offices in nearby suburbs. The idea of a distributed workforce was already gaining steam long before anyone ever heard about the novel coronavirus. By the time the pandemic hit, remote and hybrid work had already risen.

We all know what happened next: The pandemic forced almost every white-collar employee to work remotely, and every company had to plan for the new hybrid work future. Suddenly, the term “hub and spoke” became front and center in the conversation around the workplace.

Some of that talk has since died down as workers begin to make the commute back to their regular offices, but that doesn’t mean the hub and spoke concept isn’t still on companies’ minds. “We haven’t seen many companies who have pulled the trigger yet on the strategy,” said Bryan Berthold, Global Lead of Workplace Experience at Cushman & Wakefield. “Businesses are trying to get aligned first with what’s happening with their workforce rather than aggressively going after a strategy that may not make sense in a few years.”

The office sector certainly has more clarity than it did in March 2020, but attitudes toward returning to the office remain cautious. The number one question for occupiers now is what their employees want. Companies are collecting data and insights on what’s happening with remote and hybrid work and return to the office, and many occupiers may not be ready to make any bold moves. Hub and spoke would, for the most part, entail acquiring new real estate assets, and some firms may not want to expand office footprints just yet.

But hub and spoke may still be on companies’ minds as some executives still aren’t keen on remote work. Hub and spoke would mean more in-person working, which execs are hoping for. The ever-controversial Elon Musk, Tesla’s CEO, is further evidence of some executive’s distaste for remote work arrangements. Musk recently sent an email to Tesla executives that demanded office workers return to their desks or leave the company. “If you don’t show up, we will assume you have resigned,” Musk wrote. Musk’s hardline stance against remote work is an extreme example of a return to office policy, but he’s not alone. Goldman Sachs CEO David Solomon has called remote work an “aberration,” and other big-name executives have challenged it, though many have backed down and caved into at least a hybrid work policy.

“Well-being for employees has actually been going downhill since the pandemic started,” Berthold said. “Workers say they like remote and hybrid, but it’s not working out very well for them to a certain extent.” Of course, employee well-being could be dropping for several reasons, including the persistence of COVID-19 or any number of socio-economic problems currently in the U.S. But Berthold questions whether remote and hybrid work itself isn’t causing problems, including increased loneliness, mental health issues, and burnout.

Big wheel
The hub and spoke model originally described a company with an HQ in the city and satellite offices in the suburbs. But the definition of hub and spoke has expanded during the pandemic. Executives are now asking how to access the best labor pool, and sometimes that means a “hub quarters” in a major metro area and then spokes in different national markets. A company could have a central office in Boston and open satellite offices in growing secondary cities like Austin, Texas, or Nashville. Big corporations like Google and Amazon are already doing this, but the idea has spread to smaller and mid-sized companies.

Utilizing the hub and spoke model means companies would think remote-first when hiring new employees, but focus on specific national markets in their strategy. So, if a company ends up hiring ten or more employees in Denver, why not open a satellite office there? The employees could still work on a primarily remote basis, but they’d at least have a branded, central location to meet that keeps them tied to the company.

This strategy could enable a corporate occupier to take advantage of population shifts and nationwide migration patterns. Secondary markets in the Sunbelt continue to grow in places like Phoenix and Atlanta, so placing satellite offices there allows companies to gain access to those ever-increasing and talented labor pools.

“The mantra could be ‘decide where to live first, and then decide where to work,’” said Adam Segal, Co-Founder and CEO of cove, a tenant experience and building operations tech provider. “It’s fascinating because this really changes things for the future of the office and, arguably, makes the office more valuable.”

Different spokes
Segal said his company set up a hub and spoke for a company in 2018, but they haven’t been asked about them as much lately. He thinks it’s because there’s been such a slow re-entry back to the office. “With the return to the office, we may not have clarity for another 2 to 3 years,” Segal said. “Anecdotally, we see people coming back, but many companies may sit tight for a while before deciding what to do with leasing and long-term planning for their portfolios.”

The companies that sit tight may decide to simply continue with hybrid and remote schedules without adding new real estate assets. After all, with hub and spoke, employees’ homes could be spokes. There may not be a need to spend on new real estate if employees can just work from home and still be productive, despite whatever problems remote work may cause. And with a new wave of virus cases nationwide and uncertainty about the future of the pandemic, the ebb and flow of return to the office and COVID fears are keeping some companies cautious.

Another way to enact a hub and spoke strategy is to use flex spaces as spokes. Some companies are doing this now; it’s a low-risk opportunity to test the market and get employees to work in-person together. Flex space leases are typically much shorter and require less commitment than a traditional office lease, so companies can shed the leases without much hassle if they’re not utilizing the space enough.

Real estate experts say the satellite offices have to be full of amenities for the hub and spoke model to work, and that goes for whether the spoke is in a nearby suburb, in a different national market, or in a flex space. Spokes can’t be in an isolated suburb where it takes a while to drive to lunch spots or other amenities. The location must be ideal. The satellite offices also need to give opportunities to the employees there, allowing them a chance to move up the ranks in the company instead of being a dead-end office cut off from the company’s main headquarters. Otherwise, companies would just churn through the labor pool in the satellite office’s area.

Rolling along
Using a hub and spoke strategy can help draw workers back into the office. The whole idea of the strategy is to service employees, and if satellite offices are opened closer to workers in the suburbs, it cuts down on their commute times. Offices in urban areas where employees tend to live closer to where they work have a higher return-to-office rate, according to a recent Wall Street Journal analysis of combined data from the U.S. Census Bureau and access control platform Kastle Systems.

Of the ten major U.S. cities with the most significant dip in office occupancy during the pandemic, 8 had an average one-way commute of more than 30 minutes. So, it stands to reason that cutting down commute times will draw employees back to the office. And one way to do this is by opening satellite offices closer to where employees live, including giving them access to flexible workspaces.

Whether or not the hub and spoke model truly comes to fruition is still up for debate. The strategy was utilized pre-pandemic, and while it gained popularity in the business media soon after COVID hit, not many companies have pulled the trigger on it yet. That doesn’t mean it won’t happen, though. The hub and spoke model can be enacted in many ways, and some company executives may be thinking about it differently.

Opening satellite offices in other, growing national markets can allow companies and landlords to lean into the population shifts and national migration trends. Companies could still maintain a presence in gateway metros like New York and San Francisco while catering to secondary cities. This idea could be brilliant as cities like New York and San Fran have struggled to increase office occupancy rates and have seen plateaus or declines in population levels.

Flexibility has become an essential aspect of the office sector since the pandemic started, and the trend of the distributed workplace has taken off. Hub and spoke could be another way for occupiers to service employees, cutting down on commute times and getting them back to in-person work. The hub and spoke model is nothing new, and while it may not be highly utilized at the moment, the potential is there. As office occupiers and landlords gain more clarity on the future of work, hub and spoke is on the menu of options to adjust to the new office workplace reality.

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