Housing is a front line issue in tomorrow’s midterms. Realtor.com cited a Pew Research Center poll finding that 66% of Americans are very concerned about housing costs, and its coverage of the toss up Senate races in Ohio, Iowa, Texas, and Maine found affordability near the top of voters’ concerns in each one. Whoever wins, I think the honest read for anyone who builds, lends, or buys is the same: most of what is being promised acts on the money side of housing, and the shortage lives on the dirt side.

Start with what each side is pitching. According to Realtor.com’s rundown of the two parties’ housing agendas, Republican leaders on the House Financial Services Committee want to loosen bank capital rules so big banks return to construction and mortgage lending, exempt single family homebuilding from Davis Bacon prevailing wage rules, and exempt building materials from Buy America sourcing requirements. Democrats are pushing more money for Section 8 vouchers, rent relief, eviction prevention, and an expanded Low Income Housing Tax Credit, which Realtor.com notes produces roughly 40,000 to 50,000 affordable units a year.

Some of that matters. Cheaper construction credit and lower labor and material costs would show up in a pro forma. But notice what is missing from almost every federal promise: the lot. Vouchers and rent relief help households pay for housing that already exists. Capital rule changes help money reach projects that are already entitled. Neither one creates a buildable site in a town that has not approved one.

The best evidence that the cost stack has moved faster than policy came from a Texas developer quoted in Realtor.com’s toss up state coverage. She said a $2 million allocation of state housing credits built 115 units for her in 2017, and the deals she is looking at today might produce 65 to 70. She also said banks now pay her about 80 cents per credit dollar instead of a full dollar. That is the same subsidy buying roughly 40% fewer homes. Expanding a program whose purchasing power keeps eroding is better than nothing, but it is running up a down escalator.

This is also where the K shaped housing economy shows up in the policy fine print. The bipartisan More Homes on the Market Act, which Realtor.com says has more than 170 cosponsors, would double the capital gains exclusion on a home sale. It could loosen some long held inventory, and that is real. But the benefit flows to owners sitting on large gains, which means the top arm of the K, while renters and first time buyers wait for that inventory to trickle down at today’s prices and rates.

Where I see opportunity is in the quieter bipartisan work, because it touches the constraint. Realtor.com reported that the 43 member Build America Caucus released a 95 page agenda it plans to pursue regardless of who controls either chamber, including fast tracking construction where zoning is outdated, building near transit and on underused federal land, and modernizing building codes. Two House members from opposite parties also introduced a bill encouraging pre reviewed, permit ready home designs. None of that will lead a campaign ad. All of it shortens the time between buying land and putting a family in a home, and time is the most expensive line item in development right now.

The risk I would flag sits one level down, in the states. North Carolina voters will decide on an amendment directing the Legislature to cap property tax increases. Realtor.com reported that an Elon University poll found 72% support for limiting increases, while the NC Budget and Tax Center estimated the average savings at about $84 per home per year. Caps like that rarely make the bill disappear. They push it toward sales taxes, user fees, and impact fees, and impact fees land on new lots. A measure sold as relief for existing owners can quietly raise the cost of the next subdivision.

So here is how we are reading tomorrow at Kaufman & Company. The federal outcome will move financing conditions at the margin and set the tone for how the new housing law and the investor rules get implemented. The local outcomes, meaning tax caps, zoning votes, and the council members who decide whether a site gets approved, will decide where supply actually gets built. Data over emotion says watch the second set more closely than the first.

What I am watching next: whether the lame duck session moves any of the bipartisan supply bills, how agencies write the rules for the investor restrictions Congress already passed, whether any housing credit expansion is paired with fixes to credit pricing, and which states tie property tax relief to growth rather than against it. Markets where approvals are fast and land is entitled will keep winning no matter which party holds the gavel.

If you want to see which metros are actually turning land into approved, buildable supply, the free National Land Opportunity Watchlist and market pulse at https://www.landbriefing.com track exactly that, and they will matter more after tomorrow than any campaign promise.

About the Author

I’m the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. My focus is workforce housing and employer-anchored development, including mountain resort communities through Oldivai.

Reach me at Daniel@kaufmanredev.com or find more at danielkaufmanre.com.

Sources

What Each Party Promises on Housing as Congress Hangs in the Balance, Realtor.com, November 2, 2026, https://www.realtor.com/news/real-estate-news/democrats-republicans-housing-promises-midterms-2026/

In Senate Toss Up States, Housing Affordability Is Top of Mind, Realtor.com, November 1, 2026, https://www.realtor.com/news/real-estate-news/midterm-election-senate-ohio-texas-iowa-maine-housing-concerns/

North Carolina To Vote on Ballot Measure Capping Property Taxes, Realtor.com, October 23, 2026, https://www.realtor.com/news/real-estate-news/north-carolina-election-ballot-amendment-property-tax-2026/

Two pieces of commercial real estate news landed this week that look like they contradict each other. I think both are right, and the reason matters for anyone heading into 2027.

CRE Daily, citing Avison Young, reported that U.S. investment sales reached $143 billion in the third quarter, the strongest third quarter in four years, bringing year to date volume to $389.3 billion, up 17.9%. MSCI’s price index rose 0.9% from a year earlier, its best annual gain since December 2025.

In the same week, CRE Daily reported CBRE Research’s view that the average cap rate now sits only about 160 basis points above the 10 year Treasury. That is the thinnest spread on record and roughly half the long run norm of about 325 basis points. CBRE expects cap rates to rise at least 40 to 60 basis points, which it says implies value declines of 6% to 10%.

So which is it, recovery or repricing? The answer is in who is doing the buying.

According to the Avison Young data, private investors accounted for nearly 60% of transactions, targeting discounted assets and leaning on debt less than usual. That is the whole story to me. This is not a recovery financed by cheap money. It is a recovery financed by people who can write a large equity check and do not need a lender to agree with their valuation. CBRE notes the 10 year has held near or above 5% since September 10, and CRE Daily’s market snapshot had it at 5.024% at the October 28 close. At that level, positive leverage is hard to find. The buyers who win are the ones who do not need it.

JLL’s third quarter results point the same way. CRE Daily, citing Bisnow, reported that CEO Christian Ulbrich said very few capital markets deals are collapsing. They are taking longer, and price negotiations are tougher. His argument was that predictability matters more than the rate itself, and that investors handled 5% rates for years before. I agree with half of that. Investors can live with 5%. What they cannot live with is a 5% Treasury paired with a cap rate that was set when the Treasury was at 4%.

The sector split makes this sharper. Industrial sales jumped 41.5% to $113.3 billion and office sales rose 22.4%, with suburban office prices up 4.4% from a year earlier, per CRE Daily’s summary of the Avison Young and MSCI numbers. Multifamily still led every sector in total volume at $119.6 billion, but its sales grew just 3% and its values fell 4.6% from a year ago.

Now put that next to CBRE’s spread math. CBRE says multifamily and industrial carry the thinnest spreads, under 100 basis points, which makes them the most exposed if cap rates move. Industrial is trading at record values on a cushion that barely exists. Apartments have already taken a markdown, and CBRE still flags them as vulnerable, especially across the Sun Belt, where supply is heavy and loans are maturing. That is the Southern Squeeze showing up in the capital markets: the metros that built the most are the last ones the bid comes back to.

Where I see opportunity. The opening is for patient equity and for lenders. CBRE ranks CRE debt as the most compelling opportunity right now, and that matches what we see on the ground. When a bank will not size a loan to the old price, someone fills the gap, and that someone gets paid well for it. Discounted multifamily bought with modest leverage, at a basis that already reflects higher rates, is a very different trade than multifamily bought in 2021. Gateway markets are also pulling ahead. CRE Daily reported Chicago investment sales up 76.5%, Washington up 51.3%, and San Francisco up 30.9%, while supply heavy Denver and Phoenix lagged.

Where it breaks. The third quarter is a rear view mirror. Avison Young has already trimmed its full year sales forecast to $520 billion. JLL’s guidance implies flat to low single digit capital markets growth in the fourth quarter. CBRE expects activity to slow for roughly six months before recovering in the second half of 2027. If you bought industrial at a record value with meaningful leverage, a 50 basis point move in cap rates is not a rounding error. And CRE Daily notes that $733 billion of loans come due in 2027 as lenders grow less willing to extend. Every one of those maturities is a forced pricing event.

What I am watching. First, whether fourth quarter sales hold up once the summer momentum fades. Second, whether industrial cap rates start to move, since that is where pricing is hottest and the cushion is thinnest. Third, the share of deals closed by private buyers using low leverage. If that share keeps climbing, the recovery is real but narrow, and access to equity, not access to debt, is the competitive edge of this cycle.

Data over emotion: the headline says recovery, the spread says caution, and the buyer mix says both are true at the same time.

If the cost of debt is what stands between you and your next project, I wrote a free e-book on exactly that problem. The Capital You Don’t Have to Rent walks through ways to fund development without leaning on hard money, and you can get it at https://danielkaufmanre.com/capital.

About the Author

I’m the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. My focus is workforce housing and employer-anchored development, including mountain resort communities through Oldivai.

Reach me at Daniel@kaufmanredev.com or find more at danielkaufmanre.com.

Sources

CRE Sales Surge as Property Prices Rebound Despite Rising Rates, CRE Daily, October 29, 2026, https://www.credaily.com/newsletters/national/issue/cre-sales-surge-as-property-prices-rebound-despite-rising-rates/

CBRE: Cap Rates Could Rise 40 to 60 bps as 10 Year Tops 5%, CRE Daily, October 28, 2026, https://www.credaily.com/briefs/cbre-cap-rates-could-rise-40-60-bps-as-10-year-tops-5/

JLL Says Higher Rates Delay Deals but Aren’t Killing Them, CRE Daily, October 29, 2026, https://www.credaily.com/briefs/jll-says-higher-rates-delay-deals-but-arent-killing-them/

BREAKING | October 28, 2026

The Federal Open Market Committee left the federal funds rate unchanged this afternoon at 3.75% to 4.00%. The vote was 10 to 2, with Chair Kevin Warsh in the majority. Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, and both wanted another quarter point increase.

