Underwater Mortgages Are Rising Again

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Southern apartment markets struggle as overbuilding sinks occupancy link

• Occupancy rates in the South dropped to 94.8% over the past year—170 basis points lower than last year and 80 basis points below the national average of 95.7%. The South was the only U.S. region where occupancy declined.

• Of the 15 weakest apartment markets, 12 were in the South. San Antonio led with just 93.1% occupancy, and Austin, Fort Worth, Atlanta, and Jacksonville all trailed their pre-pandemic averages by 80 to 200+ basis points.

• Massive new construction outpaced demand across the region—San Antonio, for example, saw a 35% increase in multifamily units since 2020. This oversupply has stalled rent growth and strained investor returns, though a slowdown in new development could rebalance things later in 2025.

Self Storage Trends link

• National advertised rates for self storage dropped 0.5% year-over-year in May 2025, with average rents at $16.76 per square foot. This marks the third straight month of decline, following -0.3% in April and -0.2% in March.

• Yardi projects a sharp pullback in new self storage construction, with a 19% drop in new square footage expected in 2025, followed by 18% in 2026 and 9% in 2027.

• As of Q2 2025, 3,058 self storage properties are in the pipeline—728 under construction, 1,935 planned, and 395 in early-stage planning—signaling a pivot away from recent years of rapid expansion.

Office Conversions Surge as Vacancies Set New Records link

• Over 149 million square feet of office space is being considered for conversion into housing, with Manhattan alone accounting for 23 million square feet—despite being one of the most occupied office markets. This shift is backed by city-led zoning and permitting incentives.

• National office vacancy hit 19.4% in May, up 160 basis points year-over-year, with Western cities like Austin (26.7%) and San Francisco (28.4%) among the hardest hit. San Francisco is seeing low conversion momentum despite high vacancy, with only 1 million square feet proposed.

• Construction starts are way down—only 4.2 million square feet broke ground through May, compared to 11.3 million completed—signaling a shrinking development pipeline. Meanwhile, office sale prices have dropped sharply in some cities, like Los Angeles where they fell over 30% since 2022.

Homeowners Start Moving Again—Even With 6%+ Rates link

• 79% of homeowners thinking about selling in 2025 say they’re doing it out of necessity—not financial gain—according to Realtor.com. Most say it's due to personal life changes like family needs or space issues.

• The share of homeowners with sub-3% mortgage rates is shrinking, while more sellers are now locking in rates over 6%—a sign that lifestyle needs are outweighing rate concerns.

• Nearly 2 in 3 potential sellers have been sitting on the idea of moving for over a year, even though experts expect only a slow decline in mortgage rates this year.

Underwater Mortgages Are Rising Again—These States Are the Worst Off link

• Louisiana still leads the nation, with 10.5% of mortgages seriously underwater—1 in 10 homes is worth at least 25% less than what's owed. This is despite a slight year-over-year improvement from 11.3%.

• Kansas saw the sharpest rise in underwater mortgages, jumping from 2.9% to 4.7% in just one year. That’s a 62% spike—suggesting sudden shifts in home values or borrowing behavior.

• Wyoming had the biggest recovery, with its underwater rate plunging from 8.8% to just 2.5%. A 6.3-point drop suggests a major bounceback in home equity or a market correction.

SewerAI

SewerAI is an AI-powered infrastructure inspection platform that uses computer vision and machine learning to automate the analysis of sewer and stormwater inspection data, improving accuracy and reducing costs for utilities and municipalities.

A.I. money floods SF—record-breaking $20M+ home sales surge link

• More homes sold above $20 million in San Francisco in 2025 than in any previous year, driven by AI wealth from founders and engineers wanting to live near the action. A $70M deal on Billionaire’s Row made headlines.

• Buyers aren’t just purchasing high-end homes—they’re investing millions into renovations, signaling a long-term commitment to the city. Luxury homes are becoming personalized HQs for the AI elite.

• Luxury markets elsewhere are also heating up: NYC saw a 115% jump in $10M+ properties, and Utah’s Deer Valley logged 15 deals over $15M—a new state record.

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Vidit

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