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Acouple of years into the COVID-19 pandemic, a California state flag appeared on a front porch near my parents' home in suburban Austin. The whole thing felt a little too on the nose, as if one household was trying to sum up all of the city's recent changes — the tidal wave of coastal dwellers, the skyrocketing home values, the maddening traffic — with a single banner.The flag is gone now, and so is the gold rush. Home prices and asking rents in Austin are down significantly from a year ago. Local Zillow listings are littered with price cuts. Real-estate agents who once doubled as bouncers at crowded open houses are now hiring ice-cream trucks to lure prospective buyers into properties.The sudden shift in Austin's real-estate market can be read in two ways. Look at it through one lens, and it's a cautionary tale in which FOMO-filled buyers irrationally bid up home prices, setting the stage for an inevitable bust. Look at it another way, though, and it's a success story of a growing city: Real-estate developers saw all those millennials and out-of-towners clamoring for a piece of Austin and answered the call, building tens of thousands of new homes in just a few years. The construction boom, combined with spiking mortgage rates, kept prices from spiraling further out of control. In other words, Econ 101 happened.This isn't a bust in the traditional sense — pretty much anyone who owned a home in Austin before 2020 is substantially richer today than they were a few years ago. But as other pandemic Zoomtowns continue to see increases in prices and rents, Austin stands alone in its change of fortune. The reversal has meant short-term pain for homebuyers who bought near the peak, <a target="_blank" href="https://www.businessinsider.com/home-sellers-summer-disappointment-mortgage-rates-house-prices-real-estate-2024-5">disappointed sellers</a> who now expect smaller windfalls, and homebuilders who are eager to offload their inventory. But letting some air out of the bubble will turn out to be a great thing for Austin in the long run. The slowdown, experts told me, is a sign of a healthy market, an example of how cities can dodge a true housing crisis by allowing developers to do what they do best: build, build, build.Housing in Austin has been through so many extreme distortions that nobody really knows what "normal" even means anymore. Long before offices shuttered and remote workers started pining for more space, Austin residents were sounding the alarm on the city's rising costs. New construction practically ground to a halt after the financial crisis in 2008, but as the economy recovered, the city's population exploded. No <a target="_blank" href="https://www.businessinsider.com/2020-census-fastest-growing-and-shrinking-metro-areas-2021-8">major metropolitan area in the US grew faster</a> between 2010 and 2020 than Austin, where the number of residents surged by 33% over the decade. Real-estate developers ramped up construction to meet the demand, but they couldn't get enough shovels in the ground to keep prices in check. The median cost of a house in the Austin metro area grew by 63% during that time, Zillow found, reaching $323,000 at the cusp of the COVID-19 crisis.Then the real boom began. To well-paid workers unmoored from their desks during the pandemic, Austin <a target="_blank" href="https://www.businessinsider.com/moved-from-san-francisco-to-texas-for-work-life-balance-2023-8">looked like paradise</a>: lower taxes, cheaper homes, and a thriving business ecosystem. Big-name tech firms like Oracle, Facebook, and Google endorsed the city, as did "<a target="_blank" href="https://www.businessinsider.com/manosphere-widening-ideological-gap-between-young-men-women-gender-genz-2024-2">manosphere</a>" figureheads such as <a target="_blank" href="https://www.businessinsider.com/elon-musk-austin-joe-rogan-biggest-boom-town-50-years-2021-2">Elon Musk</a> and <a target="_blank" href="https://www.businessinsider.com/celebrities-moved-to-texas-from-california-new-york-reasons-why-2024-8">Joe Rogan</a>, who urged others to follow in their footsteps. Austin was once again the <a target="_blank" href="https://www.austinchamber.com/blog/05-09-2023-migration">fastest-growing large metro</a> from 2020 to 2022, according to the Census Bureau, surging in population by 5.3%, or more than 120,000 people.As people flocked to the city, home prices exploded. I don't need to tell you that Austin got really expensive really fast, but the raw numbers are still stunning: The typical home price rose by nearly 56% in just a couple of years, Zillow found, surpassing $500,000 by the start of 2023. Homebuyers <a target="_blank" href="https://www.businessinsider.com/moving-to-austin-buy-a-home-texas-tech-jobs-2023-10">got swept up in bidding wars</a>, reasoning that even if the price ended up being steep, it would only climb higher if they waited. Things got so crazy that one large-scale builder started accepting bids for homes on its website, sight unseen. "That never happens," Keith Hughes, an Austin-based executive at the housing-research firm Zonda, told me. "It was that kind of frothy."I'd already moved out of Texas by that point, but I worried from afar that my hometown would meet the same fate as San Francisco, the poster child of the <a target="_blank" href="https://www.businessinsider.com/economic-inequality-housing-shortage-causes-2023-1">housing shortage and all its associated woes</a>. I feared that Austin would become known as a playground for the rich, a city where displacement and mind-boggling home prices marred the natural beauty that once made it such a draw. In my hand-wringing, though, I'd overlooked one crucial detail: Texas is better at building homes than almost anywhere else in the country.Austin-area builders immediately raced to meet the new demand, securing permits for about <a target="_blank" href="https://fred.stlouisfed.org/series/AUST448BP1FH">2,600 new single-family homes</a> in April 2021 alone, a 45% jump from the same month in 2019. All told, plans for more than 130,000 new housing units of all kinds were approved from 2020 through 2022. Once the paperwork goes through, it can take anywhere from a few months to a couple of years for homes to hit the market, so for a while, it didn't feel like any relief was on the way. That couldn't have been further from the truth.Consider the following trend: In the spring of 2022, more than 3,000 new listings were hitting the market each month, <a target="_blank" href="https://www.parcllabs.com/">Parcl Labs</a>, a real-estate-analytics company, found. By the following spring, the figure had surpassed 5,000. All told, Austin's housing stock has ballooned by more than 76,000 units since 2020, an 8.34% increase that includes single-family homes, condos, and townhomes. That's to say nothing of the <a target="_blank" href="https://www.businessinsider.com/rent-decline-fall-apartment-housing-market-landlords-tenant-lease-construction-2023-3">roughly 40,000 new rental apartments</a> that also opened their doors during that time. Now compare Austin's building blitz with San Francisco, which has added a measly 14,000 homes over the same period and grew its housing stock by less than 1%."It's pretty amazing when you think about it," Jason Lewris, a cofounder of Parcl Labs, told me. Considering the size of the Austin market, moving the stock of homes by nearly 10% is a colossal feat. "These are huge housing markets," Lewris added. "Austin wasn't small in 2019."Thousands of new homes weren't the only things pumping the brakes on Austin's runaway market. Mortgage rates reached record lows during the thick of the pandemic in 2021, making it easy for homebuyers to stretch their budgets by borrowing a lot of money for cheap. Then in spring 2022, the Federal Reserve started hiking interest rates to bring down inflation, and mortgage rates leaped. In October 2023, the rate for a typical home loan hit a 20-year high, making the prospect of <a target="_blank" href="https://www.businessinsider.com/housing-market-mistake-buyers-sellers-mortgage-rates-time-to-buy-2024-3">buying</a> — <a target="_blank" href="https://www.businessinsider.com/denmark-mortgage-rates-lock-in-effect-home-buying-selling-easier-2024-5">or selling, for that matter</a> — a lot less appealing. More expensive loans forced buyers to consider the possibility of paying several hundred dollars more each month for the same home, and many decided to play the waiting game instead. The result is homes are sitting on the market longer. These days, "there's no sense of urgency," Doreen Sidney, a local real-estate agent, told me. "There's no rush. The home that you saw two weeks ago, it'll still be there."The job market cooled as companies pulled back on hiring or laid off workers in the face of higher borrowing rates. Migration to Austin also slowed considerably. Between July 2022 and July 2023, more people moved out of the city's main county than moved in for the first time in two decades. Some departed for the suburbs or cheaper Texas locales like San Antonio — 20% of new San Antonians in 2022 had <a target="_blank" href="https://www.bizjournals.com/austin/news/2023/09/14/austin-sanantonio-migration-data-2023.html">moved from Austin</a>. Others, including some tech workers from places such as California, decided Austin wasn't all it was cracked up to be and moved on. "Austin is where ambition goes to die," one disappointed founder and angel investor <a target="_blank" href="https://www.businessinsider.com/tech-workers-moved-to-austin-regrets-2023-8">told Business Insider</a> last year.There was no shortage of ambition among Austin's homebuilders, however. Their efforts may have been focused on chasing all the profit that comes with a crush of demand, but they ended up doing what hopeful buyers had been praying for — bringing down home prices. The typical home price in Austin was down almost 4% in July compared with the same month in 2023, according to the Freddie Mac House Price Index, while prices across the US were up more than 4%. On the one hand, a single-digit drop like Austin's "is not a huge number," Sean Kelly-Rand, a Boston lender who works with home developers, told me, adding: "On the other hand, that's massive." Overall, Austin home prices are down more than 14% from the peak in 2022, according to Freddie Mac, and more than 18% according to Zillow.Homeowners and -builders don't like to see price drops — they want to watch their wealth balloon and reap the rewards of a market that's running red hot. But just like a collapse in prices is bad news for everyone, an unsustainable run-up in home values is also unhealthy. Companies don't want to move to a place where workers can't afford to live. Wannabe sellers might choose to stay in homes they've outgrown if they can't find anything else within their budget. Add up <a target="_blank" href="https://www.businessinsider.com/san-francisco-doom-loop-fix-american-city-housing-transit-2023-7">all these problems and you get San Francisco</a>. A crash in home prices would've also been bad news for Austin, sure, but that's not what's going on here. The vast majority of homeowners in Austin are still wealthier than they were before all this craziness, and local homebuilders made plenty of hay while the sun was shining. For that reason, Austin's slowdown isn't a doom signal — it's a dazzling success."It's nice to see the positive developments in Austin," Orphe Divounguy, a senior economist at Zillow, told me. "Austin should be a model for the rest of the country in terms of allowing builders to meet demand."Austin's long-standing advantages were on full display during the building boom: Sun Belt cities in the lower half of the US have traditionally been more permissive of growth, which enabled developers to mobilize when they saw the first signs of Austin's unprecedented spike in home values. And most of the new construction was concentrated in the suburbs, where there was plenty of space to build outward. Not all cities have the luxury of ample space, but they do have the power to cut red tape and make it easier to build more types of housing. When developers can get projects approved more quickly, they're more responsive to buyer demand, which prevents prices from getting out of hand. Relaxing the zoning laws, which tell builders what they can and can't build, allows developers to get creative and add multiple housing units to lots that might have traditionally allowed only single-family homes.Nobody watching the Austin market should be having flashbacks to the Great Recession. The market's cooling is less a disturbing sign of cratering demand and more a hopeful hint that the city can adapt to people's desire to call it home."I think Austin is going to be fine in the medium to long run," Jenny Schuetz, a housing-policy expert at the Brookings Institution, told me. "The fundamentals of Austin's economy are great, and it's going to continue to grow with jobs and population over time." In fact, easing the housing crunch will probably add to Austin's allure, which has always been at least partly predicated on being cheaper than the big cities on the coasts. The next challenge will be to avoid forfeiting this success — homebuilding is prone to cycles of booms and busts, and developers are already pulling back on new construction as they try to get their already-built units off their books. Home prices in Austin may be down year over year today, but it's not like there's a glut of empty homes like there was around the country in 2008. If building in Austin dries up, prices may very well resume their rise.Kelly-Rand, the Boston lender, thought about making inroads in Austin a few years ago when the building renaissance was in full swing. But ultimately, he decided not to — buyers' behavior was too frenzied for his taste, and prices seemed likely to come down when all those homes on the horizon actually got built. Nevertheless, Kelly-Rand told me he's still a believer in the Texas capital."Long term, I think Austin will be in an even better position," Kelly-Rand told me. "I think the right thing is happening in that developers are meeting demand."<a target="_blank" rel="" href="https://www.businessinsider.com/author/james-rodriguez">James Rodriguez</a> is a senior reporter on Business Insider's Discourse team.