Read that again. The dissents were not for a cut. They were for a hike.

The numbers that matter today

• Fed funds: 3.75% to 4.00%, unchanged

• The vote: 10 to 2, both dissents in favor of raising rates

• Last month: the first hike in three years

• 30 year fixed: 7.32% last week per Freddie Mac, just off a three year high of 7.40%

• Late February: mortgage rates briefly dipped below 6%

• Market pricing: another quarter point in December, and at least one more in the first quarter of 2027

This is a pause, not a pivot

The midterms are less than a week away. Holding steady keeps the Fed out of the headlines while voters head to the polls. That is timing, not a change in direction.

Nothing in today’s vote says inflation is beaten. Two members wanted to hike, and the market is pricing two more increases. I am underwriting as if the tightening cycle is still running, because the people setting the price of money are telling us it is.

The Fed doesn’t set your mortgage rate. The 10 year does.

The best line in today’s coverage came from Bankrate’s Jeff Ostrowski: when the Fed raised a quarter point last month, mortgage rates jumped three quarters of a point in a month. Mortgage rates follow the 10 year Treasury, not the overnight rate.

That is the variable to watch. Bond investors have been pricing inflation risk off rising oil prices tied to the war with Iran. If oil cools, the 10 year can come in even while the Fed is hiking. If it doesn’t, a pause today does nothing for your borrowing cost.

The trend line

Since late February, the 30 year fixed has gone from under 6% to above 7.3%. That is more than a full point in about eight months, and it lands directly on affordability for buyers and on exit assumptions for anyone holding a deal.

Realtor.com’s chief economist Danielle Hale put it plainly: rates have not come back to their mid September level, and the housing market is feeling it.

What it means for investors

1. Stop underwriting a refinance. If a deal only works when rates fall back under 6%, it is a bet, not an investment. Underwrite at today’s rate and stress it higher.

2. Fix or cap floating rate debt. Two more hikes are priced. Anything floating without a cap is exposed to the part of the curve the Fed controls directly.

3. Higher rates thin the buyer pool. Leveraged buyers step back when debt costs this much. That leaves better pricing for cash and patient equity, and it surfaces sellers who need to transact, especially in land and stalled projects.

4. Rental demand holds. With mortgages above 7%, would be buyers rent longer. Workforce rentals near real job centers stay full.

What it means for developers

1. Construction carry is tied to short rates. Construction loans price off SOFR and prime, which move with fed funds. Today buys you about six weeks. December is the next test.

2. For sale product has to get smaller and sharper. Buyers are qualifying at 7% plus. Rate buydowns are getting more expensive. Attainable, right sized product near employment is where absorption is.

3. The margin is in the land basis. In many markets, land sellers still haven’t repriced to a 7% world. That gap is closing. Buying land at the right basis, entitling it, and being ready when the cycle turns is how you win this stretch.

4. Equity over leverage. In this rate environment, the capital stack is the strategy. Less debt, more control, and terms that survive a December hike.

What to watch next

• The midterm elections next week

• The next inflation prints heading into December

• The December FOMC meeting

• Oil and the 10 year Treasury yield

• Freddie Mac’s weekly mortgage rate survey every Thursday

The bottom line

The pause is a breath, not a turn. Price your deals for the rate you have, buy basis instead of hope, and let the people who need rates to fall be your sellers.

If you are tracking land and housing fundamentals market by market, that is exactly what we built LandBriefing for. And if you want a second set of eyes on a deal in this rate environment, reach out through Kaufman Real Estate & Consulting.

Source: Keith Griffith, “Fed Pauses Interest Rate Hikes for Now as Key Midterm Elections Loom,” Realtor.com, October 28, 2026. Mortgage rate data from Freddie Mac. Developing story.

About the Author

Daniel Kaufman is the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. He writes The Kaufman Report on housing, land, and capital markets from an operator’s seat.

Daniel@kaufmanredev.com | danielkaufmanre.com

In July, two support columns gave way inside the former Pfizer headquarters in Manhattan, under floors that had just been added to the top of the building. Six floors sagged, nearby blocks closed, and the city’s busiest conversion pipeline went quiet. CRE Daily reported this morning that the pipeline is moving again. Buildings Commissioner Ahmed Tigani says the city has cleared 16 more conversions to start construction since the accident, and work has resumed at 222 Broadway and 750 Third Avenue.

That matters more than it sounds, and the reason sits in a different report that landed the same week.

Realtor.com’s latest New York City Rent Report puts Manhattan’s median asking rent at $5,375 a month in the third quarter, up 8.3% from a year earlier. Under the 30% rule, that takes about $215,000 a year in household income. Realtor.com notes the Census Bureau puts Manhattan’s median household income at $106,403. Citywide, the median asking rent hit a record $3,785, now 27.5% above pre pandemic levels, and rents for studios through two bedrooms rose 7.1% in a year.

This is the K shaped housing economy compressed into one borough. At the top, a Brooklyn broker told Realtor.com that wealthier clients are borrowing against their portfolios and skipping conventional mortgages entirely. At the bottom, renters are staying put because moving means a bigger rent check, and that frozen turnover squeezes the market further. The middle, the nurses, teachers, cooks and junior staff the city runs on, is being priced out of the place where the jobs are.

Why conversions are the fastest lever

The only durable answer to that math is more units, and in New York the binding constraint is not demand. It is time and land. Conversions shortcut both. CRE Daily points to a BH3 Management and Capstone Equities venture turning a never leased 24 story Brooklyn office tower into apartments in 18 to 20 months, against four to five years for a ground up building. The site is already assembled, the structure already stands, and comparable one bedrooms nearby rent for about $5,000. When the timeline is cut by more than half, the math can absorb a lot of cost.

The capital is showing up too. Northwind Group provided a $219 million construction loan for the 463,000 square foot conversion of 100 Wall Street, and its founder says the firm has funded two more with two Midtown loans in progress. The Mamdani administration is counting on conversions for up to 12,000 homes.

Where I see the opportunity

First, the Pfizer scare reset what diligence means, and the sponsors and lenders who take structure seriously will win. Adding new floors onto an old frame is where the risk concentrated. Projects that reuse the envelope without stacking new load should move through review faster and price better.

Second, the raw material is coming to market under pressure. CRE Daily counts $733.2 billion of commercial real estate debt maturing in 2027, and in September only 12.79% of maturing office CMBS loans paid off on time. Older towers in locations where office demand is not coming back will trade at prices that let a conversion pencil.

Where it breaks down

Rates and costs are the first problem. CRE Daily says higher rates, costlier construction and tighter lender scrutiny are already slowing deals, and its market snapshot had the 10 year Treasury at 4.999% at Tuesday’s close.

The second problem is that the office recovery is real at the top. Midtown availability is back near its March 2020 level, so owners of good buildings will keep leasing rather than convert. The candidates left are the harder ones, and as the CRE Daily piece notes, the easy towers will not last forever.

The third problem is the product. Conversions mostly deliver studios and one bedrooms at market rents near $5,000. That relieves pressure at the top of the K and filters down slowly. It does not house a household earning $106,000 unless incentives require income restricted units, and those incentives shape what gets built.

What I am watching

I am watching whether approvals catch back up to the first half pace, whether the 1,600 unit tower at the former Pfizer site restarts within weeks as MetroLoft expects, whether construction lenders keep writing checks with the 10 year near 5%, and how many of these projects include income restricted units.

The July collapse was a reason to tighten engineering, not to stop building. A city where the typical Manhattan renter needs twice the median income cannot afford a paused pipeline.

If you are weighing an adaptive reuse project or a stalled conversion and want a hard look at feasibility, structure and the capital stack before you commit, that is the work we do at Kaufman Real Estate & Consulting: https://www.kaufmanrealestateandconsulting.com

About the Author

I’m the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. My focus is workforce housing and employer-anchored development, including mountain resort communities through Oldivai.

Reach me at Daniel@kaufmanredev.com or find more at danielkaufmanre.com.

Sources

New York’s Office-to-Apartment Conversions Restart After the Pfizer Scare, CRE Daily, October 28, 2026, https://www.credaily.com/newsletters/national/issue/new-yorks-office-to-apartment-conversions-restart-after-the-pfizer-scare/

Manhattan Renters Now Need To Make $215K To Afford the Typical Apartment, Realtor.com, October 27, 2026, https://www.realtor.com/news/trends/nyc-rent-manhattan-income-required-q3-2026/

National rents are still falling. Realtor.com’s September 2026 rental report, published today, puts the median asking rent for zero to two bedroom units across the 50 largest metros at $1,694, down 0.4% from a year earlier. That is the 38th straight month of annual declines. If you stopped reading there, you would think renters finally hold the cards.

They don’t, at least not everywhere. The same report shows a group of metros long treated as affordability refuges moving the other way: St. Louis, Minneapolis, Riverside, Las Vegas and Virginia Beach. What ties them together is not a local hiring boom or a construction drought. It is imported demand.

Realtor.com found that nearly half of the out-of-market rental interest in St. Louis last quarter came from Chicago, where the median asking rent rose to a record $1,909. St. Louis rents rose 2% to $1,300. Minneapolis, which drew about a quarter of its outside interest from Chicago, rose 1.7% to $1,509. Roughly half of Riverside’s outside interest came from Los Angeles, as did about 31% of Las Vegas’s, and Virginia Beach drew around 31% of its outside interest from Washington, DC. Virginia Beach rents rose 1.7% to $1,539, still about $700 a month below DC.

Here is how I read it. The refuge is being priced by someone else’s paycheck. A household carrying a Chicago or Northern Virginia income looks at a $1,500 townhome and sees a bargain. The nurse, the warehouse supervisor and the teacher who already live there see a rent increase their own wages did not earn. That is the K shaped housing economy showing up inside a single metro. The upper leg imports its budget, and the lower leg absorbs the cost.

