Apartment demand explodes

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Private equity is quietly crushing the S&P 500 link

• Private equity and private credit have consistently outperformed the S&P 500 across both 5-year and 10-year rolling periods from 2000 to 2024, based on annualized return windows. This suggests strong relative performance regardless of market cycle.

• The data comes from Preqin and Apollo's internal analysis, showing that PE has delivered higher average returns over time than public equities. Even with recent volatility, PE’s long-term edge has held.

• Despite disclaimers and forward-looking caveats, Apollo’s chief economist is signaling continued confidence in PE and credit strategies for the rest of 2025. This implies institutional capital is likely staying the course—or doubling down.

Smaller cities are winning the warehouse race—big hubs fall behind link

• Some of the biggest industrial markets like Riverside, CA are seeing declining rents, while smaller cities such as Louisville are projected to outperform over the next five years, per CBRE. Oversupply and macroeconomic shifts are dragging down the big hubs.

• Rent growth is now being driven more by geography than building quality, marking a sharp split in market performance. CBRE says this divide will only grow wider over the next half-decade.

• Cities like Charlotte and Omaha, with slower development and better supply-demand balance, are expected to see the highest industrial rent growth going forward. These markets are also less vulnerable to national economic swings.

Apartment demand explodes—3x more units rented than built link

• Only 209,000 new market-rate apartments broke ground in the year ending Q1 2025—about 32% below the 10-year average of 307,300 units. Construction starts have dropped for 10 straight quarters since peaking in late 2022.

• Meanwhile, apartment demand surged to nearly 708,000 units absorbed in the same period—3.4x more than the number of units started. That’s the strongest demand-to-starts ratio since 2010.

• This imbalance signals a tightening market despite cooling rent growth. Developers are pulling back, but renters are still showing up in big numbers.

Niche lending boom link

• After Surfside, stricter rules pushed more condos into the “nonwarrantable” category, meaning they can’t be financed by Fannie Mae or Freddie Mac—putting pressure on condo values and affordability in affected communities.

• Non‑QM lenders are seizing the opportunity: investors, especially using DSCR loans, are snapping up nonwarrantable units (often cash buyers), with Florida as the primary hotspot.

• Owner-occupied buyers face surprises post-underwriting—higher rates, bigger down payments, and extra closing costs for nonwarrantable condos, making education and upfront communication essential.

Home builder sentiment slumps—confidence now near 2012 lows link

• Builder confidence rose slightly to 32 in June 2025—but that's still the third-lowest reading since 2012, according to the NAHB/Wells Fargo Housing Market Index. A score of 50 marks breakeven, so this remains firmly in negative territory.

• Elevated mortgage rates and economic uncertainty, including tariffs, are keeping buyers on the sidelines. Builders are responding by cutting prices to lure back hesitant buyers.

• The NAHB has tracked sentiment for over 35 years, and it's only dipped lower than this twice since 2012—signaling persistent strain in the new construction market.

New Homes Still Hot in These 4 Cities link

• Only 4 out of 50 major U.S. metros showed strong new-home sales in April: Indianapolis, Chicago, San Diego, and Orange County bucked the national slowdown, with each averaging 4–5 sales per community per month. That’s double the rate seen in “slow” markets.

• San Diego and Orange County new homes command premium prices despite cooling: Median new-construction home prices hit $1.03M in San Diego and $1.6M in Orange County, driven by low supply and strong demand—even as both metros were downgraded from “very strong.”

• Indianapolis stands out for growth and affordability: With a median new-home price of $411K, it's attracting corporate relocations and migration. Builders there report strong pricing power and steady sales—rare in today’s market.

Mortgages Could Soon Accept Bitcoin as an Asset link

• Fannie Mae and Freddie Mac have been ordered to draft proposals allowing crypto assets—held on U.S.-regulated exchanges—to count toward mortgage applications. This would mark the first time crypto is treated like cash, stocks, or bonds in home loan underwriting.

• Borrowers wouldn’t need to convert their crypto to qualify, potentially unlocking higher loan amounts or eligibility for buyers with significant digital holdings. However, crypto still can’t be used to make actual mortgage payments.

• This move aligns with President Trump’s push to make the U.S. a global crypto leader and has already sparked a 1.5% bump in Bitcoin’s price, which now tops $107,000.

AI is reshaping real estate tax—but most firms aren’t ready link

• 88% of real estate tax executives now see AI as key to boosting efficiency, a major jump from just 9% in 2023. But only 8% say they’ve fully adopted it, showing a wide gap between optimism and execution.

• 37% of tax departments lack the budget for critical upgrades like AI tools, training, and new hires, while 32% are struggling to hire or keep skilled staff. Legacy systems and fragmented data are also slowing down progress.

• Real-time digital tax filings and transparency are gaining traction, with 61% expecting a big impact on operations and 62% planning voluntary public tax disclosures. But 20% say they don’t have the talent needed for sustainable reporting.

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An affordable (boat)house in Seattle!

Link to the listing

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Vidit

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