The Vertical: Jake’s Weekly Brief

Hey… Jake here with your 5 minute download.
No fluff. Just real signals from deals, data, and the news shaping tomorrow.

EXEC SUMMARY: Your 10 Second Download

Theme this week: Dislocation = Opportunity.
From lease up drag to CRE stress to shifting buyer power - cracks are forming, and smart capital is moving fast.

Renters are in control: Lease ups slow, concessions rising
Builders are hitting pause: Permits are slipping, sentiment is shaky
Rates are rising again: Treasury volatility is bleeding into CRE
Wealth is relocating: Scottsdale just overtook Austin in millionaire growth

LOCAL MARKET INTEL: WATCH THE TREND, NOT THE NOISE

If you're serious about staying ahead in your market, here’s what to track every week:

• Inventory: Are sellers piling on or sitting tight?

• New Listings: Is fresh supply fading?

• Pending + Sold Volume: Measures real buyer demand

• Price Cuts vs. Increases: Who’s blinking first?

• Days on Market: Are listings aging or clearing?

The headlines lag. The data whispers. Watch what happens before it shows up in the news.

MULTIFAMILY: LEASE UP RISK IS REAL

🔻 Only 49% of new apartments leased within 3 months in Q4 2024
→ Fifth straight quarter below 50%
→ 8.2% vacancy for 5+ unit buildings - highest since 2020
→ Renters pushing back: lower rent, free parking, flexible terms

Studios had biggest YOY jump: 38% → 47%
3+ BR units leased fastest: 53%

Takeaway:
Lease up timelines are expanding. If you're banking on a quick stabilization, you’re going to miss.

TOP CITIES FOR NEW CONSTRUCTION

Why it matters:
Texas is still lapping the field. Houston's zero zoning model shows what political will can unlock.
NY is building, but not selling - another sign of bifurcation.

OVERSUPPLY VS. FUTURE DEMAND

Oversupplied Today:

• Texas: +37% resale homes vs. 2019

• Florida: +38%
  → Builders cutting prices, pulling permits

But Look at the Long-Term:

• Austin: +2.4% population growth in 2024

• Orlando: Job growth nearly 2x national average

Lesson:
Don't just underwrite today’s absorption. Underwrite migration, jobs, and the path to equilibrium.

QUICK HITS

🚇 LAX Metro Connector opens June 6 and finally connects the K Line to the system. Free rides opening weekend.
💸 Luxury pending sales down 10% YoY - softness showing at the top.
👷‍♀️ Construction jobs: CA +6,300 in April; WA lost 3,300
🌳 LA Park Fees: $9K/unit… and we still rank 90th out of 100 cities for park access. Where’s the money going?

FRESH SIGNALS

📦 Millionaire Migration: Scottsdale now leads the nation, overtaking Austin with +125% millionaire growth over the past decade. Sunshine & Golf = Happiness

💰 Financing Pressures:

• 30-year fixed at 6.82% in May

• Treasury volatility + deficit fears = upside risk

• CRE loan delinquencies now at highest since 2014

🔨 Building Costs Flatlining:

• Input costs: -0.4% in April

• Materials: -0.3% MoM, +2.2% YoY

• First drop in services in 5 months - minor breathing room if you’re bidding jobs

🏡 April New Home Sales:
743,000 annualized (+10.9% MoM), but inventory still at 8.1 months. Builders are moving product, but we’re far from supply pressure.

🏠 Iowa Legalizes ADUs:
Statewide reform allows 1,000 sf or 50% of primary unit on every SF lot.
The ADU wave isn’t just coastal anymore.

CONTRACTORS TO WATCH

Top Commercial Contractors 2025:

• #1: Turner

• #2: Bechtel

• #3: Kiewit

• 🔼 HITT Contracting: #26 → #10, added $3B+ in revenue (data centers, healthcare, industrial)

• 🔼 Holder Construction: #30 → #15 (logistics + AI builds)

Takeaway:
The firms leaning into infrastructure, logistics, and AI are gaining fast. Watch where they’re pulling permits, they’re the new forward indicators.

SPRING SELLING SEASON: STILL MID

Rates are stuck near 7%
Buyer fatigue is real
There are 500,000 more sellers than buyers nationally

Pending sales: -6.4% in April
Mortgage apps: Down 2 straight weeks
Redfin: Forecasts a ~1% home price drop by year-end

Takeaway:
Buyers have leverage now. But sellers haven’t adjusted expectations (Yet).

FASTEST-GROWING CITY IN AMERICA?

Princeton, TX - not Austin or Phoenix.
Up 30.6% in a single year.

→ $330K new homes
→ 10,000 units in pipeline
→ DR Horton, KB Home, Starlight active
→ Median income: $91K, median age: 33.2

Zoom out:
7 of the top 15 fastest growing cities in the U.S. are in Texas.

WHAT IT TAKES TO BUY A HOME IN 2025

To buy a 3BR with 10% down + 30-year fixed, you’ll need to earn:

• Hawaii: $229K

• California: $210K

• Texas: $102K

• West Virginia: $65K

Migration follows affordability. That’s where the next wave of housing demand and regulation is heading.

WRAPPING IT UP

Here’s what this week’s data actually says:

• Renters and buyers are starting to hold the cards (regionally)

• Builders/developers need to plan for longer DOMs (days on market) and lease up timelines

• CRE lenders are quietly sweating

• Wealth is migrating, and policy is following close behind

If you're still pricing like it's 2021? Good luck.

Talk soon. Let’s build smart.

NEED ENTITLEMENTS OR PERMITS IN LA?

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✅ Flat-fee feasibility memos: $1K
✅ Permit expediting: submittal to RTI
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See you next week.
- Jake