I want to be honest about the size of this. Riverside rose 0.2%. Las Vegas rose 0.9%. Nobody should call that a boom. But direction matters more than magnitude when the national number has been negative for more than three years. When cheap markets drift up while expensive ones drift down, the spread that made them a refuge is closing from both ends. Los Angeles is still at $2,851, down 1.1%, according to the same report.

The tech hubs are a separate story with the same lesson. Realtor.com reported San Jose rents up 6% to a record $3,565, with the share of listings offering concessions falling from 51.9% to 24.3% in a year. San Francisco rose 4.8%. Demand follows paychecks, and right now the paychecks are concentrated.

The outlier I would watch most closely is Detroit. Realtor.com said Detroit rents are still down 1% year over year, but the trend improved by 6.6 percentage points, helped by AI related investment, thinner rental inventory and renters arriving from New York, Chicago and DC. That is what an underpriced turnaround market looks like before the headline catches up: rents that are falling more slowly every month until they are not falling at all.

Where I see the opportunity. The winners are owners and builders of well run, mid priced rentals in established neighborhoods: townhomes, small multifamily and single family rentals near decent schools with an easy commute. The out-of-market renter is moving to save money, not to upgrade, so the opportunity is not in luxury. Product that lands near the local median, built on land bought at local prices, is where the spread lives.

Builders and lenders who can deliver attainable for-sale homes also win. Realtor.com described Virginia Beach renters doing the math on buying after repeated increases. When rents in a refuge market climb while the national rental market softens, the rent versus own decision tips, and entry level for-sale demand follows.

Where it breaks down. First, imported demand is fickle. If Chicago and Los Angeles keep softening, the push weakens and these metros lose the outside renter driving the increases. Underwriting a refuge market on rent growth that depends on another city staying expensive is underwriting someone else’s market.

Second, the locals carry the risk. Realtor.com cited a 2024 report from the Virginia Center for Housing Research and Housing Forward Virginia that found a shortage of rentals affordable to very low income households and pressure on moderately priced stock. When outsiders bid up the middle, the workforce gets pushed to the edge or out. That is exactly where employer anchored workforce housing earns its place.

Third, capital. CRE Daily’s market snapshot put the 10 year Treasury at 5.19% at the October 14 close. Expensive money makes it harder to build the supply that would relieve the pressure, which means the squeeze on locals can last longer than the inflow that caused it.

What I am watching next: whether the out-of-market share in these metros keeps climbing in the next two monthly reports, whether local wages in St. Louis and Minneapolis keep pace with rent, and whether Detroit crosses into positive annual rent growth. The national number says renters are winning. The metro data says it depends on whose paycheck sets the price.

We think about refuge markets, workforce housing and turnaround metros as one connected story across the Kaufman & Company platform. If you want to see how those pieces fit together, start at https://www.thekaufmanco.com

About the Author

I’m the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. My focus is workforce housing and employer-anchored development, including mountain resort communities through Oldivai.

Reach me at Daniel@kaufmanredev.com or find more at danielkaufmanre.com.

Sources

Rents in ‘Affordable Refuge’ Metros Are Getting Pricier. Here’s Why., Realtor.com, October 15, 2026, https://www.realtor.com/news/trends/fleeing-high-rent-in-major-cities-why-these-affordable-refuge-metros-are-getting-pricier/

Power Access Overtakes Land and Labor in US Site Selection (Market Snapshot), CRE Daily, October 15, 2026, https://www.credaily.com/newsletters/national/issue/power-access-overtakes-land-and-labor-in-us-site-selection/

Two data points crossed my desk this week, and together they explain more about the housing market than any mortgage rate headline.

The first: CRE Daily, summarizing a GlobeSt report on new Federal Reserve data, reported that median net worth for households under 35 fell 23% from 2022 to 2025 after inflation. Over the same stretch, median net worth for Americans 75 and older rose 37%. The typical household overall gained just 2%, to $216,900, while the mean rose 7% to $1.24 million. When the average climbs more than three times as fast as the middle, the gains are pooling at the top.

The second: Realtor.com reported on a RentCafe analysis of Census data showing that households earning at least $1 million a year and renting rose 229% from 2020 to 2024, to roughly 18,400 households. Nearly half of them are millennials, and nearly 74% live in just eight metros, led by New York.

Put those side by side and you get the K shaped housing economy in its plainest form. The top arm of the K rents by choice, keeps its capital liquid, and moves when the job moves. The bottom arm rents because the door to ownership closed, and it loses ground every year it waits.

What the numbers actually say

I want to be careful here, because both stories are easy to overread. Realtor.com senior economist Hannah Jones noted that the millionaire renter surge partly reflects a small starting base and a nominal income threshold that more households cross every year. Owners still dominate that income bracket by a wide margin. Renters went from about 8% of it to just under 9%.

CRE Daily, following GlobeSt, also cautioned that rising aggregate wealth says little about where spending or property demand is headed. That is exactly the point. The aggregate looks healthy. The median under 35 does not.

Here is the part that matters for anyone who builds or lends. Realtor.com noted that the typical first-time buyer is now 40 years old, a record, and first-time buyers made up just 21% of purchases. Meanwhile Freddie Mac has the 30 year fixed rate at 7.40%, per Realtor.com, against 6.27% a year ago. The household that lost nearly a quarter of its net worth is the same household that now needs more cash to offset a higher rate. That is not a cyclical delay. That is a cohort being priced out of the asset that built every prior generation’s balance sheet.

Where I see opportunity

The obvious trade is luxury rental, and the market already found it. Realtor.com cited Moody’s data, via Fannie Mae, showing about 86.3% of apartments completed in early 2024 were Class A. The affluent renter is well served.

The underserved customer is the bottom of the K that still has a paycheck: nurses, teachers, technicians, plant workers. That is where I think workforce housing, especially employer anchored development, earns its place. An employer who needs people within commuting distance has a reason to help solve the land and capital stack. A renter who cannot build wealth through ownership benefits from a rent they can actually save against. And product sized for that household, smaller homes, attached product, and rent-to-own structures, is still thin on the ground.

Where it breaks

Two risks. First, if you underwrite a project off headline household wealth, you will overestimate what your actual tenant can pay. CRE Daily made the same point: underwrite the customer base the building serves, not the national average. A senior community serving asset rich retirees and a garden apartment serving 28 year olds live in different economies.

Second, the top of the K is mobile by design. Realtor.com cited Census data showing that people in rented homes moved at more than three times the rate of people in owned homes in 2024. Luxury rental demand that follows high paying jobs can leave when those jobs do. Anyone building at the top end in a single industry town should price that in.

What I am watching

Whether younger renters start to show up in delinquency and concession data, whether employers start treating housing as a recruiting cost rather than someone else’s problem, and whether the next Fed survey shows this gap closing or compounding. Based on the data so far, my bet is compounding. Data over emotion: the middle of this market is not going to recover on its own.

We publish this kind of analysis every morning in our Perspectives at the U.S. Real Estate Journal. If you want the daily read on where the K is widening and where it is not, start at https://www.usrealestatejournal.net.

About the Author

I’m the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. My focus is workforce housing and employer-anchored development, including mountain resort communities through Oldivai.

Reach me at Daniel@kaufmanredev.com or find more at danielkaufmanre.com.

Sources

Wealth Gap Widens as Young Households Lose 23% of Net Worth, CRE Daily, October 15, 2026, https://www.credaily.com/briefs/wealth-gap-widens-as-young-households-lose-23-of-net-worth/

Why Millionaire Renters Have More Than Tripled Since 2020, Realtor.com, October 16, 2026, https://www.realtor.com/news/trends/millionaire-renters-triple-since-2020-rentcafe/

Mortgage Rates Hold Steady at 3-Year High as Bond Market Stabilizes, Realtor.com, October 15, 2026, https://www.realtor.com/news/trends/mortgage-rates-inflation-today-october-15-2026/

CBRE just said out loud what most of us feel in our inboxes. CRE Daily reported on October 23 that CBRE chief executive Bob Sulentic expects rate volatility to keep a lot of investors on the sidelines, potentially until the second half of 2027. Deals are being repriced, canceled, or quietly converted into refinancings.

Now read that next to the rest of CBRE’s quarter. According to the same CRE Daily report, CBRE’s third quarter revenue rose 13% to $11.5 billion, global property sales rose 28%, and U.S. property sales rose 37%. Data center revenue jumped 80%. That is not a market where nothing trades. It is a market where some things clear easily and a lot of things do not clear at all.

That is the K shaped economy showing up in commercial real estate. The top leg is capital that does not need the rate to fall: well capitalized buyers, infrastructure and data center money, trophy assets with real demand behind them. The bottom leg is everything financed for a world that ended in 2022. Both legs live inside the same headline number, which is why the headline number misleads.

Here is my read. The rate is the excuse. The price is the argument. Sellers are still anchored to values set when money was nearly free. Buyers are underwriting off a 10 year Treasury sitting right around 5%, which both CRE Daily’s market snapshot and Realtor.com’s coverage this week put in that range. CRE Daily also cited Colliers putting all property cap rates at 6.1%. Run those two numbers against each other and the spread for taking real estate risk over a government bond is roughly one point. That is my math, not theirs, but it explains the standoff better than any forecast does.

The most important number in the whole week is one most people will skip. CRE Daily’s chart of the day, citing Colliers, shows commercial property values sitting 13% to 56% below replacement cost. When existing buildings trade below what it costs to build new ones, new supply stops. You can already see it: CRE Daily reported third quarter retail construction starts fell to about 7.7 million square feet, the weakest since 2016.

That is where I see the opportunity. Scarcity is being manufactured right now by math, not by policy. Owners who can hold good, well located assets through the freeze, without a forced sale or a maturity they cannot meet, are going to own the only product available when demand returns. Buyers with patient capital and modest leverage can buy below replacement cost in sectors where demand has not gone anywhere. And anyone positioned around power, data centers, and critical infrastructure is on the leg of the K that CBRE says is still growing.

