—— U.S. Multifamily Deals Plunge 74%; TD Bank Faces $3.7B in Shorts; Gold Prices Hit 13-Month High; Over 100 Manhattan Luxury Homes Change Hands in Q1; Japan Runs Out of Land to Bury Infected Birds; GM Pays $1B to Buy Out 5,000 Workers; Blackstone Acquires UK Industrial Real Estate Firm
1. U.S. Multifamily Deals Plunge 74%
Though multifamily housing has been among the most popular real estate asset classes in recent years, new data shows the sector is cooling. According to the latest figures from CoStar, U.S. multifamily property investment in Q1 2023 totaled $14 billion—a 74% plunge from the same period in 2022.
In 2022, total U.S. multifamily transactions reached $184 billion, the second-highest total on record, though still 17.4% below 2021. The last two years have been some of the busiest ever for multifamily deals.
David Auerbach, president of Armada ETF Advisors, explained that transaction volume dropped primarily due to soaring interest rates, which had been near zero just a few years ago.
Yardi Matrix noted that declining multifamily sales may also stem from a surge in apartment supply—over 1 million rental units are currently under construction. In 2022, 325,000 units were added nationwide, with 425,000 more expected this year.
Since March 2022, the Federal Reserve has raised rates seven times, pushing the benchmark interest rate to between 4.75% and 5%.
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2. TD Bank Faces $3.7B in Shorts
In recent weeks, short sellers have ramped up positions against TD Bank, Canada’s second-largest bank. According to S3 Partners, total short positions have reached $3.7 billion.
The surge in short interest is tied to broader sector panic triggered by the collapse of three U.S. regional banks. Analysts believe that after a Canadian housing slowdown, many banks are beginning to show cracks.
TD, which is attempting a $13.4 billion acquisition of First Horizon Corp., is now the most shorted bank in the U.S.
In March, TD’s stock fell 11%, leading losses in the S&P Bank Index—proving short sellers right so far.
TD’s bid for First Horizon and concerns over Canada’s housing market may both be fueling short interest.
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3. Gold Prices Hit 13-Month High
On Tuesday, gold surpassed $2,000 per ounce for the first time since March 2022, edging closer to record highs. The rally comes as markets anticipate the Federal Reserve nearing the end of its rate hike cycle.
Recent data suggests the U.S. economy may be heading toward a recession, while the weakening U.S. dollar has also helped lift gold prices.
David Lennox, an analyst at Sydney’s Fat Prophets, said investor concerns over the U.S. economy and dollar have given gold a “safe haven” premium.
While gold doesn’t generate interest income, it remains an attractive store of value in the current market environment.
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4. Over 100 Manhattan Luxury Homes Change Hands in Q1
According to data from Olshan Realty, 334 properties priced over $4 million were sold in Q1 2023. While that’s down 21% from the same period in 2021 and 2022, it far exceeds the 245 luxury sales in Q1 2019.
Typically, wealthy buyers are less sensitive to interest rate changes. Still, even affluent buyers are increasingly hunting for discounts.
Corcoran Group broker Richard Ziegelasch noted that while wealthy individuals are not strapped for cash, they still care about getting value for money.
Among the homes sold in Q1, the final sale price averaged 8% below the initial asking price. The median luxury home price dropped 13% year-over-year to $5.65 million.
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5. Japan Runs Out of Land to Bury Infected Birds
NHK reports that Japan is running out of land to bury infected poultry following the country’s worst bird flu outbreak, which has also caused egg and chicken prices to surge.
While the bird flu outbreak is most severe in Europe, the U.S., and parts of Asia, the virus has recently spread to South America as well.
Egg prices have risen so sharply that companies like McDonald’s and 7-Eleven have paused sales of egg-based products or raised menu prices.
Egg and poultry price inflation has become extreme, with bird flu identified as the primary driver.
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6. GM Pays $1B to Buy Out 5,000 Workers
GM CFO Paul Jacobson revealed that the company will offer buyouts to 5,000 full-time employees, generating annual cost savings of $1 billion.
The voluntary buyouts represent 6% of GM’s 81,000 salaried global workforce and will help achieve half of the company’s $2 billion cost-reduction target. However, GM will pay $1 billion upfront for the buyouts in 2023.
In a Tuesday statement, GM said it does not plan additional layoffs for now, as thousands have already opted to leave voluntarily.
Over the next few years, GM plans to invest $35 billion in its transition to electric vehicles and launch 30 EV models by 2025. The CFO said the company aims to keep staffing lean in preparation for a potential recession.
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7. Blackstone Acquires UK Industrial Real Estate Firm
Blackstone, the world’s largest commercial real estate owner, plans to acquire UK-based Industrial Reit Ltd., whose share price has fallen 40% from its peak to a two-year low.
Industrial Reit focuses on small-to-mid-sized properties near cities. Industrial real estate is familiar territory for Blackstone, which began investing in the sector even before the pandemic accelerated e-commerce demand.
The acquisition values Industrial Reit at $825 million.
The UK continues to face a shortage of industrial real estate, giving landlords strong pricing power.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.