3 Things: Jara Capital acceptance into Project REAP, DFW home prices rose faster than other Texas Major Metro, SVB collapse and impact on real estate.

3 Things: Jara Capital acceptance into Project REAP, DFW home prices rose faster than other Texas Major Metro, SVB collapse and impact on real estate.

“Before anything else, preparation is the key to success.” - Alexander Graham Bell

MARCH EDITION

01. Jara Capital Acceptance into Project
REAP Academy Spring 2023

Jara Capital is excited to announce that our managing directors, Caleb and Toyyib, have been selected to participate in the Project REAP Academy Program for the Spring 2023 Cohort. As the industry & premier effort to promote diversity, equity, and inclusion in commercial real estate (CRE), acceptance into this program is highly selective, with an acceptance rate of less than 40%. Participants will gain access to a comprehensive CRE-focused education and networking opportunities, positioning them for success in the industry.
The Spring 2023 Cohort will take part in a 10-week hybrid learning model, consisting of both
virtual and in-person engagement. Participants will receive instruction on topics such as financial analysis, development, asset and property management, and market analysis, among others. Notably, the REAP Academy's lecturers are distinguished CRE professionals, providing a unique opportunity for participants to leverage the knowledge, expertise, and experience of
seasoned veterans in the industry.

Our takeaways:

At Jara Capital, we value continuous learning and networking, which is why we are excited to participate in the upcoming Project REAP for Spring 2023. This program will expand our understanding of multifamily real estate and other complementary asset classes, allowing us to provide exceptional returns for our investors. Through this initiative, we will connect with other professionals in the industry and develop relationships that will lead to future deals, partnerships, and opportunities. We are committed to leveraging the knowledge, relationships, and values we gain through this program to deliver exceptional returns for our investors and advance our mission of excellence in commercial real estate. Additionally, we are proud to be part of an initiative that promotes diversity, equity, and inclusion in the commercial real estate industry, which we believe will result in a more innovative and resilient industry that creates greater value for all stakeholders.

02. Despite a slowdown in activity, prices
rose faster in DFW than in any of the other
major metropolitan area in 2022.

The Dallas/Fort Worth area saw the highest increase in median home prices among major Texas metros, with a 15.6% increase from 2021, surpassing the state average of 13.3% and Houston & an increase of 11.7, according to the Texas Realtor 2022 Report.
A few other notes worth stats from this report include:
● Texas population and median income are growing. In 2022, Texas’s median household
income reached a record high of $68,000 and the population was just under 30 million
people.
● In Dallas/Fort Worth area, the availability of homes priced under $300,000 has decreased
40% since 2017
● In Dallas/Fort Worth area, the average asking rent increased over 11% from 2021 while
the vacancy rate declined to 5.1%

Our takeaway:

Dallas-Fort Worth has proven to be more resilient to the recent slowdown in homebuying than other parts of Texas, making it an attractive location for real estate investors. Despite the recent increase in mortgage rates to above 7%, the region continues to outperform comparables due to its durable economy and increasing population.
This provides investors with confidence in the long-term performance of multifamily assets in the area, particularly as home affordability for the average resident continues to shrink, driving demand for apartments and resulting in an average rent increase of 11% from 2021 to 2022. Furthermore, Texas's strong economy, with a growing population and median income, makes it an increasingly attractive location for multifamily investments.
This can be attributed to factors such as the large number of companies headquartered in Texas major metro areas, climate attractiveness, and cost of living. As more and more people choose to move to Texas, real estate investors can benefit from this trend by investing in the multifamily sector, which is poised for growth in the Dallas-Fort Worth area. Overall, the combination of a strong economy, increasing population, and favorable market conditions make Dallas-Fort Worth a prime location for real estate investment.

03 The Silicon Valley Bank Collapse and
It’s Impact on Commercial Real Estate.

Silicon Valley Bank, a 40-year-old institution known for supporting startups and tech firms, experienced a massive bank run earlier this month that led to the largest bank failure of a US bank since 2008. The bank's declining assets and investment loss left it with a weakened balance sheet and no confidence from the VC community that their deposited capital was indeed safe with the bank, causing its stock to plunge by 60% in one day. However, the US government stepped in to take over the bank and ensure that all depositors, even those beyond the $250,000 FDIC insured limit, will get their money back, avoiding a potential contagion of bank runs across other regional banks and risking destabilizing the banking system.

Our takeaway:

While the recent failure of Silicon Valley Bank may have caused concern for some investors, it’s important to note that regional banks are crucial to the commercial real estate industry. In fact, small and medium-Sized Banks account for about 80% of total commercial real estate lending and about 60% of total residential lending.
Smaller banks are often more willing to lend and partner on real estate deals that larger banks may be unwilling to due to regulatory constraints and risk limits. While the government's intervention in the case of SVB was necessary to prevent potential contagion, it's also important to consider the impact on the real estate market in the short term. We may see further tightening of lending standards and reduced activity from regional banks, leading to a potential decrease in property prices and more creative financing solutions for multifamily transactions.
However, there is also the potential for the Federal Reserve to slow down their interest rate hikes, as it was the rapid rate hikes that contributed to SVB's collapse. Keeping a close eye on macro and microeconomic events can help investors stay informed and make intelligent decisions in an uncertain environment. Ultimately, while the failure of a major regional bank may cause some short-term volatility, we remain optimistic about the long-term outlook for the commercial real estate market.

Ready to invest?

Connect with us via mail Instagram, or linkedin to learn more about our investment strategy
and upcoming real estate investment opportunities.

As you evaluate your 2023 strategic investment plans, Real Estate is and will always be a solid asset class for investment. Jara Capital is well positioned to help anyone looking to invest some capital in the multifamily real estate sector.

Regards,
Caleb & Toyyib
Co-founders & Managing Partners
Jara Capital Partners “Delivering Extra”