Now the downfalls. Waiting until late 2027 is itself a bet that rates come down, and I would not bet the company on it. Realtor.com chief economist Danielle Hale noted this week that the Fed is widely expected to hold on Wednesday while inflation pressure lingers and an oil supply shock works through the economy. If higher for longer simply stays higher, then a deal converted into a refinancing is not a solution. It is a delay with interest. The exposure is already visible: CRE Daily reported that 25% of Texas floating rate apartment loans sit below a 1.0x debt service coverage ratio. Those owners are not waiting for clarity. They are waiting for a buyer, a lender, or a special servicer, whichever comes first.

On the housing side the same tension holds. Realtor.com reported Freddie Mac’s 30 year rate at 7.32% for the week ending October 22, the first dip after seven straight weekly gains. One good week does not make a trend, and anyone who repriced a deal on one good week in 2024 or 2025 learned that the hard way.

What I am watching next: the Fed decision on Wednesday and, more importantly, what the 10 year does afterward; Freddie Mac’s Thursday rate print; whether CBRE’s 37% U.S. sales growth holds into the fourth quarter or proves to be a few large trades; and whether the deals being converted into refinancings start showing up as special servicing transfers in the first half of next year. Data over emotion. The data says the freeze is selective, and selective freezes are where disciplined buyers do their best work.

If your project’s capital stack was built for a rate that never came back, start with how the deal is funded instead of hoping for the cut. My free e-book, The Capital You Don’t Have to Rent, walks through ways to fund development without leaning on hard money: https://danielkaufmanre.com/capital

About the Author

I’m the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. My focus is workforce housing and employer-anchored development, including mountain resort communities through Oldivai.

Reach me at Daniel@kaufmanredev.com or find more at danielkaufmanre.com.

Sources

Rate Uncertainty Is Repricing and Delaying Commercial Property Deals, CRE Daily, October 23, 2026, https://www.credaily.com/newsletters/national/issue/rate-uncertainty-is-repricing-and-delaying-commercial-property-deals/

Housing Week Ahead: Metro Rankings, Home Prices, and Fed Rate Decision, Realtor.com, October 26, 2026, https://www.realtor.com/news/trends/housing-week-ahead-video-home-prices-fed-decision-october-26-2026/

Why Today’s 5% Treasury Yield Reset Means Big Moves for Down Payment Cash, Realtor.com, October 26, 2026, https://www.realtor.com/news/trends/treasury-yields-above-5-homeowners-savings-money-monday/

The loudest version of the apartment story right now is that multifamily credit is cracking. The data says something more specific, and a lot more useful for anyone who actually has to underwrite a building.

CRE Daily reported this week on Trepp’s August figures for securitized multifamily debt. Of roughly $635.8 billion outstanding, about $11.6 billion is delinquent. On its own, that is not a crisis. What matters is where the delinquency sits.

Freddie Mac holds about $519 billion of that debt, roughly 82 percent of the balance, and its delinquency rate is 0.80 percent. Private-label CMBS holds about $75.5 billion, 12 percent of the balance, and its delinquency rate is 7.69 percent. That small slice now carries about $5.8 billion of past due loans, or roughly half of every delinquent securitized apartment dollar.

Two years ago the picture looked different. According to Trepp, delinquent securitized apartment debt totaled $7.04 billion in August 2024, and CRE CLOs carried the largest share of it. Since then, the private-label delinquency rate has more than doubled, from 3.30 percent to 7.69 percent.

This Is the K in the Credit Stack

I keep coming back to the K shaped housing economy because it keeps showing up in places people do not expect. Here it is in the capital stack. The upper arm of the K is agency debt: fixed rate, conservatively sized, sitting on buildings with real cash flow. The lower arm is conduit and bridge style debt written near peak values, often on older buildings that cost more to run every year.

Trepp’s vintage data makes the point. Over two years, private-label exposure to pre-1980 buildings rose from $20.4 billion to $29.1 billion. CRE CLOs went the other way, cutting their pre-1980 exposure from $16.2 billion to $6.8 billion and shifting toward newer product. The oldest, hardest to operate apartments migrated into the bucket with the worst performance.

Read the Footnote

The CLO numbers look like a recovery. Their delinquency rate fell from 6.05 percent to 3.88 percent. But Trepp notes that CLO managers can remove defaulted or impaired loans from their pools. Some of that improvement is loans leaving the pool, not loans getting healed. Those assets did not disappear. They moved to a balance sheet, a workout, or a sale. Data over emotion means reading the footnote before you read the headline.

The broader backdrop is not getting easier. CRE Daily reported that the CMBS special servicing rate rose to 11.49 percent in September, the highest since 2013, with the 10 year Treasury sitting above 5 percent. Walker & Dunlop’s Willy Walker told the market that debt is plentiful and equity is scarce, with about $1.5 trillion of multifamily loans due to refinance over four years.

Where I See Opportunity

Concentrated distress is workable distress. When the problem sits in a defined pool of older buildings with identifiable maturities, it becomes a set of specific situations rather than a market wide panic. That favors operators who can actually run a 1970s garden complex: fix the deferred maintenance, tighten expenses, and keep it as workforce housing that people can afford. It favors patient equity and rescue capital that can fill the gap a refinance will not cover. And it favors agency lenders, who will take the good buildings out of troubled structures once they stabilize.

Supply helps the survivors. CRE Daily reported that Sun Belt apartment starts are down about 75 percent from their 2022 peak, and that several large metros could see their tightest conditions in years by 2028. Owners who can hold through 2027 may find a very different rent picture on the other side.

Where It Breaks Down

A distressed old building is not automatically a bargain. Insurance, taxes, and capital needs on pre-1980 stock can erase a low basis fast. The agency book is healthy, but its delinquency rate still rose from 0.48 percent to 0.80 percent in two years, so the upper arm of the K is not immune. And if more 2021 and 2022 vintage loans run into a 5 percent ten year, private-label delinquency may not have peaked.

What I Am Watching

Whether the private-label rate plateaus near 8 percent or keeps climbing. Whether Freddie Mac’s rate crosses 1 percent. How many impaired loans CLO managers keep pulling out of pools, and at what marks they trade. And whether note sales on older Class B and C apartments start clearing at prices that let a real operator make the numbers work.

If you are holding, lending against, or looking at an older apartment asset with a maturity coming, the right time to stress test the capital structure is before the servicer calls. That is the work we do at Kaufman Real Estate & Consulting through capital structure and feasibility reviews: https://www.kaufmanrealestateandconsulting.com

About the Author

I’m the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. My focus is workforce housing and employer-anchored development, including mountain resort communities through Oldivai.

Reach me at Daniel@kaufmanredev.com or find more at danielkaufmanre.com.

Sources

Multifamily Delinquency: Private-Label CMBS Holds Half, CRE Daily, October 16, 2026, https://www.credaily.com/briefs/multifamily-delinquency-private-label-cmbs-holds-half/

Power Access Overtakes Land and Labor in US Site Selection (National newsletter, Editor’s Picks and Multifamily sections), CRE Daily, October 15, 2026, https://www.credaily.com/newsletters/national/issue/power-access-overtakes-land-and-labor-in-us-site-selection/

Sun Belt Apartment Recovery Turns Sharply Uneven, CRE Daily, October 14, 2026, https://www.credaily.com/newsletters/national/issue/sun-belt-apartment-recovery-turns-sharply-uneven/

Multifamily distress has a location problem, and it is not the one most people assume. CRE Daily reported this week on Trepp’s August data for securitized apartment debt, and the headline is striking: private-label CMBS now carries about half of all delinquent multifamily debt while holding only about 12 percent of the outstanding balance.

Here is the scale. Trepp tracks roughly $635.8 billion of securitized multifamily debt. About $11.6 billion of it is delinquent, up from $7.04 billion two years ago. Private-label CMBS accounts for about $75.5 billion of that balance, and its delinquency rate has more than doubled in two years, from 3.30 percent to 7.69 percent. Freddie Mac, which holds about 82 percent of the tracked total, sits at 0.80 percent. CRE CLOs, the home of floating rate transitional loans, actually improved, falling from 6.05 percent to 3.88 percent.

Read that quickly and you would conclude the bridge lending problem fixed itself while conduit loans fell apart. I don’t read it that way, and neither does Trepp.

The CLO number is partly a structure story. As CRE Daily laid out, CRE CLO managers can pull defaulted or impaired loans out of their pools, and they have a reason to, because a failed overcollateralization test can divert cash away from equity and junior noteholders. A private-label trust generally cannot do that. So the conduit bucket shows its distress in full, while the CLO bucket can move some of its problems off the scoreboard. Same apartments, different window dressing.

The vintage data makes the point sharper. Over two years, CLO exposure to pre-1980 buildings fell by more than half, from $16.2 billion to $6.8 billion, while post-2000 construction rose from $19.2 billion to $28.5 billion. Private-label went the other way, with pre-1980 exposure climbing from $20.4 billion to $29.1 billion. The older, harder to operate stock is concentrating in the structure that cannot quietly shed it.

This is the K shaped economy showing up in apartment debt. On the top leg sit newer, agency financed buildings with fixed rate debt and tenants who can absorb increases. On the bottom leg sit older Class B and C properties, often carrying debt sized on peak rents and peak valuations, serving renters whose wages have not kept up. The tenants in those buildings are the workforce. When those properties fail, the cost is not only a markdown for a bondholder. It is deferred maintenance, rising vacancy, and a slow loss of the naturally affordable housing that nobody can replace at today’s construction costs.

Where I see opportunity: private-label special servicing is where older workforce apartments are most likely to change hands at real prices. Buyers with patient, fixed rate capital and a genuine operating plan for older buildings, not just a spreadsheet plan, are positioned to acquire at a basis that works for the rents those neighborhoods can actually pay. Operators who know how to run a 1970s garden complex will matter more than allocators who know how to model one.