How Austin's real-estate boom went bust

The Italian carmaker Pagani produces fewer than 100 vehicles a year, and each comes with a seven-figure price tag. The brand is known among gearheads for its attention to detail and air of exclusivity, qualities that Pagani hopes will translate to its next project: luxury condominiums.This spring, the company unveiled plans for Pagani Residences, a 70-unit condo development in Miami's North Bay Village. The automaker says the building will offer waterfront views and living spaces "meticulously curated" by its interior-design arm. Pagani condos, much like Pagani cars, start at about $3 million. But for people desperate to claim a piece of Pagani, the price tag may be no problem at all."I sold a unit to a guy that loves Pagani cars, and it just didn't matter to him what the location was," Carlo Dipasquale, a luxury-real-estate agent in South Florida, told me. "They could've built the building inland, anywhere in Miami, for all he cared."Pagani is the latest high-end car brand to lend its name to a shiny condo project along the Miami coast, joining the likes of Mercedes-Benz, Porsche, Aston Martin, and Bentley. Beyond automakers, there's a growing list of luxury brands hoping to use real estate to turn their cultural cachet into cold, hard cash. The owner of the trendy Italian eatery Carbone is partnering with developers on a high-rise; Dolce &amp; Gabbana also has one in the works. Even Elle magazine announced this spring that it would get in on the action with a condo project near Miami Beach, hoping to sell buyers on a lifestyle pulled straight from its glossy pages.When I heard of these plans a few months ago, I was tempted to dismiss them as the kinds of vanity projects that matter only to people with too much money and an insatiable hunger for status. Some of the announcements also struck me as a bit of a stretch. Magazines have a hard enough time peddling subscriptions these days — what makes them so sure they can sell condos? But as I talked with more people, it became clear that so-called branded residences are a global phenomenon that's here to stay, with developers laying the groundwork for branded towers in hot spots like Dubai, London, and New York. The hottest — and weirdest — trend in condominiums could actually tell us a lot about the future of real estate, not to mention our brand-addled brains.The concept of branded real-estate projects isn't new. New York's five-star Sherry-Netherland Hotel began welcoming long-term residents almost a century ago, and since then roughly 700 branded residences have graced skylines around the world. But the recent boom in these projects makes it clear that we've entered a new era: More than 650 branded projects are set to open over the next five years, a doubling that Riyan Itani, the founder of the specialty consulting firm Global Branded Residences, told me is "pretty much unprecedented in any sector." Condo developers these days are laser-focused on the bottom line, and they believe linking up with a well-known label will help them sell units faster and at higher prices. Brands like Elle or Pagani stand to collect some nice licensing fees, too. But that's not what they're really after."It's about outreach to a customer base beyond your core business," Itani said. Whether you sell handbags or golf clubs, "you're able to reach out in a different way and get brand loyalty."<div type="image" title="A digital rendering of a Pagani car parked outside the planned Pagani Residences condo development at sunset." height="1754" width="3200" msid="112521069" hostid="261" sizebytes="412604"></div>Most of these projects are tied to big, swanky hospitality names like Four Seasons or Ritz-Carlton, which set aside parts of their buildings as for-sale units. These arrangements feel like natural unions — if you're a big-money traveler with a fierce loyalty to the Four Seasons, for example, you might be inclined to purchase a home that promises the same level of comfort, service, and brand recognition. But a smaller slice of branded residences, about 20%, are partnerships between forward-thinking real-estate developers and companies that appear to have nothing to do with housing. These are the most attention-grabbing, and sometimes head-scratching, marriages: Lamborghini villas in Dubai and Spain; Nobu Residences in Toronto, named for the Japanese Peruvian restaurant favored by celebrities like Drake; a Miami tower branded by the fine crystal maker Baccarat that touts the tagline "Where life forever sparkles."It's not as if these luxury-goods companies suddenly morphed into real-estate experts. They typically license their names to seasoned development firms that front the money for these projects, shepherd them to the finish line, and ultimately bear the risk and reward of the actual condo sales. While the brands leave the number crunching and floor planning to the developers, they weigh in on design flourishes — Giorgio Armani himself apparently lends a personal touch to the interiors of Residences by Armani Casa in South Florida — and the condos' marketing campaigns. The contributions may appear comparatively small, but adding a well-known company to the marquee can deliver real results for the building's owner. Itani estimates that developers working on a branded residence spend an extra 10% to 15% of what they would spend on a standard condo project, since they have to pay for all the additional amenities and the right to splash the brand's logo across the building. But in crowded cities like New York or Miami, a recognizable logo can help a new building stand out. It also translates to cash: Itani told me units in branded towers go for a global average of 30% more than comparable non-branded units."It's kind of a no-brainer for a developer," Itani told me. "From a financial standpoint, it's a very profitable enterprise."No-brainers for developers aren't always a win for consumers (take, for instance, the recent <a target="_blank" href="https://www.businessinsider.com/why-are-new-homes-ugly-construction-builders-design-materials-architecture-2024-7">race toward the bottom in homebuilding</a>). But when it comes to branded residences, there are real selling points for buyers. Brand loyalists may be eager to welcome their favorite company into yet another corner of their lives. They're invited to consider what it might feel like to live inside a Lambo rather than merely speed down the coastal highway in one. There's a novelty aspect to these purchases, too. Plenty of people own luxury condos, but far fewer get to flex a prestigious name like Bentley or Porsche when directing visitors to their new pad. Developers load up these buildings with amenities to help discerning buyers feel like they're getting bang for their buck. Convenience waits around every corner: infinity pools and thermal spas, private boat slips, rooftop helipads. The Bentley Residences allows owners to park their cars in their units via a vehicle elevator. Villa Miami, the 58-story Miami condo project from Major Food Group, which owns a slew of exclusive restaurants such as the impossible-to-get-a-table-at Carbone, promises residents private dining experiences and VIP status at all its outposts. Hotels, meanwhile, offer to list branded condos on Airbnb and manage them when their owners aren't there, helping buyers make a return on investment even in their absence.The biggest attraction of these glitzy homes, however, may be peace of mind. Plenty of condos are vying for rich buyers' eyes and wallets, and they're not all created equal. But when a prestigious name like Aston Martin or Dolce &amp; Gabbana stakes its reputation on a project, buyers get some added assurance that the units will meet — or exceed — their lofty standards."These are all very well-known, established brands that people feel comfortable buying into," Laura Steinbruckner, a luxury agent in the Miami area, told me.Developers aren't likely to stray too far from this lucrative pitch. Luxury brands will probably always offer the biggest upside for builders, and even the "non-luxury" projects in the pipeline are still tied to respected brands like Hilton and are only slightly cheaper than the big-name buildings. But developers interested in branded residences have a plethora of other candidates, some of which could stretch the boundaries of the sector even further. The Elle project may seem out of left field, but Itani told me he's talking with another publication interested in making similar inroads. After all, magazines like Elle portray enviable lifestyles tied to fashion, celebrity, health, and beauty. All those things could translate to experiences within buildings, Itani told me. That's not to say all branded residences offer the same gilded path to profits. Car companies and fashion labels, unlike hotels, aren't known for their property-management chops, and there's a risk that buyers eventually tire of the marketing schtick. In a few years, you may well see some condo owners complaining that they got a Fiat level of service when they were promised a Ferrari. Rob Sykes, an associate principal at the global design firm WATG who advises companies on hotels and branded residences, told me developers shouldn't count on slapping a big name on a building and instantly reaping rewards. But he does expect to see the sector expand as non-hotel brands enter the market — just last year he was in conversations with a client who was interested in bringing a luxury jewelry brand (he wouldn't name names) into the fray.Itani was still amazed that two sectors in particular — tech and food — hadn't made more of a splash in the world of branded residences. There are a few big restaurant names, including Nobu, Major Food Group, and Cipriani, the famed Italian eatery. But Itani envisions a world in which many other newcomers turn corner-table regulars into corner-unit owners. He also sees an opening for ubiquitous tech companies like Apple or Google to sell loyal fans yet another product, one tricked out with all the latest tech and infused with their design ethos."If there are two things that a modern human being cares most about, it's what they're putting in their mouth and what phone they've got in their pocket," Itani told me. "So I would expect to see those two elements represented."<a target="_blank" rel="" href="https://www.businessinsider.com/author/james-rodriguez">James Rodriguez</a> is a senior reporter on Business Insider's Discourse team.