Where I see the downfalls: first, the CLO improvement may be flattering. If impaired loans are being pulled rather than resolved, the stress has not disappeared, it has moved somewhere less visible. Second, Freddie’s rate is low, but its past due balance nearly doubled, from $2.29 billion to about $4.2 billion. A small percentage of a very large book is still real money. Third, with long rates staying high, refinancing an older asset out of a conduit loan is not getting easier. Anyone underwriting a quick rescue refinance is underwriting hope.

What I am watching: whether private-label delinquency keeps climbing, how many loans CLO managers buy out or modify over the next few quarters, and whether Freddie’s past due balance keeps compounding. If all three move the wrong way at once, the discount on older workforce apartments gets deeper, and buyers with clean capital get paid for their patience.

Data over emotion. The headline says distress is falling in one bucket and rising in another. The structure says it is the same problem, with better accounting in one of them.

If you own or lend on older apartment assets and want a sober look at capital structure, a workout path, or the feasibility of a rescue plan, that is the work we do at Kaufman Real Estate & Consulting: https://www.kaufmanrealestateandconsulting.com

About the Author

I’m the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. My focus is workforce housing and employer-anchored development, including mountain resort communities through Oldivai.

Reach me at Daniel@kaufmanredev.com or find more at danielkaufmanre.com.

Sources

Multifamily Delinquency: Private-Label CMBS Holds Half, CRE Daily, October 16, 2026, https://www.credaily.com/briefs/multifamily-delinquency-private-label-cmbs-holds-half/

Pending home sales fell to the lowest level on record in September. Not the lowest since the last downturn. The lowest ever measured. Realtor.com reported on Tuesday that contract signings dropped 7.3% from August and 11.3% from a year earlier, according to the National Association of Realtors Pending Home Sales report.

I want to be careful about what that number says and what it does not. It does not say prices are about to collapse. It says the transaction itself is breaking. And when the transaction breaks, the market sorts people by balance sheet, not by need. That is the K shaped housing economy in a single data point.

Every region fell, both month over month and year over year. The West led the decline at 9.2% for the month and 15% for the year, followed by the South at 8.2% and 12%. Even the strongest metros went negative. Nashville, the best performer in the country, was still down 2% from a year ago, with Hartford and San Francisco close behind at 2.1% and 3.5%.

The cause is not mysterious. CRE Daily’s Texas newsletter, citing the Texas Real Estate Research Center, put the average 30 year mortgage rate at 7.03% in September, up from 6.66% a month earlier, as the 10 year Treasury climbed to 5.29%. A 37 basis point jump in one month reprices every buyer who was stretching to the edge of a budget.

Here is the part that matters most. Conditions for buyers are actually improving. Realtor.com noted that asking prices fell for an 11th straight month in September, price reductions edged up, inventory climbed, and months of supply held near a 10 year high. Its Market Clock now puts the national market at 4 o’clock, a late balanced market leaning toward buyers. The leverage has moved to the buyer. The buyer just cannot finance the leverage.

Why this is a K story. When rates do the rationing, the top of the K keeps transacting. Cash buyers, move up buyers sitting on equity, and households whose pay has kept pace get the soft market, the price cuts, and the negotiating room. The bottom of the K, first time buyers and renters trying to cross over, gets the payment. Realtor.com senior economist Hannah Jones pointed out that wage growth is running below inflation, which keeps eroding real buying power. A market can be friendly and inaccessible at the same time. That is exactly where we are.

Where I see opportunity. Sellers and builders who solve the payment rather than the price will take share. At these rate levels, a buydown moves a first time buyer further than a list price cut of similar cost, and builders with their own mortgage arms are best positioned to offer one. Patient, well capitalized land buyers are also in a better spot than they have been in years, because a frozen resale market is when owners of entitled lots start returning calls. And several of the metros that held up best, like Buffalo, Richmond, and Pittsburgh, are relatively affordable places with steady employment bases. Data over emotion says that is where demand is stickiest.

Where I see the downfalls. Thin volume is its own risk. NAR chief economist Lawrence Yun argues that a limited number of distressed properties is keeping prices steady, and for now he is right. But steady prices on record low volume are fragile prices. Agents, title companies, loan originators, and small builders live on transactions, not on values, and another year like this one thins out that whole ecosystem. Jones also said markets are pricing in the possibility of another Fed hike before year end after hot inflation data. If that happens, winter could be worse than fall. For the Sun Belt, which drove much of the South’s 12% annual decline, this is another turn of the Southern Squeeze: more inventory, falling asking prices, and still too few buyers who qualify.

What I am watching next. Closings trail contracts by one to two months, so the November and December existing home sales reports will carry this September drop. I am watching whether the 10 year holds above 5%, whether builders widen incentives or cut starts further, and whether the best performing metros keep their edge or converge with everyone else. If signings stay this low into the spring market, the question stops being about price and becomes about who is still standing to sell, lend, and build when demand comes back.

If you are a builder or developer trying to keep a project moving while the cost of money does the rationing, I wrote a free e-book on exactly that problem, The Capital You Don’t Have to Rent, about funding development without hard money. You can get it at https://danielkaufmanre.com/capital.

About the Author

I’m the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. My focus is workforce housing and employer-anchored development, including mountain resort communities through Oldivai.

Reach me at Daniel@kaufmanredev.com or find more at danielkaufmanre.com.

Sources

Pending Home Sales Plunge to All-Time Low in Troubling Sign for Fall Housing Market, Realtor.com, October 20, 2026, https://www.realtor.com/news/trends/pending-home-sales-fall-september-2026-housing-update/

Texas Job Growth Triples the Nation’s as Mortgage Rates Top 7%, CRE Daily, October 14, 2026, https://www.credaily.com/newsletters/texas/issue/texas-job-growth-triples-the-nations-as-mortgage-rates-top-7/

Two reports landed this morning that belong together. Realtor.com covered ATTOM’s third quarter affordability report, which found that major ownership costs exceed historical affordability norms in 98% of the 583 counties ATTOM analyzed. The same morning, Realtor.com reported on new John Burns Research and Consulting work showing the country has 135 million households when 2010 living patterns would have produced 139.3 million. That is 4.3 million households that never formed.

Read them separately and you get two gloomy headlines. Read them together and you get the most important demand number in housing right now.

The price fell. The house did not get cheaper.

ATTOM put the median single family and condo price at $368,000 in the third quarter, down 2% from a year earlier. Prices moved the right way. Affordability did not. With mortgage rates reaching 7.3% by the end of the quarter, as Realtor.com reported, ATTOM calculates that a buyer needs $90,191 a year to carry a median priced home at a 28% front end ratio, against a national average wage of $79,534. In one of every three counties, ownership costs eat more than 43% of the typical local wage, which ATTOM labels seriously unaffordable.

This is the K shaped housing economy in one table. Owners with equity and old debt are fine. Anyone who has to finance today, at today’s rate, is shut out even when the sticker price softens. A 2% price cut does not offset financing at more than 7%.

Where the missing households went

The Burns report, as Realtor.com described it, finds every age group short 600,000 to 900,000 households. Relative to size, the youngest adults carry the heaviest load: 15 to 24 year olds are missing 9% of their households, versus 2% to 4% for older groups. Realtor.com’s own research counted a record 25.2 million adults under 35 living with parents in 2025, and NAR’s latest buyer profile put the median first time buyer at 40.

Those people did not disappear. They are in childhood bedrooms and shared apartments, waiting for a product they can afford. That is suppressed demand, not absent demand, and it is why I do not buy the argument that the country is overbuilt outside a handful of oversupplied submarkets.

Where I see the opportunity

The builders who win from here are the ones building small and pricing for the middle. Burns and Realtor.com senior economist Hannah Jones land on the same prescription: smaller homes, zoned and permitted at lower cost. I agree, with Jones’ own caveat attached. Small only helps if it is actually priced lower. Realtor.com found the starter home share of inventory slipped from 38.1% to 36.2% over seven years while the median starter price climbed from $260,000 to $340,000.

The other winner is Texas. ATTOM found Harris, Dallas, and Bexar counties still well under the 28% threshold. That is not luck. It is permitting. Markets that let builders deliver lots at scale keep ownership within reach of local wages, and those are the markets where the missing households will form first. Inside the Southern Squeeze, the metros that kept building are the ones keeping their discount.

Employer anchored workforce housing gets more valuable in this setup too. When a third of counties are seriously unaffordable, a company that can house its people has a recruiting edge, and a developer partnered with that employer has a demand floor most spec builders do not.

Where it breaks down

Pent up demand is not the same as effective demand. A 26 year old living at home only becomes a household when the payment works. If rates stay above 7%, that demand stays bottled up, and builders who underwrite to it too early carry inventory nobody can finance.

The coastal counties at the top of ATTOM’s list will not be fixed by small homes alone. In Kings County, ATTOM found ownership costs on a median priced home running at 114.1% of local wages. Land is the whole problem there, and entitlement is the bottleneck behind the land.

I also expect the 4.3 million figure to get misused. It is a count measured against 2010 behavior, not a construction target, and Realtor.com’s coverage notes that lower divorce rates and longer lives are part of the shift. The useful read is directional: the demand exists, and it is concentrated at the entry level.

What I am watching

Three things. Whether the starter home share of listings turns back up. Whether the next ATTOM report shows counties moving back under the 28% line as wages keep climbing. And which cities move first on lot size and small home zoning, because that is where land gets repriced.

If you want to follow which metros are lining up the land and entitlements to meet that pent up demand, the free National Land Opportunity Watchlist and market pulse at www.landbriefing.com track it every week.

About the Author

I’m the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. My focus is workforce housing and employer-anchored development, including mountain resort communities through Oldivai.

Reach me at Daniel@kaufmanredev.com or find more at danielkaufmanre.com.