The next big status symbol in real estate

<ul class="summary-list"><li>The growing ranks of boomers aged 65-plus could spark a boom in the senior housing market.</li><li>Demand for senior housing is expected to surge 50% by 2040, Capital Economics estimated.</li></ul>A big investment opportunity is brewing in one corner of the real estate market, thanks to a wave of <a target="_blank" class="" href="https://www.businessinsider.com/how-retirement-of-peak-boomers-could-affect-economy-social-security-2024-4">baby boomers</a> that are about to age into retirement, according to Capital Economics.The research firm pointed to the so-called "<a target="_blank" class="" href="https://www.businessinsider.com/what-will-happen-baby-boomer-homes-die-millennials-gen-z-2024-1">silver tsunami</a>," the moniker that's been given to describe the imminent surge of Americans over the age of 65 entering prime retirement age. It says this will drive strong demand for <a target="_blank" class="" href="https://www.businessinsider.com/cost-of-a-retirement-home-community-in-every-state-2019-7">senior housing</a> facilities, including assisted living, independent living, skilled nursing, and memory care.For real-estate investors faced with a prolonged slump in the <a target="_blank" class="" href="https://www.businessinsider.com/commercial-real-estate-office-debt-investing-outlook-blackstone-jon-gray-2024-11">commercial real estate</a> space, senior housing offers an enticing alternative, wrote Imogen Pattison, an assistant economist at Capital Economics."With an <a target="_blank" class="" href="https://www.businessinsider.com/baby-boomer-gen-z-millennials-economy-housing-job-market-stocks-2024-2">aging population</a>, senior housing has a clear long run structural demand driver pointing to further growth in the sector. Our analysis shows rent prospects appear strong on the back of undersupply and solid wage growth," Pattison wrote. "That makes senior housing a compelling option for investors looking to break away from traditional property investment."The 65-plus population is on track to grow 30% over the next 16 years, encompassing 80 million Americans by 2040, according to estimates from the US Census Bureau.<div type="image" title="Graph showing number of Americans over age of 65" height="964" width="1396" msid="115427149" hostid="261" sizebytes="21546"></div>Meanwhile, around 11% of those over the age of 65 are currently living in a form of senior housing, according to the American Senior Housing Association. Assuming that percentage holds steady, that implies demand for senior housing will grow 50% over the next 16 years, per Capital Economics' analysis, up from 6 million in 2023 to 9 million in 2040.Rents, meanwhile, are seeing a strong uptrend, thanks to the supply of senior housing growing tighter after the pandemic. The sector posted more than 5% year-per-year rent growth in 2023, nearly double its 20-year average, the firm added.<div type="image" title="Chart showing senior housing rent growth" height="1001" width="1413" msid="115427143" hostid="261" sizebytes="26652"></div>That puts the senior housing sector on track to see average annual returns of 13% for the next four years, the firm estimated. Yearly returns are also set to peak in 2026 at around 16%, it added, more than triple the 4.5% yearly growth expected in 2024."We expect continued tight supply to bolster rents over the next year or so," Pattison added. "Taken together, strong capital value growth and income returns mean the sector looks relatively attractive compared to the other real estate sectors."The <a target="_blank" class="" href="https://www.businessinsider.com/commercial-real-estate-office-outlook-fire-sales-apartment-conversions-housing-2024-10">commercial real estate</a> space has been challenged in recent years, with the demand for offices being weighed down by work-from-home trends while borrowing costs rise in the sector. That means the most troubled office buildings could see a wave of fire sales and conversions, potentially sparking steep losses for property owners, real estate experts told Business Insider.

A 'silver tsunami' of retirement-age baby boomers is creating a big opportunity for real-estate investors, research firm says

<ul class="summary-list"><li>Commercial real estate has struggled post-pandemic, with office values tanking as remote work persists.</li><li>But there's been huge growth in data centers, says Aetos Capital Real Estate CEO Scott Kelley.</li></ul>Commercial real estate has struggled post-pandemic, amid tight financial conditions and falling prices. But there's one corner of the industry that's soaring above other property sectors: data centers. "There continues to be an almost unquenchable demand for data center capacity," Scott Kelley, CEO of Aetos Capital Real Estate, said in <a target="_blank" class="" href="https://www.bloomberg.com/news/videos/2024-08-29/aetos-ceo-data-centers-are-the-only-bright-spot-in-cre?srnd=phx-markets">a Thursday interview with Bloomberg</a>.Data centers — the infrastructure at the heart of the AI boom — have seen outsize growth, with the size of market doubling in four years, according to <a target="_blank" href="https://www.us.jll.com/en/trends-and-insights/research/na-data-center-report">data from JLL</a> released Tuesday.Vacancy at colocation data centers has fallen to a record low of 3%, and data center construction has increased by sevenfold in the last two years, the report says.The rapid growth of data centers across the US comes as the commercial real estate market, more broadly, has struggled since the pandemic. Office vacancies are high, and offices in central business districts have seen their values sink 52% from their peak, MSCI Inc. data shows.Retail, meanwhile, is stabilizing, hitting a five-year low point for vacancy at around 4%, but is still hard-hit by high interest rates, like the rest of the industry."If you want to go by category, offices got issues, retail has got issues, increasingly apartments do, to some extent, but data centers have just been on fire," Kelley said.The commercial real estate market has over $900 billion in debt set to mature this year, according to Bloomberg. Once that debt hits maturity, it will have to be refinanced at higher rates and possibly lower property values.Kelley said people have been anticipating this commercial real estate crash, but it hasn't come as quickly as expected."People have been — us included — anticipating this distressed wave of real estate, which has not come as quickly as folks thought. But it's also inevitable, just because the refinancing rates are totally disconnected from the underwriting of a bunch of these properties," Kelley said.He says regulators don't want to cause a banking crisis during an election year, so they're waiting until after the election to tighten the screws on local and regional banks that "extend and pretend" troubled commercial property loans.Even with such high demand for data centers, he sees even bigger opportunities coming for real estate as a result of AI.He says his company is working "to really synthesize the information in a way to help you make not just good commercial judgments but informed commercial judgments," Kelley said."We're focused on places we can add value," he said.

There's one bright spot in commercial real estate amid an 'inevitable' wave of distress, CEO says

<ul class="summary-list"><li>Jonathan Yarton is a real-estate agent who helps buyers and renters find spots in the Hamptons.</li><li>He says the rental market is booming and he sees premium rentals go for up to $1 million a month.</li></ul>This as-told-to essay is based on a conversation with <a target="_blank" href="https://www.instagram.com/jonathanyarton/?hl=en">Jonathan Yarton</a>, a 27-year-old real-estate agent from Rochester, New York. It's been edited for length and clarity.I've been a real-estate agent in New York City, Long Island, and the <a target="_blank" href="https://www.businessinsider.com/what-is-the-hamptons-really-like-in-summer-disappointing-photos-2022-7">Hamptons</a> for five years. I'm also on the second season of the HBO show "<a target="_blank" href="https://www.businessinsider.com/a-selling-the-hamptons-broker-shares-why-now-is-the-best-time-to-buy-2022-11">Selling the Hamptons</a>," and I'm the founder of <a target="_blank" href="http://jyarton.substack.com">Finding Space</a>, a weekly newsletter of the trends I'm seeing in real estate.Six months into my career, the COVID-19 pandemic hit. I started helping people find <a target="_blank" href="https://www.businessinsider.com/hamptons-home-rental-glut-summer-real-estate-market-2023-6">rentals in the Hamptons</a> as a way to leave the city. I'm also familiar with the Hamptons from visiting with friends.<div type="image" title="a man sits on a chair on the beach" height="1080" width="1440" msid="111284192" hostid="261"></div>Two camps of people go to <a target="_blank" href="https://www.businessinsider.com/hamptons-ny-real-estate-guide-eat-shop-stay-party">the Hamptons</a>. Some go to retreat and get away from the world, and the other group goes to be around all the people. Both are valid reasons, but you should be informed before you visit, rent, or buy.<h2 id="25e6d8be-ac70-4843-b139-daaf45f506cd">The rental market is on fire right now</h2>Inventory for buyers is pretty low in the Hamptons. We're seeing a lot of the market move over $5 million, and I'm seeing more cash deals for those properties.This summer's rental market is hotter than it's been in the last few years. I've rented to clients who have paid $50,000 for a month and clients who have paid over $100,000 for a month. The ultra-premium market can cost $1 million a month.On the lower end, you do see people renting for just weeks. Due to the 5% tax on rentals under 30 days, we see people renting longer just to avoid that.Once the borders opened back up after the pandemic, a lot of people ran to Europe. Now, I'm seeing a renewed interest in the Hamptons, even from people not based in NYC, which has been cool. I've even gotten some calls from clients in the UK.<a target="_blank" href="https://www.businessinsider.com/kyle-from-summer-house-loveryboy-hard-teas-grew-38-million-brand-2023-2">Reality TV</a> is giving international exposure to the Hamptons lifestyle, making people more curious to visit, but certain areas are better for visitors than others.<h2 id="7ef47269-e302-468b-b988-84c72efc8e8b">Sagaponack is my favorite spot</h2><a target="_blank" href="https://www.businessinsider.com/photos-third-most-expensive-zip-code-in-us-sagaponack-hamptons-2022-8">Sagaponack</a> is quiet, the houses are gorgeous, the lot sizes are the biggest, it's the most low-key, and there isn't everyday traffic like in Southampton or East Hampton. <a target="_blank" href="https://www.businessinsider.com/jimmy-fallon-hamptons-home-2011-6">Jimmy Fallon has a house out there</a>, which put it on my radar.Some of America's most private people live in Sagaponack. It's the kind of place where, if you're driving by, you'll miss it. It's not super lively, which is great for celebrities.Sagaponack is my No. 1 recommendation if you want to be away from the crowds and remain exclusive while having access to the beach and East Hampton.<h2 id="04daef17-e9e0-4765-98c6-85836f0bc639">East Hampton has a bit more to do</h2>People really gravitate toward East Hampton. There's just a little more life there, with restaurants, designer stores, and things to do.Sag Harbor has an old fisherman-architecture vibe and feels a little more like a small town, which I love. There's something very charming about that, especially in the Hamptons, which can feel a little commercial. Every time I'm in Sag Harbor, I feel the local energy. The average house price depends but can range from $2 million to $25 million.Amagansett is nice, too, but it's a little far out. Many people are looking for access, and access from Amagansett is tough, especially when you get onto the main strip headed toward Montauk.In 2024, you would expect cell service to be top-notch, but it's not what you think it is. You really have to stick at your house out there. Some people love that.If you're looking to rent in Amagansett, you should rent at a resort, and if you're looking to buy, you should buy something with a lot of amenities since you're farther away from the main activities.<h2 id="6203dd84-e39c-40e0-a512-8f61cd08445a">Southampton is the best for retirees</h2>Southampton has the name power and the big restaurants. It also has communities with pools, and your lawn, landscaping, and house color are all taken care of. Keeping up with an estate is a lot of work. In these communities, life becomes the vacation that you always wanted it to be.Southampton is also a good option to be closer to NYC. For celebrities looking to make it a little faster to the Hamptons, Southampton is where they go; if they're looking for more activities but a little more off-the-beaten-path, East Hampton is where they end up.<h2 id="d34ddd4b-cd7b-4643-be29-11e7905feeaf">These are the Hamptons hot spots for summer 2024</h2>I always rave about this Mediterranean-inspired restaurant in East Hampton called <a target="_blank" href="https://www.ehpresort.com/sisi">Sí Sí</a>. I love it. The food there is fresh, you get incredible sunsets, and then at night, it turns into a really fun party. It's absolutely one of the best places to be.Then there's <a target="_blank" href="https://www.gurneysresorts.com/montauk">Gurney's</a> in Montauk. It's well-known, and Sunday nights at Gurney's will always be popular. People like <a target="_blank" href="https://www.thesurflodge.com/">Surf Lodge</a> in Montauk, too, but it's a hit or miss for me.In Sag Harbor, the place to be is <a target="_blank" href="https://lebilboquetsag.com/">Le Bibloquet</a>. People just eat that restaurant up. It's a staple out there.<a target="_blank" href="https://www.toppingrosehouse.com/dine/">Topping Rose</a> in Bridgehampton is very nice for something a little more low-key. There's also this restaurant called <a target="_blank" href="https://almondrestaurant.com/lens_galleries/bridgehampton/">Almond</a>, with LGBTQ+ owners. As a gay man, when I was looking for a community out east, I found it at Almond, which was a very happy surprise.Did you rent a house in the Hamptons this summer and want to share your story? Email Lauryn Haas at lhaas@businessinsider.com.

The Hamptons are back. Here's where people want to be this summer, from a real-estate agent.