Sources

Homes Are ‘Seriously Unaffordable’ in Nearly a Third of U.S. Counties, New Report Finds, Realtor.com, October 22, 2026, https://www.realtor.com/news/trends/housing-affordability-report-by-county-q3-2026/

U.S. Is Missing 4.3 Million Households as Priced-Out Young Adults Stay Home, Realtor.com, October 22, 2026, https://www.realtor.com/news/trends/millions-missing-households-young-adults-stay-home/

Housing hit a wall in September. Not just sales. Starts, completions, and the permits builders are sitting on all tell the same story: mortgage rates are crimping affordability, and both sides of the market stepped back in the same month.

That's the part I want to focus on, because a market where only buyers pull back looks very different from one where builders pull back with them.

The demand side

NAR's pending home sales index fell 7.3% from August. Consensus was looking for a dip of 0.4%. Year over year, signed contracts were down 11.3%, the lowest reading since NAR launched the index in 2001.

All four regions fell on both a monthly and annual basis. The West was weakest, down 9.2% on the month and 15.0% on the year. The South followed, down 8.2% on the month and 12.0% on the year.

The trigger isn't hard to find. According to Mortgage News Daily figures cited by CNBC, the 30 year fixed started September around 6.8% and finished near 7.6%. That's close to a full point in four weeks. Pending sales measure contracts signed, so this is buyers reacting in real time to a payment that moved on them mid search.

NAR's Lawrence Yun put it simply: job and income growth help, but affordability moves with mortgage rates.

The supply side

The Census Bureau and HUD numbers for September:

• Housing starts fell 5.2% month over month and 7.4% year over year to an annualized 1.2 million. Single family starts were 859,000, down 4.6%, the lowest since September 2025.

• Building permits were roughly flat on the month and down 3.0% on the year at 1.4 million. Single family permits fell 4.0% to 845,000, while permits for buildings with five or more units rose 5.9% to 503,000.

• Units under construction were flat from August but down 3.3% year over year at 1.3 million.

• Completions rose 2.0% on the month but were down 14.0% on the year at 1.19 million, the second lowest reading since December 2019. Year to date, completions are down 12.5%.

• Units permitted but not yet started rose 9.8% year over year to 279,000.

Builder sentiment backs it up. NAHB's October read came in at the lowest level in 14 years, with buyer traffic the weakest component.

So what's going on?

Higher rates are hitting demand and supply at the same time. Buyers are stepping back from contracts. Builders are holding off, and the pile of permitted but unstarted units keeps growing while they wait for demand to come back.

That 279,000 number is the one I keep coming back to. Those aren't speculative projects. Somebody already bought the land, got it entitled, paid the fees, and pulled the permit. The hard part is done. What's missing is a buyer at a payment that pencils, so the work sits. That's capital waiting, not capital leaving.

Here's the other side of it. Fewer completions today mean less new inventory in 2027. That helps explain why prices, not counting incentives, are holding steady even as sales slow. The "not counting incentives" part matters. Builders are protecting the sticker price and giving it back through rate buydowns and closing cost credits. Nationwide's Ben Ayers expects construction to stay sluggish into 2027 as builders keep working through current projects with price cuts and incentives eating into margins.

And notice where permits are going up: buildings with five or more units. When the monthly cost of owning jumps, the capital that's still moving shifts toward rentals.

The rate question

Yun believes mortgage rates may be close to peaking, since they've already climbed well beyond the Fed's increases. I think that's a reasonable read. Still, energy driven inflation is the wild card, and it's the variable nobody in housing controls.

If rates ease, there is pent up demand on both the buyer side and the builder side ready to come back at once. Buyers who walked from contracts in September haven't stopped needing a house. Builders holding 279,000 permitted units can move quickly. That's how a frozen market can turn into a tight one faster than most people expect.

How I'm reading it

A frozen market isn't a broken one. NAHB's Robert Dietz said demand persists; it's sitting on the sidelines. Here's what I'm watching:

• The downside is carry. Builders and land holders sitting on permitted sites are paying interest, taxes, and fees every month the shovel doesn't go in. The longer this lasts, the more of those sites change hands.

• The opportunity is entitled land. When completions drop 14% and the backlog grows, the land that's already through the approval process gets more valuable on the other side of the cycle, not less.

• Workforce housing gets harder and more necessary. The households most sensitive to a point on the mortgage rate are the ones employers need housed. Projects that don't depend on a 7.6% mortgage buyer are the ones that keep moving.

• Watch the rentals. Five plus unit permits rising while single family falls tells you where the money still sees demand.

This is the kind of market where the work is on land and fundamentals, not on headlines. If you're tracking where the next cycle sets up, that's what we built LandBriefing for: land and housing fundamentals across markets, in one place.

About the Author

Daniel Kaufman is the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. He writes The Kaufman Report on housing, land, and the markets underneath them, from an operator's point of view.

Contact: Daniel@kaufmanredev.com | danielkaufmanre.com

Sources: CNBC, "September data shows housing market in a deep freeze" (Oct. 20, 2026); National Association of Realtors, Pending Home Sales Index, September 2026; U.S. Census Bureau and HUD, New Residential Construction, September 2026; National Association of Home Builders, October 2026 Housing Market Index.

The housing shortage everyone will be complaining about in 2028 is being written this month, and the paperwork came out this week.

Read more

CRE Daily’s national newsletter led this morning with a number every apartment owner should read twice. CRED iQ re-sized $136 billion of Fannie Mae, Freddie Mac, and CMBS apartment debt maturing between October 2026 and December 2028, and found that loans holding 31% of that balance fall short at today’s terms. Closing the gap takes $6.8 billion of fresh capital, and it touches nearly one maturing loan in four.

I want to be precise about what this is. It is not a multifamily collapse. Debt is still available, and CRE Daily notes that most maturing loans should refinance without trouble. What it is, is a sorting event. The market is about to separate owners by when they bought and how they financed, and the data says that sorting has already started.

The vintage is the whole story

According to CRE Daily’s summary of the CRED iQ work, loans written in 2021 and 2022 carry a median coupon of 3.35% and now face rates two to three points higher. Of that vintage, 46% need new equity. For loans written in 2016 to 2018, the figure is 15%.

That is the K shaped housing economy showing up in the capital stack. The older vintage bought at a lower basis, collected years of rent growth, and can absorb today’s rates. The 2021 and 2022 vintage bought at peak pricing with cheap money and underwrote rent growth that the supply wave took away. Same asset class, often the same cities, two completely different balance sheets.

The income split makes it sharper. Among loans that still qualify, CRE Daily reports median NOI is up 31% since underwriting. Among the loans that fail, NOI is down 12%. This is a rate problem stacked on top of an operating problem, and the operating problem is the one nobody can refinance their way out of.

A quarter point did real damage

The September 17 move in SOFR, from 3.62% to 3.85%, pushed 178 more loans below a 1.25x coverage threshold, adding $4.0 billion of balance and $846 million to the funding gap, per CRE Daily. Each additional quarter point adds roughly another $1.0 billion. CRE Daily also reports borrowers are preparing for a possible October 28 rate hike, with the 10 year Treasury at about 5.09% as of Friday’s close. I would not underwrite relief from the rate side.

Look at the geography. The share of maturing balance falling short is 70% in San Francisco, 55% in Atlanta, and 51% in Denver, but only 13% in Chicago. Atlanta and Denver are where peak era money chased rent growth that new deliveries absorbed. Chicago never got bid up the same way, so it had less to give back. That is the same pattern we keep seeing in underpriced turnaround markets: the places nobody was excited about in 2021 are the places with the cleanest balance sheets in 2026.

And occupancy will not save you. CRE Daily highlights a 767 unit building near Wall Street that is 94% occupied, yet its income supports only about $183 million of new debt against a $246 million loan maturing in February 2027. A full building can still be $63 million short.

Where I see opportunity

Owners from the older vintages with moderate leverage are positioned to be buyers, not sellers, as 2027 maturities force decisions. Providers of preferred equity and gap capital will have real pricing power. And well capitalized operators who can take over 2021 and 2022 assets at a reset basis will be buying good buildings with bad capital structures, which is the best kind of problem to inherit.

Where I see the downfalls

Extensions are not solutions. Every negotiated extension pushes the loss into a later year and usually into a weaker hand. The stress is also migrating. CRE Daily, citing Trepp, reported last week that private-label CMBS apartment delinquency hit 7.69%, more than double its 3.30% rate two years ago, while CRE CLO delinquency fell partly because troubled loans left those pools. Headline numbers can look calmer while the risk just changes address. Rescue capital is expensive, and an owner who covers a gap with it may keep the building and lose the upside. The quiet casualty is the resident, because owners short on cash defer capital work first.

What I am watching

The October 28 Fed decision, because each quarter point is worth about a billion dollars of shortfall. First quarter 2027 maturities, where the February deadlines start. And whether Sun Belt NOI recovers fast enough as the supply wave clears, which CRE Daily’s chart of the day suggests is beginning. Data over emotion: the owners who survive this will be the ones who rerun their numbers now instead of waiting for a rate cut.

If you are staring at a 2027 maturity or a capital gap on a new project, my free e-book, The Capital You Don’t Have to Rent, walks through how we think about funding development without leaning on hard money. You can get it at https://danielkaufmanre.com/capital.

About the Author

I’m the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. My focus is workforce housing and employer-anchored development, including mountain resort communities through Oldivai.

Reach me at Daniel@kaufmanredev.com or find more at danielkaufmanre.com.

Sources

One in Four Maturing Multifamily Loans Now Fall Short at Refinancing, CRE Daily, October 19, 2026, https://www.credaily.com/newsletters/national/issue/one-in-four-maturing-multifamily-loans-now-fall-short-at-refinancing/

Multifamily Delinquency: Private-Label CMBS Holds Half, CRE Daily, October 16, 2026, https://www.credaily.com/briefs/multifamily-delinquency-private-label-cmbs-holds-half/

Realtor.com’s latest Hottest Housing Markets ranking came out this week, and the headline most people will read is that Kenosha, Wisconsin took the No. 1 spot. The more useful headline sits underneath it. Manchester-Nashua, New Hampshire, the metro that has topped this list 35 times since the data began in 2017, fell to 38th in September after ranking eighth in July.

I read those two facts together, because they tell one story. Buyers are not chasing hot markets. They are chasing a payment that works within driving distance of a paycheck. When that payment stops working, even the most reliable market in the country cools off fast.

What the ranking actually measures

Realtor.com scores hotness on two things: how many people view each listing and how quickly listings leave the market. According to Realtor.com, the Midwest and Northeast split the top 20 evenly in September, ten spots each. The South, which owned the growth narrative for most of the last decade, is not the story here.

Kenosha drew roughly three times the national average in views per property, and homes there sold in about 32 days, roughly a month faster than the national norm, according to Realtor.com’s reporting. Racine sits about 25 miles from Milwaukee with a median list price near $352,000. Janesville offers about an $85,000 discount to Madison. Providence and Hartford offer $200,000 or more in savings to buyers coming from Boston or New York.

Realtor.com senior economist Hannah Jones calls this the rise of the affordable alternative metro. I call it what it is on the ground: the commuter shed around a real employment base, priced before the market noticed.

Why Manchester broke

Manchester did not lose buyer interest. Realtor.com reports its listings still pull 2.7 times the views of a typical U.S. home. What it lost was speed. Typical time on market stretched to 48 days in September. The median listing price was $579,900, and Freddie Mac’s 30 year fixed average has since climbed to 7.40% for the week ending October 8, its highest level since November 2023, according to Realtor.com.

New Hampshire Housing’s figures, cited by Realtor.com, put the income needed to buy a median priced single family home in the state at about $189,000, and only 15% of households clear that bar. That is the K shaped housing economy in one number. The top of the K can still buy. Everyone else is window shopping, which is exactly what high views and slow sales look like.

Manchester is what happens to an affordable alternative after it stops being affordable. That is the lesson I would carry to every market on this month’s list.

Where I see opportunity

The winners in this cycle will not be the metros with the best story. They will be the ones where land is still priced for yesterday’s demand and the job base is already in place. Kenosha works because it sits between Chicago and Milwaukee with a lower tax burden. The same logic applies to dozens of secondary metros in the Midwest and Northeast that nobody puts on a conference panel.

For builders, that means smaller product near highway, rail, and employer corridors, delivered at a payment the local wage can carry. For lenders, it means the demand in these markets is grounded in value rather than speculation. CRE Daily, citing RealPage, reported this week that the Midwest posted the strongest regional apartment rent growth in the country at about 2% annually, while the South was the only region with falling rents. Demand is following the cost of living, and it is not subtle.

Where I see the risk

The same pattern can eat itself. Every affordable alternative becomes the next expensive market if supply does not follow demand. Manchester had just 0.8 months of supply in August, per NH Realtors data cited by Realtor.com. That is not a market correcting because buyers left. That is a market stalling because there was never enough to buy, and the rate move finally caught up with prices.

The other risk is rates themselves. A ranking built on views and days on market can turn quickly when the 30 year mortgage moves a full point in a year. Kenosha at $350,000 is resilient. Kenosha at $450,000 with an eight percent mortgage would not be.

What I’m watching

Three things. Whether Kenosha and Racine hold their days on market through the winter at these rates. Whether the Northeast entries start showing the same slowdown Manchester did. And whether local governments in these alternative metros approve enough housing, fast enough, to keep them affordable. Land and entitlement are the real bottleneck. They always are.

If you want to see how we score metros like these on growth, land pricing, and entitlement risk, our free National Land Opportunity Watchlist and market pulse are at https://www.landbriefing.com.

About the Author

I’m the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. My focus is workforce housing and employer-anchored development, including mountain resort communities through Oldivai.

Reach me at Daniel@kaufmanredev.com or find more at danielkaufmanre.com.

Sources

America’s Hottest Market No More: This New England City Just Dropped Out of the Top 20, Realtor.com, October 9, 2026, https://www.realtor.com/news/trends/manchester-nh-hottest-markets-report-september-2026/

Mortgage Rates Hit New 3-Year High as Fed Official Says More Hikes Are Needed, Realtor.com, October 8, 2026, https://www.realtor.com/news/trends/mortgage-rates-fed-hikes-today-october-8-2026/

Apartment Demand Catches Up to a Fading Supply Wave, CRE Daily, October 8, 2026, https://www.credaily.com/newsletters/national/issue/apartment-demand-catches-up-to-a-fading-supply-wave/

CRE Daily reported this week that Avison Young is now tracking 124 proposed or announced U.S. manufacturing projects worth about $3.4 trillion in potential investment, with roughly two dozen plants already under construction and about $500 billion committed. Most of the industry is reading that as a site selection story. I read it as a housing story.

Read more

Two office reports crossed my desk this week, and read side by side they tell you more than either one does alone. CRE Daily reported that new direct lease rents in Manhattan averaged $99 per square foot over the trailing twelve months through September, up 28 percent from a year earlier, citing Avison Young data. Three days later, CRE Daily reported that Houston posted positive office absorption for a second straight quarter, citing JLL, but year to date that adds up to only about 56,000 square feet in one of the largest office markets in the country.

Both are recovery headlines. They are not the same recovery. This is the K shaped economy showing up in office, and if you underwrite the sector as one asset class you will get it wrong in both directions.

The top leg is broadening

The Manhattan story is no longer a trophy tower story. Per the Avison Young figures CRE Daily cited, overall availability fell 290 basis points to 13.4 percent, the lowest since 2020, and Class A and Class B/C space now land at similar net effective rents of roughly $83 per square foot once concessions are counted. Year to date leasing reached 30.2 million square feet, the second strongest pace through the third quarter since 2014. Avison Young’s busyness tracker put Manhattan at 86.2 percent of pre-pandemic office activity, against a 70.8 percent national average.

That last number is the one I care about most. Rent follows bodies. When people are physically back, tenants compete for whatever space is left, concessions shrink, and the discount that used to separate a great building from an average one starts to close. That is what demand broadening past trophy actually looks like.

The bottom leg is still on the floor

Houston is the other picture. JLL’s data, as reported by CRE Daily, shows that all of the space newly leased in the third quarter was Class A, mostly in buildings delivered since 2015, and that top tier space rents for about 65 percent more than older stock. Leasing volume was healthy, close to 8 million square feet year to date, but most of that activity is tenants trading up and leaving older buildings behind. JLL’s own Texas research lead described the market as walking a fine line between occupancy gains and losses.

That is not a recovery for the owner of a 1980s tower on the edge of town. That is a migration out of his building.

Pricing has not caught up to either story

Green Street’s Commercial Property Price Index, covered by CRE Daily on October 9, still has office values 33 percent below their 2022 peak, the widest gap of any sector, even though office prices were up about 5 percent year over year. One national index cannot price a market where Manhattan Class B is converging with Class A while a Sun Belt city fills only its newest buildings. The average hides both the winners and the losers.

And the cost of capital is moving against everyone. CRE Daily’s market snapshot had the 10-year Treasury at about 5.23 percent at the October 8 close, and Green Street warned that persistently higher yields could push values down again. Assets with real income growth can absorb that. Assets waiting on a recovery that is not coming to their tier cannot.

Where I see opportunity, and where I see trouble

The opportunity sits in the middle of the top leg: well located Class B in markets where demand has clearly broadened, where rent convergence is real, and where the basis still reflects the panic pricing of the last few years. In Manhattan that window is closing fast. The next places to look are markets where office attendance is high and new supply is close to zero.

The trouble is the bottom leg wearing a recovery headline. Older, commodity office in markets where new Class A is still soaking up all the demand does not get rescued by positive absorption numbers. It gets emptied by them. Even the strong market has a test ahead: CRE Daily also noted $8.7 billion of New York commercial loans maturing within twelve months, 58 percent of it office.

What I am watching next: whether Houston’s leasing starts to reach Class B space the way it has in Manhattan, whether the 10-year holds above 5 percent into year end, and whether lenders start pricing office by tier and by attendance instead of by asset class. Data over emotion. The headline says office is back. The data says some of it is.

I break down stories like this one every day in the Perspectives section of the U.S. Real Estate Journal. If you want an operator’s read on the numbers before they become consensus, start at https://www.usrealestatejournal.net

About the Author

I’m the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. My focus is workforce housing and employer-anchored development, including mountain resort communities through Oldivai.

Reach me at Daniel@kaufmanredev.com or find more at danielkaufmanre.com.

Sources

Manhattan Office Rents Climb 28% as Demand Broadens Past Trophy, CRE Daily, October 6, 2026, https://www.credaily.com/newsletters/new-york/issue/manhattan-office-rents-climb-28-as-demand-broadens-past-trophy/

Houston Office Absorption Turns Positive for Second Quarter, CRE Daily, October 9, 2026, https://www.credaily.com/briefs/houston-office-absorption-turns-positive-for-second-quarter/

CRE Price Recovery Stalls as Higher Yields Threaten Further Declines, CRE Daily, October 9, 2026, https://www.credaily.com/newsletters/national/issue/cre-price-recovery-stalls-as-higher-yields-threaten-further-declines/

Nationally, the apartment market just crossed a line I have been waiting on for two years. CRE Daily, reporting RealPage data, said renters absorbed nearly 304,800 units in the year ending in the third quarter, while about 318,000 new units were delivered. That gap of roughly 13,000 units is the smallest since late 2015. Deliveries are down 46% from the late 2024 peak of 588,000 units.

On the surface, that reads like a recovery. National occupancy sits at 95.4%, and effective asking rents rose 0.9% year over year, the first positive annual print since the second quarter of 2025, according to the same RealPage figures. But a national average blends very different markets, and this one hides the most important regional story in American housing right now.