<ul class="summary-list"><li>The Texas housing market has cooled after a frenzy of activity during the pandemic.</li><li>Boomtowns like Austin are seeing home prices drop, while fewer people are moving to the state.</li></ul>Texas was not all what it cracked up to be, according to Peter Hoholick, a native Californian who moved to Austin in 2021 on rumors that a cheaper, more laid-back lifestyle was in store.The move fell short of Hoholick's expectations. The <a target="_blank" class="" href="https://www.businessinsider.com/texas-heat-wave-weather-costs-economy-workers-jobs-2023-7">weather</a> was "miserable," with southern humidity and temperatures trailing into the triple-digits during the summer. The <a target="_blank" class="" href="https://www.businessinsider.com/cost-of-living-texas-cities-prices-housing-medical-energy-2023-9">cost of living</a> was comparable to that of California, though the pay, he felt, was lower.The tense, conservative-leaning political climate is what broke him. When Roe v. Wade was overturned, Hoholick made the decision to head back to California. His quality of life has "vastly" improved, he told Business Insider in an interview."I was young and dumb at this point in time," Hoholick said of his brief stay in Texas — around 13 months. "I would never entertain the idea of moving back."He isn't alone. Though some towns still <a target="_blank" class="" href="https://www.businessinsider.com/inside-fastest-growing-city-in-the-us-celina-texas-2024-6">attract a good deal of interstate movers</a>, a growing number of Americans have soured on the Lone Star State, with interest in moving to Texas cooling, while <a target="_blank" class="" href="https://www.businessinsider.com/where-people-are-moving-to-and-moving-from-usps-data-2023-5#1-katy-texas-16">interest in moving out has risen</a>. The shift in attitudes is an indicator for the state's housing market, which boomed during the pandemic.The weather is hot and the political climate too charged for some, but the biggest reason the scramble for Texas may be over is simply because living there is way more expensive than it used to be, real estate experts and realtors in the state told BI.The downbeat feelings are already evident in the state's migration and housing data. While Texas gained 668,000 new residents between 2021 and 2022, it also lost nearly half a million people, with 494,077 people <a target="_blank" href="https://www.businessinsider.com/leaving-texas-political-freedom-property-taxes-housing-costs-2023-11">moving out of state that year</a>, according to the US Census Bureau.That small-scale exodus appears to be taking place in what used to be Texas' most popular boomtowns. Dallas has seen a slight <a target="_blank" class="" href="https://www.census.gov/data/tables/time-series/demo/popest/2020s-total-cities-and-towns.html">population decline</a> over the past several years, with the city losing around 5,000 people from mid-2020 to mid-2023, Census data shows.<a target="_blank" class="" href="https://www.businessinsider.com/austin-home-prices-falling-texas-mortgage-rates-housing-crisis-success-2024-9">Austin</a>, meanwhile, is the fifth most moved-out of city in the US year-to-date, according to an <a target="_blank" href="https://www.pods.com/blog/moving-trends">analysis</a> from the moving firm PODS, with the town <a target="_blank" class="" href="https://mailchi.mp/austintexas.gov/austin-slips-out-of-top-10-list-of-largest-us-cities?e=0a5bb73be8">no longer considered among the top 10 most populous cities</a> in the US.Texas realtors also say it's a much cooler climate for buying and selling a home, thanks to weaker demand. Median home prices in Texas have fallen around 7% from their highs in mid-2022, according to data from Redfin. The decline is an outlier compared to the broader US housing market, which is still prices hovering around record highs.In 2022, homes for sale in Texas were being scooped up in a matter of days, but it's now taking months for sellers to find a buyer, according to James Willoughby, a real estate agent based in Austin.In some instances, Willoughby says he's encouraged sellers to slash prices by 20%-30%. According to Redfin, more than a third of <a target="_blank" href="https://www.redfin.com/state/Texas/housing-market#demand">homes in Texas saw a price drop</a> in August."We had such an avalanche of buyers moving here from elsewhere and not that many people selling. That's how we got into the craziness that we got into several years ago," he said of the Texas housing market during the pandemic, adding that he's seen a "fair amount of people" looking to move out of the state in the past year.William Wheeler, an Amarillo-based real-estate agent, says the number of clients who are looking to move out of Texas is "pretty equal" to the number of clients looking to move in."We have done a lot of price reductions, more price reductions than normal," he added.Price cuts suggest that housing markets like Austin and Dallas are likely approaching a bottom, according to Redfin's chief economist Daryl Fairweather, though she noted that the trend wasn't uniform across the state."The boom cycle's kind of coming to a close," Fairweather said.<h2 id="9d645e44-b331-4da0-b652-00cbb2fbcaea">Waning affordability</h2>When the pandemic struck, Americans <a target="_blank" class="" href="https://www.businessinsider.com/moved-to-texas-pandemic-migration-boom-sunbelt-austin-housing-crisis-2022-1">flocked to Texas</a> in search of cheaper living relative to other metropolitan areas, Fairweather says.While agents say they're seeing prices come down faster than other parts of the country, they're also coming down from a higher peak after the housing feeding frenzy that took place during the pandemic.In March 2020, the median home price in Texas was $253,600, around 20% lower than the national median of $303,577 at that time.Since then, home prices in Texas have shot up 37%, with the median price clocking in at $348,300 in August, Redfin data shows.<a target="_blank" class="" href="https://www.businessinsider.com/florida-housing-market-sales-weather-climate-change-retirement-pandemic-costs-2024-9">Similar to states like Florida</a>, Texas has been in the path of many extreme weather events in recent years, sending home insurance rates skyrocketing. <a target="_blank" class="" href="https://www.lendingtree.com/insurance/state-of-home-insurance/">Premiums in Texas have soared 55%</a> from 2019 through March 2024, with the average homeowner in the state paying $4,647 a year, according to a report from LendingTree."That difference in affordability made it worthwhile for people to move across the whole country and start a new life in Texas. But now, because home prices are so high, it's just not as attractive," Fairweather added.A higher cost of living broadly, combined with a weakening job market, could also be influencing the cooling interest in the state, she said.<a target="_blank" class="" href="https://fred.stlouisfed.org/series/CUURA316SA0">Consumer prices</a> in the Dallas, Fort Worth, and Arlington areas have risen 25% over the last five years, according to the Bureau of Labor Statistics.<a target="_blank" rel="noopener noreferrer" class="" href="https://fred.stlouisfed.org/series/IHLIDXUSTX">Job postings based in Texas</a> on Indeed, meanwhile, have dropped 28% from their highs in 2021.Samuel Cobb, an East Texas resident who's looking to move out of the state, said the cost of living had "blown up" since the pandemic. He and his wife hardly save anything, and are rarely even able to dine out at restaurants anymore, he added."We were no longer able to live there, couldn't get back there, couldn't afford to get jobs there or anything else, so they just pushed us out," he said of Austin. "We are basically struggling to afford to live anywhere at this point."Current and former Texas residents who spoke with BI also frequently cited the <a target="_blank" class="" href="https://www.businessinsider.com/leaving-texas-political-freedom-property-taxes-housing-costs-2023-11">extreme heat and political atmosphere</a> as key motivations to leave. But those issues are minor relative to things like economic growth and housing affordability, Fairweather says, which she described as two of the biggest factors that could determine if the Texas housing market picks back up.Hoholick, though, is fairly certain he'll never return to the state long-term. He recalled turning down a recruiter earlier this year for a job that would double his current salary, though the position was based in Austin."I could not stomach moving back there for any price tag," he said.Cobb, who hasn't moved out of Texas yet, also doesn't see himself coming back once he leaves. His only problem is selling his home, which has been on the market for over two months."We made a decision in August or July to move, and now we're like, now what the crap we're going to do? We want to get there. We're tired of the Texas heat, tired of Texas politics," he said. "So we're definitely feeling stuck right now."

Falling home prices and fed-up residents show the Texas housing boom is slowing

<ul class="summary-list"><li>A real estate boss expects at least 500 banks to fail or be taken over in the next two years.</li><li>Scott Rechler, CEO of RXR, said the maturing of commercial real estate loans would hit smaller lenders.</li></ul>Hundreds of American banks will collapse or be taken over by 2026, a top real estate executive predicted."I think there's going to be … 500 or more fewer banks in the US over the next two years," RXR CEO Scott Rechler said in a white paper <a target="_blank" href="https://fortune.com/2024/03/05/top-real-estate-mogul-500-fewer-banks-next-two-years-failures-consildation/">seen by Fortune</a> ahead of publication."I'm not saying they're all going to fail, but they're going to be forced into consolidation if they don't fail."The US has about 4,000 banks, per the Federal Deposit Insurance Corporation, meaning the loss of 500 would represent about a 12% decline.Rechler rooted his bleak forecast in the fact that more and more commercial real estate (CRE) loans will mature in the coming years, resulting in a "slow-moving train wreck" for smaller banks.Regional banks are key lenders to the CRE sector. It's been hit by higher interest rates that have depressed asset prices, the remote-working boom that's curbed demand for office space, and a credit crunch as lenders pull back.CRE developers also rely heavily on debt, and many face the prospect of having to refinance their loans at much higher rates this year and next.The regional banking industry has also been struggling in recent years. <a target="_blank" href="https://www.businessinsider.com/silicon-valley-bank-failure-what-happened-bank-run-explained-2023-3">Silicon Valley Bank</a>, <a target="_blank" href="https://www.businessinsider.com/signature-bank-shut-down-by-regulators-depositors-bailed-out-2023-3">Signature Bank</a>, and Silvergate Bank folded last spring after worries about their health spurred a wave of deposit withdrawals.Meanwhile, <a target="_blank" href="https://www.businessinsider.com/new-york-community-bank-nycb-shares-turmoil-ceo-internal-controls-crisis-2024-3">New York Community Bancorp's stock plunged</a> 60% in five days earlier this year after the lender set aside over $500 million to cover bad loans.The catalyst for the banking and CRE woes was the Federal Reserve hiking its benchmark interest rate from nearly zero at the start of 2022 to north of 5% by last summer to cool inflation.The sharp rise in rates slashed the value of regional banks' mortgage and fixed-income portfolios, stoking concerns about their stability among depositors.Rechler's warning of widespread bank closures contrasts with JPMorgan CEO Jamie Dimon's recent <a target="_blank" href="https://www.businessinsider.com/jamie-dimon-commerical-real-esate-crisis-soft-landing-economy-jpmorgan-2024-2">description</a> of the bank scandals to date as products of "idiosyncratic problems" at particular lenders.

A real estate CEO predicts hundreds of banks will fail or be taken over by 2026

<ul class="summary-list"><li>Russia's economic woes are creating opportunities for investors from the UAE to put money to work. </li><li>Traders in the Gulf state have ramped up business in Russian oil and gold markets, <a href="https://www.wsj.com/world/russia/u-a-e-cashes-in-on-russias-economic-woes-52700157" target="_blank" rel="noopener">the WSJ reported</a>. </li></ul>Russia's difficult economic situation has resulted in deepening ties between the nation and the United Arab Emirates, which is seeing a cash from the warring country flood into its markets and economy. That's as sanctions and trade restrictions have <a href="https://markets.businessinsider.com/news/currencies/russia-economy-putin-sanctions-markets-currency-labor-recession-emigration-2023-7">weighed heavily on Russia's economy</a>, cutting it off from <a href="https://markets.businessinsider.com/news/currencies/russia-accuses-us-of-stealing-cash-gold-reserves-sanctions-ukraine-2022-10">billions of its foreign reserves</a> and crimping its energy trade. But Russia is still selling plenty of oil, offering hefty to discounts to "friendly" nations who are gorging on cheap Russian crude. The markdowns have led UAE traders to snap up more discounted Russian oil and gold than ever before and ushering in a huge amount of wealth to the Middle Eastern nation.The UAE purchased a record 60 million barrels of Russian oil last year, according to Kpler data cited by the <a href="https://www.wsj.com/world/russia/u-a-e-cashes-in-on-russias-economic-woes-52700157">Wall Street Journal</a> on Monday. Meanwhile, its purchases of Russian gold soared to $4 billion from February 2022 to March of this year, up from just $61 million in 2021, ImportGenius data shows. Meanwhile, Russians fleeing their country amid Putin's war in Ukraine has resulted in the UAE seeing an influx of immigrants, among them wealthy Russian oligarchs, who are flooding the local market with cash and investment capital. Foreign currency flowing into the country has grown about 20% per month since May of last year, Capital Economics data shows.Wealthy Russian immigrants are also fueling Dubai's hot housing market. Russians were the third-largest group of real estate buyers in Dubai over the last quarter, the real estate firm Betterhomes told the Journal, up from the ninth-largest group in 2021. Russia's economy meanwhile is in a state of turmoil. <a href="https://markets.businessinsider.com/news/commodities/russia-oil-gas-prices-revenue-budget-deficit-widens-ukraine-war-2023-2">The nation's oil and gas revenue has crashed about 50%</a>, Russia's finance ministry said in February. The <a href="https://www.reuters.com/markets/europe/russian-budget-deficit-narrows-42-bln-after-slight-surplus-may-2023-06-06/">Kremlin is also grappling with a $42 billion budget deficit</a> as it tries to square the growing costs of its "special military operation" in Ukraine.Experts say the shift in capital from Russia to neighboring countries like Poland and further afield to places like the UAE will continue over the long run as trust in Putin to better the lives of Russian citizens deteriorates. <a href="https://markets.businessinsider.com/news/stocks/russia-economy-stock-market-putin-ukraine-war-moscow-investment-sanctions-2023-8#:~:text=The%20functioning%20of%20Russia's%20stock,nowhere%20as%20Moscow's%20economy%20spirals.">Wealthy oligarchs and everyday Russian workers likely aren't coming back</a> to the nation even after war in Ukraine ends, two Yale researchers told Insider.