The recovery is regional, and the South is last

The markets leading are the ones that could not build. CRE Daily reported San Francisco posted 14.3% annual rent growth. San Jose and Oakland rose 6% to 9%. Virginia Beach rose 6.5% with occupancy of 97.7%. The Midwest led every region at 2% growth, carried by Milwaukee, Chicago, Cleveland, and Detroit.

The South was the only region with falling rents and occupancy below 95%. San Antonio dropped 3.7%. Charlotte, Tampa, and Houston, along with Denver, fell 2% to 3%. Phoenix and Austin are improving at the margin, with annual losses narrowing below 2% and quarterly rents turning positive, but they are still in the red over twelve months.

This is the Southern Squeeze from the other side

I have written about the Southern Squeeze as an affordability problem: home prices, insurance, and taxes rising faster than local wages across the Sun Belt. The apartment data shows the other half of it. The same markets that attracted the most capital also permitted the most units, and owners there are carrying the longest hangover. CRE Daily reported that 22.7% of apartments nationally still offer incentives, averaging 7.5%. In oversupplied Sun Belt submarkets, concessions are where effective rent goes to disappear.

Values tell the same story. Green Street’s price index, as reported by CRE Daily on October 9, has apartments down 4% year over year and 22% below the 2022 peak. Expenses are not helping. Yardi Matrix data in the same issue put property taxes at 20.9% of apartment operating expenses in the second quarter, second only to payroll. Rising taxes on top of flat rents squeeze NOI no matter what cap rates do.

Where I see opportunity

Supply is the variable that matters most, and it is falling fast. The delivery pipeline for 2027 and 2028 is being set right now by starts that higher rates have already choked off. Sun Belt markets with real job growth, not just population growth, are likely to tighten faster than consensus expects once the last wave leases up. The buyers positioned to win are the ones who underwrite today’s concession heavy rents, not pro forma rents, and can still make the deal work.

The Midwest result is not a fluke either. Markets that never overbuilt, and that many investors dismissed as slow, are now printing the best regional rent growth in the country. Data over emotion keeps winning in the places that were written off.

Where it breaks down

I see three risks. First, rates. Realtor.com reported Freddie Mac’s 30-year fixed average at 7.40% for the week ending October 8, a three year high. That keeps would-be buyers renting, which supports absorption, but it also keeps pressure on cap rates and values. Second, demand quality. Quarterly absorption of 69,800 units ran below seasonal norms, per CRE Daily, so the narrowing gap is mostly about supply falling, not demand surging. Third, the K shaped economy. Luxury lease ups with heavy concessions are absorbing higher income renters, while workforce renters face a wage ceiling that no supply cycle fixes on its own.

What I’m watching

Fourth quarter absorption in San Antonio, Charlotte, and Tampa. Concession share by submarket rather than by metro. And starts, because the next shortage is being written into the pipeline now, and the markets that can actually entitle land in the next cycle will be the ones that capture it.

If you want to track which metros have the land and the growth to absorb the next cycle, the free National Land Opportunity Watchlist and market pulse at https://www.landbriefing.com is where we publish that work.

About the Author

I’m the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. My focus is workforce housing and employer-anchored development, including mountain resort communities through Oldivai.

Reach me at Daniel@kaufmanredev.com or find more at danielkaufmanre.com.

Sources

Apartment Demand Catches Up to a Fading Supply Wave, CRE Daily, October 8, 2026, https://www.credaily.com/newsletters/national/issue/apartment-demand-catches-up-to-a-fading-supply-wave/

CRE Price Recovery Stalls as Higher Yields Threaten Further Declines, CRE Daily, October 9, 2026, https://www.credaily.com/newsletters/national/issue/cre-price-recovery-stalls-as-higher-yields-threaten-further-declines/

Mortgage Rates Hit New 3-Year High as Fed Official Says More Hikes Are Needed, Realtor.com, October 8, 2026, https://www.realtor.com/news/trends/mortgage-rates-fed-hikes-today-october-8-2026/

In three weeks, Florida voters decide on Amendment 3, the proposal to raise the homestead exemption from $50,000 today to $150,000 in 2027 and $250,000 in 2028. Governor DeSantis says it would wipe out property taxes for roughly 60% of Florida homeowners. On a campaign flyer, that looks like a clear win. On a development pro forma, it looks like a problem.

I build and invest in Florida. I underwrite land, entitlements, infrastructure, and rental housing here, and every one of those deals depends on local governments that work. So when I look at Amendment 3, I'm not asking how much my neighbor saves. I'm asking who pays for the roads, the sewer lines, the schools, and the fire stations that make a piece of land worth building on. Right now, nobody has a good answer.

The hole is real, and it's big

Homestead property makes up about a third of the property tax revenue that funds local government in Florida. Last year, cities, counties, schools, and special districts collected $59.17 billion in property taxes, up from about $32 billion in 2019, and the state projects $83 billion by 2032. According to the Florida Chamber of Commerce, school boards took the largest share, $22.83 billion or 38.6%. Counties took $20.68 billion, about 35%. Cities and special districts split the rest.

Shrink a revenue source that size and the cuts don't land on abstract line items. They land on people.

The Florida League of Cities found 85 cities, including Pensacola, Fort Myers, and Key West, could not fund public safety at current levels even if they eliminated every other service paid for by property taxes. That isn't a budget trim. That's a city choosing between a fire engine and a police patrol.

Both candidates for governor see the gap. Republican nominee Byron Donalds supports reform but has called for a way to replace what police and fire departments would lose, and he hasn't said what that is. Democratic nominee David Jolly has turned against the measure, saying the math probably doesn't work, and he'd rather see a first time homebuyer exemption. When firefighters and police come out against a tax cut, I pay attention.

The bill doesn't disappear, it moves

This is what concerns me most as someone who builds rental housing. When homestead owners stop paying, pressure shifts to everyone who isn't homesteaded: apartment owners, single family rental owners, retail centers, offices, hotels, and second homes.

In practice, that means renters. Property tax is an operating expense, and it shows up in the rent.

Florida already has a workforce housing shortage. Teachers, nurses, deputies, hotel staff, and young families mostly rent. Amendment 3 gives a tax break to people who already own and quietly raises costs on people who can't afford to buy yet. Every workforce rental deal I look at gets harder to make work when the tax line goes up, and when deals don't pencil, they don't get built.

Growth still has to be paid for

Florida adds people every year, and new neighborhoods need water plants, sewer capacity, roads, and schools. A big share of that is carried by the local property tax base. Shrink the base and local governments do the predictable things: raise impact fees, slow approvals, push more infrastructure cost onto developers, and pass on projects they can't service.

All of that ends up in the price of a new home. The irony is that a measure sold on affordability could make new housing more expensive to deliver.

Higher prices, fewer listings

Realtor.com estimates that eliminating property taxes would lift Florida home values 7% to 9% almost immediately, adding $200 billion to $250 billion in total value. Its senior economist, Joel Berner, points out that makes homes less affordable for first time buyers. Great news for anyone who already owns. Bad news for the young nurse trying to buy her first condo in Orlando.

I also expect it to deepen the lock in effect. If your tax bill drops to zero, you have one more reason never to sell. That means fewer listings, less turnover, and tighter inventory.

Then add the five year residency requirement for new arrivals. You end up with a two tier system where the people moving here, the same people who have powered Florida's growth, pay full freight while longtime owners pay little or nothing.

Somebody still pays

If the money has to come from somewhere, the realistic options are higher sales taxes, new fees, or deep service cuts. Neil Schiller of Government Law Group has warned that a sharply higher sales tax would hurt tourism and widen the gap between the wealthy and everyone else. Tourism is the backbone of this economy, and sales taxes hit working families hardest. Taxing visitors and renters so homeowners with paid off houses can pay nothing isn't reform.

Schiller makes another point I agree with. People don't come to Florida only for the weather. They come because local governments built places worth living in. Cut those services and you change the product.

It doesn't touch the real cost problem

Ask Florida homeowners what's squeezing them and property tax usually isn't first on the list. It's insurance and HOA fees. Florida sits at the center of the national property insurance crisis and has some of the highest HOA fees in the country. Amendment 3 does nothing about either.

MidFlorida Credit Union estimated in 2024 that the average Florida homeowner pays about $2,338 a year in property tax. That's real money, but for a lot of owners the insurance bill is bigger, and it keeps climbing.

Uncertainty is its own cost

Amendment 3 needs 60% to pass, and Florida Chamber CEO Mark Wilson has said that will be hard to reach. But this doesn't end on Election Day. Donalds has said he'll push to eliminate homestead property taxes whether the amendment passes or fails, and the state's Tax and Budget Reform Commission could come back with a new proposal in 2028.

For anyone underwriting long term projects here, that means years of not knowing what local governments can spend, or what tax load rental and commercial property will carry. Capital prices in that uncertainty. Communities pay for it in projects that never start.

What I'd rather see

I'm not against property tax relief. I'm against relief with no replacement plan. I'd rather see targeted help for first time buyers, real insurance reform, and any homestead expansion tied to a funded plan, so a city like Fort Myers never has to choose between its police and its firefighters.

If you're buying

An agent in Austin who has watched homestead exemptions play out in Texas put it well: the question buyers rarely ask is where the missing revenue comes from. When small counties trim services or shift the load onto commercial and nonhomestead owners, the neighborhood changes, even if your own bill went down. Her advice is to weigh the exemption against your specific property and street over ten years, not the headline number.

I'd go one step further. A neighborhood is only as good as the services behind it. A lower tax bill on a street with weaker schools, slower emergency response, and roads nobody can afford to fix isn't a deal. It's a discount on a declining asset.

Two Realtor.com stories ran on Sunday that belong in the same sentence. One covered a Neighbors Bank survey showing first-time buyers are negotiating harder than they have in years. The other reported that Mike Fratantoni, chief economist of the Mortgage Bankers Association, expects the 30-year mortgage rate to stay above 7% through the end of 2027.

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