Russia's economic woes have brought a flood of cash and sparked a real estate boom in the UAE

<ul class="summary-list"><li>Some of the main winners of the AI boom will be stocks that are flying under the radar.</li><li>They include unflashy companies that provide electricity and data-center services.</li></ul>Picture a stuffy, windowless room with servers lined back-to-back. It's hot, with thousands of computers operating at once. Massive industrial-size fans are whirring in an attempt to cool things down.Across the road, ground has been broken on another data center. A whole industrial complex is popping up. The construction companies in charge can barely keep up with demand.The scene encapsulates the immense computing power required to fuel the artificial-intelligence boom. And while it's a far cry from the glitz and glamour of the <a target="_blank" href="https://www.businessinsider.com/nvidia-ai-3-trillion-club-apple-microsoft-jensen-huang-2024-6">megacap tech firms that dominate headlines</a>, some of the movement's biggest winners will be the companies working on the back end.This specifically means <a target="_blank" href="https://www.businessinsider.com/amazon-google-microsoft-ai-future-data-centers-monopoly-tech-industry-2024-6">data centers</a>, which will be increasingly key for storing information as AI becomes more mainstream. A growing chorus of analysts say they represent one of the most overlooked beneficiaries of the AI shift."This new architecture on gen AI, you basically have to upgrade around a trillion dollars of infrastructure," Ted Mortonson, a managing director and tech strategist at Baird, said. "And it's very early. If you use the baseball analogy, we're still probably not even at the start of the game."Consider that Goldman Sachs says <a target="_blank" href="https://www.goldmansachs.com/intelligence/pages/AI-poised-to-drive-160-increase-in-power-demand.html#:~:text=It%20will%20be%20stoked%20partly,to%20support%20data%20centers%20alone.">data-center power demand is set to surge 160%</a> by the end of the decade, with the bank noting that a <a target="_blank" href="https://www.goldmansachs.com/intelligence/pages/gs-research/generational-growth-ai-data-centers-and-the-coming-us-power-surge/report.pdf">ChatGPT-powered search sucks up to 10 times as much electricity</a> as a basic Google search."That kind of spike in power demand hasn't been seen in the US since the early years of this century," the Goldman analysts said in a report. "It will be stoked partly by electrification and industrial reshoring, but also by AI."Extending from there, the AI revolution could be a boon for a number of construction, utility, and electrical companies that make up the data-center landscape. Typically viewed as the market's most boring and defensive sectors, they could offer some of the most exciting investment opportunities.<h2 id="5c5a83f6-09ef-458e-a971-b3689a460860">The under-the-radar winners so far</h2>Companies are already <a target="_blank" href="https://www.businessinsider.com/microsoft-invest-billions-into-japan-ai-data-centers-2024-4">pouring billions</a> into creating data centers, and stocks related to their construction and power supply are seeing outsize gains.For starters, utilities represent the third-best-performing sector in the S&amp;P 500 over the past six months, out of 11 total. The group trails only the information-technology and communication-services sectors that feature pure-play AI juggernauts like Meta, Nvidia, and Alphabet. Normally, when growth stocks are leading the way, more defensive sectors like utilities perform the worst. That's not been the case.On a single-stock basis, <a target="_blank" href="https://www.reit.com/investing/reit-directory/digital-realty">Digital Realty Trust</a> — the only data-center real-estate investment trust listed on the New York Stock Exchange — has jumped 38% over the past year, while the <a target="_blank" href="https://www.globalxetfs.com/funds/dtcr/">Global X Data Center &amp; Digital Infrastructure ETF</a> has climbed 12%. Both those stock returns far exceed the 4% gain for the iShares Core US REIT ETF over the same period.Stocks that aid large electricity use have also had a strong 2024. Super Micro Computer — whose liquid-cooling technology has been called a <a target="_blank" href="https://www.marketwatch.com/story/why-supermicro-is-mopping-up-the-floor-with-the-competition-2d5e49b5">must-have</a> for AI hardware — is up 200% year to date. Nvidia may be the king of AI, but even it is "only" up 150% in 2024.Meanwhile, <a target="_blank" rel="" href="https://markets.businessinsider.com/stocks/vrt-stock?utm_medium=ingest&amp;utm_source=markets">Vertiv</a> — which also makes power and cooling equipment for data centers — is up 80% this year. Its 435% gain since Nvidia's initial blockbuster quarter 13 months ago marks an outperformance of 130 percentage points. The company's dominance recently earned it the label of "<a target="_blank" href="https://markets.businessinsider.com/news/stocks/vertiv-stock-price-outperforms-nvidia-since-earnings-ai-investing-rally-2024-5">the real AI darling</a>" from Bank of America.Globally, <a target="_blank" href="https://markets.businessinsider.com/news/stocks/grid-electrical-equipment-stocks-artificial-intelligence-investing-ai-stocks-140-2024-4">grid- and electricity-equipment stocks</a> in the US, South Korea, India, and Europe have rallied as much as 140% from levels at the start of the year, JPMorgan analysts said in recent research.Investors probably aren't used to seeing energy and utility stocks as a gold mine, given the sector's muted returns over the past decade, according to Travis Miller, an energy and utilities strategist from Morningstar. But strong growth is coming: The firm expects to see 10% growth each year in the utility sector over the next 10 years."I don't think investors fully realize the impact data-center growth" has, Miller told Business Insider.<h2 id="14a29008-f695-4870-8518-8e1044a9b127">Software being left behind</h2>While traditional hardware companies and their data-center and real-estate counterparts soar, software stocks have been largely left in the dust.Hardware-tech stocks have outperformed their software peers by 30 percentage points this year amid skyrocketing <a target="_blank" href="https://markets.businessinsider.com/news/stocks/ai-stocks-hardware-vs-softare-tech-performace-nvidia-tsmc-broadcom-2024-6">demand for graphics processing units</a>, data centers, and other physical computing equipment. It's a 180-degree reversal from the past decade when software firms — lauded for their high profit margins and asset-light business models — beat their hardware peers by more than 250 percentage points.Why the shift? Mortonson said it's difficult for software companies to build around AI."This gen-AI cycle is infrastructure, all infrastructure," Mortonson previously told BI in an interview, adding that cloud companies were set to spend over $200 billion this year on data centers. "That's the horsepower, or the engine, of Gen AI," he said.Additionally, on a comparative-valuation basis, traditional tech stocks associated with software look expensive relative to energy and data-center names. Utilities, meanwhile, look to be about <a target="_blank" href="https://affiliate.insider.com?h=13abc0801dba856d8620c5101b78c8d0e44eb689b027869821a0a466c3cb23e1&amp;postID=667c35c05c62a271edbcaed3&amp;postSlug=ai-stocks-to-invest-artificial-intelligence-data-center-energy-companies-2024-6&amp;site=bi&amp;u=https%3A%2F%2Fwww.morningstar.com%2Fstocks%2F4-utility-stocks-benefit-data-center-growth">5% undervalued</a>, Miller said.Still, despite recent outperformance, it may take years for the data-center boom to fully mature. The earliest data centers could significantly influence corporate earnings is 2028, Miller estimated. That means investors could be waiting awhile to fully realize the trade's potential.There's also the risk that the US doesn't build as many data centers as anticipated over concerns on whether we have the energy capacity to support them, he added.Despite that prospect, he still expects considerable expansion."It's been a generation since utilities had this much growth potential that we see during the next 10 years," Miller said.

The big winners of the AI boom are the most boring companies imaginable

<ul class="summary-list"><li>Celebrity real estate agent Josh Altman named five cities to buy homes in before the prices get too hot.</li><li>He said home prices in Atlanta, Dallas, Orlando, Phoenix and San Diego could "skyrocket."</li></ul>There are five US cities where home prices are poised to skyrocket, so people looking to get homes there should move fast, "Million Dollar Listing" <a target="_blank" href="https://www.businessinsider.com/josh-altman-real-estate-agent-million-dollar-listing-los-angeles-daily-routine">celebrity realtor Josh Altman</a> says.Speaking to the <a target="_blank" href="https://www.gobankingrates.com/investing/real-estate/million-dollar-listing-josh-altman-buy-in-these-cities-before-homes-become-unaffordable/">personal finance website GOBankingRates</a> in an article published on Tuesday, he said that predicting which cities would be good investments required examining their economic growth, population trends, and infrastructure developments.The five cities handpicked by Altman are Atlanta, Dallas, Orlando, Phoenix, and San Diego."These cities are booming with economic growth, rising populations, strong job markets, and great affordability," he told the outlet. "We see huge potential here."<h2 id="ba6651ba-eb08-441c-8655-33b38e446757">Atlanta</h2><div type="image" title="Atlanta, Georgia skyline" height="339" width="508" msid="111283198" hostid="261" sizebytes="32876"></div>Atlanta <a target="_blank" href="https://www.census.gov/quickfacts/fact/table/US,atlantacitygeorgia/PST045222">has a population of about 510,000 as of 2023</a>.Most of its residents are millennials, with its residents' median age being 33.6 years.The median value of a home in Atlanta is about $429,990, per <a target="_blank" href="https://www.redfin.com/city/30756/GA/Atlanta/housing-market">May data from real estate site Redfin</a>.It also has a <a target="_blank" href="https://www.businessinsider.com/atlanta-georgia-own-business-entrepreneurship-work-employment-careers-jobs-linkedin-2023-9">dynamic business environment</a>, with a <a target="_blank" href="https://www.linkedin.com/pulse/anyone-starting-business-10-metros-standouts-george-anders/">2023 analysis from LinkedIn</a> showing that Greater Atlanta had the highest number of people setting up their own businesses of all US cities.<h2 id="07f4e3f6-1ed6-495f-9e82-85cd3ceae5ee">Dallas</h2><div type="image" title="A picture of Dallas' skyline." height="1414" width="2121" msid="111283196" hostid="261" sizebytes="232572"></div>Dallas in north Texas has a <a target="_blank" href="https://www.census.gov/quickfacts/fact/table/dallascitytexas,US/PST045223">population of about 1.3 million</a> as of 2024.As with Atlanta, most of its residents are millennials, with its residents' median age being 33.1 years.The median home value in Dallas is <a target="_blank" href="https://www.redfin.com/city/30794/TX/Dallas/housing-market">about $499,900</a>, per Redfin, and has increased 20.7% year over year.Texas has received a <a target="_blank" href="https://www.businessinsider.com/eric-johnson-mayor-says-californians-moving-texas-big-reasons-2024-1">large inflow of residents</a> from other states, particularly California. Between 2021 and 2022, more than 668,300 people moved into Texas, according to state-to-state migration <a target="_blank" href="https://www.census.gov/data/tables/time-series/demo/geographic-mobility/state-to-state-migration.html">data</a> from the Census Bureau.Dallas' mayor, Eric Johnson, said in January that people are attracted to Texas by its relatively lower cost of housing and living and a better quality of life.Pengyu Cheng, a tech company program manager,<a target="_blank" href="https://www.businessinsider.com/eric-johnson-mayor-says-californians-moving-texas-big-reasons-2024-1"> previously told BI </a>that he moved to Texas from San Francisco with his wife and purchased a two-story home for $825,000.He said this was a fraction of what they could have paid in California, where they were renting a two-bedroom home for $3,100 a month.<h2 id="085baccd-41f1-4924-bd1e-5e2cb085768e">Orlando</h2><div type="image" title="Aerial view of Orlando skyline and reflection in Lake Eola." height="1413" width="2121" msid="111283201" hostid="261" sizebytes="351786"></div>Popular for its Disney World and Universal amusement park, Orlando has a <a target="_blank" href="https://www.census.gov/quickfacts/fact/table/orlandocityflorida,US/PST045223">population of about 330,000</a>, a 5.43% increase from 2020.The median age of its residents is 34.67, and homes have a <a target="_blank" href="https://www.redfin.com/city/13655/FL/Orlando/housing-market">median price of $407,440, per Redfin</a>. The median price has risen 8.7% year over year.The city is <a target="_blank" href="https://www.businessinsider.com/moving-to-orlando-florida-cheaper-homes-from-miami-california-ny-2024-2">luring people from its pricier neighbor, Miami</a>, <a target="_blank" href="https://www.businessinsider.com/why-are-people-moving-florida-home-prices-cost-of-living-2023-12">particularly young people</a> attracted by its lack of state income tax, good weather, and job opportunities.<h2 id="c5aba168-1386-459a-b512-de4a11545748">Phoenix</h2><div type="image" title="Phoenix, Arizona, Downtown Skyline Aerial." height="1361" width="2203" msid="111283206" hostid="261" sizebytes="431842"></div>Phoenix is the fifth-most populous city in the US, with <a target="_blank" href="https://www.census.gov/quickfacts/fact/table/phoenixcityarizona,US/PST045223">nearly 1.65 million residents</a>.The median age of its residents is young, at 34.4 years old. Houses have a <a target="_blank" href="https://www.redfin.com/city/14240/AZ/Phoenix/housing-market">median cost of $461,000</a>, per Redfin, a figure that has risen 5.5% year over year.The city is hot, not just in terms of its climate but also in terms of an inflow of new residents.<a target="_blank" href="https://www.businessinsider.com/moving-to-arizona-luxury-real-estate-phoenix-scottsdale-paradise-valley-2021-7">Young, wealthy people are putting down roots</a> here, attracted by the warm weather all year round and the bigger, more affordable homes.<h2 id="7bf1d7fb-9ec4-4400-8cbf-5e26a2094f35">San Diego</h2><div type="image" title="Aerial view of the Sunset Cliffs area of the community of Point Loma in the city of San Diego, California shot from an altitude of about 800 feet during a helicopter photo flight." height="1414" width="2119" msid="111283207" hostid="261" sizebytes="496940"></div>The quieter sibling of Los Angeles, the seaside city of San Diego has a <a target="_blank" href="https://www.census.gov/quickfacts/fact/table/sandiegocitycalifornia,US/PST045223">population of about 1.4 million</a> and is the US' eighth most populous city.The median age of San Diego residents is 35.8 years.Prices of homes in this city top this list, with the <a target="_blank" href="https://www.redfin.com/city/16904/CA/San-Diego/housing-market">median being $980,000</a>, a figure reflecting a 7.7% increase yearly, according to Redfin.But it's also true that housing in San Diego trends toward the pricier end. San Diego, along with four other Californian cities, was marked as "impossibly unaffordable," according to the <a target="_blank" href="http://www.demographia.com/dhi.pdf">2024 Demographia International Housing Affordability report</a>.If Altman's words ring true and prices here are set to spike more, serious buyers should lock their house purchases in soon.Altman didn't immediately respond to a request for comment from Business Insider, made outside normal working hours.

These are the 5 US cities you should buy a home in before you get priced out of the housing market, says 'Million Dollar Listing' real estate investor

<ul class="summary-list"><li>Evictions are rising in housing markets that saw big demand during the pandemic, according to data from the Eviction Lab.</li><li>Eviction filings have climbed 35% year-over-year in cities in America's Sun Belt. </li></ul><a target="_blank" href="https://www.businessinsider.com/why-apartment-rent-high-pandemic-big-cities-household-formation-roommates-2023-5">Rental housing in pandemic boom towns</a> has become so expensive that many areas are seeing a huge spike in evictions. According to data from the <a target="_blank" class="" href="https://evictionlab.org/eviction-tracking/">Eviction Lab</a>, a research group at Princeton University, evictions are surging in a handful of cities throughout the Sun Belt region of the US.Eviction filings are up 35% compared to pre-pandemic in metro areas tracked in the region. That's partly due to high rent prices, researchers said, fueled by big shifts in where Americans lived and worked during the pandemic, a trend that drove many renters to the Sun Belt. In Nashville, Tennessee, one such <a target="_blank" class="" href="https://www.businessinsider.com/pandemic-boom-towns-housing-market-slowdown-real-estate-agents-2022-8">boom town</a> in the Sun Belt, evictions have climbed 31% since 2019, Eviction Lab data shows. Fort Worth, Texas, another area that saw a big uptick in housing demand, saw evictions rise 25% in that time frame. Jacksonville, Florida, saw evictions climb 14%.US rent increases peaked at around 17% year-over-year in early 2022, with cities in the Sun Belt rising at the fastest pace in the country, according to <a target="_blank" href="http://Realtor.com">Realtor.com</a>."As the United States moves past the COVID-19 pandemic, low-income renters face an increasingly difficult housing market. The country lacks millions of units of affordable rental housing, and in those units that are available, a record number of tenants are paying well-beyond their means," the researchers at the Eviction Lab said in a <a target="_blank" href="https://evictionlab.org/ets-report-2023/">note</a> earlier this year.Rents, though, are now falling, with units in the <a target="_blank" href="https://www.businessinsider.com/falling-rent-price-locations-us-housing-market-supply-florida-texas-2024-5#:~:text=This%20US%20region%20is%20seeing,to%20fill%20vacancies%2C%20Redfin%20says&amp;text=Metros%20in%20the%20Sun%20Belt,subsided%2C%20leading%20to%20more%20vacancies.">Sun Belt seeing some of the steepest price drops</a> as vacancies pile up. Austin, Texas, reported one of the largest rent declines in the nation, with prices falling 6.6% on an annual basis in April. Meanwhile, rent prices dropped 5.9% in Nashville, Tennessee, and 5.6% in Jacksonville, Florida, according to real estate listings site <a target="_blank" href="https://www.businessinsider.com/falling-rent-price-locations-us-housing-market-supply-florida-texas-2024-5#:~:text=This%20US%20region%20is%20seeing,to%20fill%20vacancies%2C%20Redfin%20says&amp;text=Metros%20in%20the%20Sun%20Belt,subsided%2C%20leading%20to%20more%20vacancies.">Redfin</a>.

Soaring rents have sent evictions spiking 35% in pandemic boom towns

<ul class="summary-list"><li>This post originally appeared in the Insider Today newsletter.</li></ul>Hello! Apparently, wealthy corporate climbers have <a target="_blank" href="https://www.businessinsider.com/rich-young-men-herman-miller-eames-chair-trend-2024-4">a new obsession: a $7,000 chair</a>. The Herman Miller Eames lounge chair and accompanying ottoman have become the pinnacle of status for a certain group of rich, young American men.Now, onto the rest of this week's top stories.On the agenda:<ul><li>Want to buy a sports team? <a target="_blank" href="https://www.businessinsider.com/top-investment-bankers-leading-sports-mergers-acquisitions-and-investments">Call these bankers</a>.</li><li>The Queen of Airbnb promised an easy windfall. <a target="_blank" href="https://www.businessinsider.com/meteoric-rise-spectacular-fall-airbnb-queen-vacation-rentals-real-estate2024-4">Then it all came crashing down</a>.</li><li>How private equity sees profit in <a target="_blank" href="https://www.businessinsider.com/how-private-equity-is-reshaping-special-education-2024-4">the business of educating autistic kids</a>.</li><li>Your favorite LinkedIn influencer <a target="_blank" href="https://www.businessinsider.com/how-pr-firms-are-making-linkedin-ghostwriting-a-big-business-2024-4">might actually be a PR ghostwriter</a>.</li></ul>But first: Making sense of a big week of first-quarter results.If this was forwarded to you, <a target="_blank" href="https://www.businessinsider.com/subscription/newsletter/insider-today-sunday-edition">sign up here</a>. Download Insider's app <a target="_blank" href="https://www.insider.com/app">here.</a><div type="image" title="Meta CEO Mark Zuckerberg" height="1000" width="2000" msid="109667213" hostid="261" sizebytes="63224"></div><h2>This week's dispatch</h2>Big Tech takeawaysTesla, Meta, Microsoft, and Alphabet reported earnings last week. Here are the takeaways in 60 seconds.Tesla: Q1 results were <a target="_blank" href="http://businessinsider.com/tesla-stock-tsla-quarterly-earnings-call-report-live-updates-2024-4">worse than expected</a>, with the company missing both its profit and revenue estimates. But plans for <a target="_blank" href="https://www.businessinsider.com/tesla-stock-tsla-quarterly-earnings-call-report-live-updates-2024-4">a robo-taxi service</a> and a <a target="_blank" href="https://www.businessinsider.com/tesla-investors-cheaper-cars-soon-musk-said-earnings-stock-up-2024-4">more affordable model</a> got investors excited for the future. That's a big bet that there are lots of drivers who <a target="_blank" href="https://www.businessinsider.com/will-cheaper-tesla-lure-buyers-ev-demand-2024-4">want a Tesla but can't afford one</a>.Meta: Wall Street may have shown Tesla leniency, but <a target="_blank" href="https://www.businessinsider.com/tesla-meta-earnings-prove-power-of-musk-word-despite-promises-2024-4">Meta didn't enjoy the same leeway</a>. Despite reporting better-than-expected first-quarter earnings, weak guidance for the second quarter and outsized AI investments spooked investors. Mark Zuckerberg <a target="_blank" href="https://www.businessinsider.com/meta-q1-results-ai-investment-payoff-mark-zuckerberg-2024-4">preached patience</a>.Microsoft: AI spend was also the name of the game at Microsoft. The tech giant pledged to <a target="_blank" href="https://www.businessinsider.com/microsoft-plans-spend-more-ai-infrastructure-capex-earnings-azure-chips-2024-4">keep investing in the tech</a> as demand for its AI and cloud services continued to rise.Alphabet: Q1 results blew past expectations, notching a 15% year-over-year revenue bump. Alphabet also issued <a target="_blank" href="https://www.businessinsider.com/alphabet-issues-first-ever-dividend-beats-estimates-stock-buyback-2024-4">a $0.20 per share dividend</a> — its first ever — joining its Big Tech peers like Microsoft, Apple, and Meta, in the dividend club.<div type="image" title="A person in a suit talking on the phone." height="975" width="1300" msid="109667214" hostid="261" sizebytes="202756"></div><h2>How to buy a sports team</h2>Thanks to a rush of billionaires looking to buy teams, investment banks up and down Wall Street are tripping over each other to work on sports deals.With sports dealmaking on the rise, BI mapped out the top investment bankers — from the bulge brackets to the boutiques — helping steer these deals. The list includes top banks like Goldman Sachs, as well as smaller firms like The Raine Group.<a target="_blank" href="https://www.businessinsider.com/top-investment-bankers-leading-sports-mergers-acquisitions-and-investments">Meet the top sports bankers</a>.Also read:<ul><li><a target="_blank" href="https://www.businessinsider.com/top-private-equity-firms-investing-in-sports-teams-leagues-media-2024-4">20 private-equity firms making big moves in sports as teams embrace outside investors</a></li></ul><div type="image" title="queen holding key with Airbnb logo in front of a window" height="1000" width="2000" msid="109667215" hostid="261" sizebytes="295504"></div><h2>The cautionary tale of Tulsa's Queen of Airbnb</h2>Post-pandemic, property manager Dani Widell promised investors an easy windfall from what was supposed to be Tulsa's Airbnb gold rush.Instead, her Airbnb empire came crashing down — and her subjects were left to pick up the pieces.<a target="_blank" href="https://www.businessinsider.com/meteoric-rise-spectacular-fall-airbnb-queen-vacation-rentals-real-estate2024-4">Where things went wrong</a>.<div type="image" title="An illustration of a child sitting at a desk inside a building." height="1000" width="2000" msid="109667216" hostid="261" sizebytes="208674"></div>PE firm. New Story has purchased other local school chains, creating what it calls one of the largest special-education companies in the US.To some, private equity's business model appears antithetical to special education. It's a concept that has former staff, researchers, and US senators worried.<a target="_blank" href="https://www.businessinsider.com/how-private-equity-is-reshaping-special-education-2024-4">How private equity is reshaping special education</a>.<h2>LinkedIn ghostwriting is booming</h2>LinkedIn influencers are becoming more popular, with some amassing followings of millions of people. The platform's shift from uncool to in-demand has created a unique opportunity for crafty PR firms.Some firms are offering executives — or "thought leaders" — ghostwriting and editorial services. In some cases, PR pros manage all aspects of an exec's LinkedIn presence, from writing to analytics.<a target="_blank" href="https://www.businessinsider.com/how-pr-firms-are-making-linkedin-ghostwriting-a-big-business-2024-4">Inside the world of LinkedIn ghostwriting</a>.This week's quote:"I make it a point to visibly leave the office toward the end of the working day and to enforce strict rules around maximum working hours so that employees can enjoy work-life balance."— Finnish CEO Samu Hällfors on running a company<a target="_blank" href="https://www.businessinsider.com/finland-happiest-country-ceo-work-culture-2024-4"> in the happiest country on earth</a>.<h2>More of this week's top reads:</h2><ul><li>People who relocated and regretted it share <a target="_blank" href="https://www.businessinsider.com/relocation-regret-biggest-mistake-lesson-2024-4">the biggest mistakes they made</a>.</li><li>The "peak boomer" crisis <a target="_blank" href="https://www.businessinsider.com/gen-x-baby-boomers-savings-cant-afford-retirement-2024-4">might only get worse</a>.</li><li>A homebuyer's guide to <a target="_blank" href="https://www.businessinsider.com/homebuyers-real-estate-revolution-nar-lawsuits-new-rules-realtors-agents-2024-4">the real-estate revolution</a>.</li><li>America's men are working at <a target="_blank" href="https://businessinsider.com/us-men-working-less-recessions-employment-productivity-2024-4">much lower rates than they used to</a>.</li><li>Jamie Dimon thinks he knows why <a target="_blank" href="https://www.businessinsider.com/jamie-dimon-jpmorgan-wealth-income-inequality-economy-inflation-recession-housing-2024-4">people are so gloomy about the economy</a>.</li><li>China stopped taking our plastic. <a target="_blank" href="https://www.businessinsider.com/plastic-recycling-problem-america-waste-pyrolysis-big-oil-china-2024-4">Now America is drowning in it</a>.The Insider Today team: <a target="_blank" href="https://www.businessinsider.com/author/matt-turner">Matt Turner</a>, deputy editor-in-chief, in New York. <a target="_blank" href="https://www.businessinsider.com/author/jordan-parker-erb">Jordan Parker Erb</a>, editor, in New York. <a target="_blank" href="https://www.businessinsider.com/author/dan-defrancesco">Dan DeFrancesco</a>, deputy editor and anchor, in New York. <a target="_blank" href="https://www.businessinsider.com/author/lisa-ryan">Lisa Ryan</a>, executive editor, in New York.</li></ul>

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