THE VERTICAL - Weekly Brief

A QUICK SCAN

• Inventory Paradox. Resale inventory hits a 5 year high, but new construction is slowing dramatically

• Ownership Crisis. The US homeownership rate plunges to 65.0%, its lowest level since 2019, as 1.2M new renter households form.

• Regional Rift. The market fractures: Sun Belt hotspots (FL, TX) cool rapidly with inventory gluts, while the affordable Midwest and Northeast show surprising price resilience.

• Starter Home Surge. The entry level segment is the only part of the market with sales growth, up +3.9% YOY, defying the broader slump.

• Policy Push. The bipartisan "Road to Housing Act" advances in the Senate, signaling a major federal focus on supply side solutions.

• AI's Unfair Advantage. Top operators are using workflow automation tools like n8n to turn public data into proprietary, first to know deal flow.

1 | INVENTORY PARADOX: Supply Surges, Sales Stall ↓

The housing market is defined by a core contradiction. On paper, supply is surging. Active resale listings have climbed to 1.53M (up 15.9% YOY), pushing inventory to 4.7 months supply.

But this is not a sign of health. It's a market being frozen by an affordability crisis.

• Buyer Resistance: Existing home sales fell again to a 3.93M SAAR. More listings are not translating to more sales, as buyers constrained by record prices and 6.7% rates are resisting the current market.

• Builder Retreat: The new construction pipeline is shrinking. Single family starts fell 4.6% in June, and builder confidence is in deeply negative territory (33 HMI).

• The Real Deficit: This temporary glut masks the nation's true 4.7 million home deficit.

Your reality: The market has more listings, but they're largely stale and overpriced. The chronic undersupply of homes people can actually afford is getting worse as builders pull back.

2 | OWNERSHIP CRISIS: American Dream Hits 6 Year Low ↓

The affordability wall is redrawing the American household. The national homeownership rate just dropped to 65.0%, its lowest point since 2019.

The data reveals a seismic shift from owning to renting:

• Renter Nation: The US added 1.2 million households last year. That growth came entirely from renters as owner-occupied households declined by 39,000.

• The Lost Generation: The homeownership rate for those under 35 declined sharply to 36.4%.

• The Affordability Equation: The median income household needs a $17,000 raise just to comfortably afford a typical home today, a fundamental financial disconnect.

3 | REGIONAL RIFT: Sun Belt Corrects, Midwest Heats Up

The national housing narrative is dead. We are in a "tale of two markets" as a dramatic regional divergence accelerates.

The Cooling Sun Belt: Pandemic era boom markets are facing a significant correction. Markets in Florida and Texas are rapidly rebalancing as their affordability advantage vanishes.

• Price Pressure: Metros like Austin and Tampa are seeing notable price declines.

• Builder Pullback: D.R. Horton confirmed a "weakening in the dynamic in the Florida markets" with a 10.1% YOY drop in regional net orders.

• Cost Headwinds: Soaring insurance and tax costs are curtailing demand.

The Resilient Core: The Northeast and Midwest are now home to the nation's most competitive markets, driven by relative affordability and tight inventory.

• Price Growth: States like Illinois (+6.4% YOY) are posting gains triple the national rate. Cleveland saw a remarkable 13.6% YOY price increase.

4 | STARTER HOME SURGE: Entry Level Defies The Slump ↑

While the broader market slows, one segment shows remarkable strength: starter homes. This is where transaction volume is now concentrated.

The Data Story (June 2025 YOY):

What's Driving This:

• Affordability Pivot: Priced out buyers are pivoting from their "dream home" to the attainable entry level.

• Competition Relief: A 19% inventory surge is finally giving buyers options and reducing bidding wars in this segment.

Your move: For builders and investors, entry level product has really durable demand. For agents, this is where transaction volume is found while other segments remain dormant.

5 | POLICY PUSH: Bipartisan Housing Bill Gains Traction ↑

Amid congressional gridlock, a major bipartisan housing bill is gaining real momentum. The "Road to Housing Act" just advanced out of the Senate Banking Committee, signaling a potential breakthrough.

• The Focus: This bill is laser focused on fixing the supply side of the housing equation.

• Key Provisions:

  • Incentives for localities to ease zoning and permitting.

  • Support for modular and manufactured housing to lower costs.

  • Streamlining of federal housing programs.

• The Momentum: A broad coalition is championing the effort, and it has support from major industry groups.

Your move: This legislation shows where federal policy is heading: rewarding jurisdictions that enable new construction. Track municipalities that are already adopting these policies; they will be first in line for funding.

6 | THE AI EDGE: Creating Your Strategic Advantage

AI is no longer a novelty; it is a strategic asset. The most sophisticated operators are using it to build proprietary systems that create a sustainable, competitive advantage. This week, we're highlighting a tool that can be the engine for your own systems.

AI Tool of the Week: n8n

Consider n8n (pronounced "n-eight-n") a powerful workflow automation platform that handles complexity far beyond simple tools. While many platforms handle basic "if-this-then-that" tasks, n8n allows you to connect virtually any application or data source to build custom, multi-step automated processes that can transform your business operations.

Case Study in Action: We used n8n to build a lead-generation engine for JDJ Consulting.

• The Goal: Be the first to know about every new development project filed in Los Angeles.

• The n8n Workflow:

  1. Every night, an n8n workflow automatically connects to the LA City Planning public database.

  2. It scrapes all new case filings from the past 24 hours.

  3. It filters and formats the data into a clean, concise report.

  4. At 7 AM, it automatically emails the report to the JDJ sales team.

• The Result: JDJ gets a prioritized list of actionable leads delivered to their inbox before competitors even begin their manual search. They are turning public data into proprietary deal flow.

🛠️ AI Prompt You Need To Use

Want to automate your capital raising? This prompt turns ChatGPT AGENT MODE into an investor sourcing agent, saving you hundreds of hours of manual prospecting.

You are "Investor Matchmaker AI," my expert capital sourcing assistant. Your mission is to find the best potential equity partners for my next real estate syndication.

INPUTS:

• Raise Amount: [e.g., $20M Equity]

• Deal Type / Asset Class: [e.g., Multifamily Value-Add]

• Market / Geography: [e.g., Los Angeles MSA]

• Target Minimum Check Size: [e.g., $5,000,000]

DELIVERABLE: Your task is to autonomously research and build a prioritized list of 10-15 highly qualified potential investors.

1. Source & Synthesize: Use SEC filings, Crunchbase, LinkedIn, and industry news to identify potential LPs.

2. Filter & Rank: Prioritize prospects based on a documented track record in our asset class, market, and check size.

3. Create Investor Dossiers: For each of the top 10-15 prospects, provide Name, Title, Company, Estimated Check Size, Relevant Past Deals, and Contact Info (Email, LinkedIn).

4. Draft Personalized Outreach: For the top 5 prospects, draft a concise, personalized introductory email that references their specific investment history.

5. Export: Compile all collected data into a clean CSV file.

BAR FOR QUALITY: Go beyond simple searches. Synthesize information from multiple sources to build a profile that a human analyst would. The goal is a list of warm leads, not a cold database.

Make sure you use Agent Mode in Chat GPT

ChatGPT Study Mode: Your Personal Real Estate Tutor

OpenAI just launched Study Mode, a revolutionary learning feature that acts like having a 24/7 expert tutor who never gets tired of your questions. Unlike regular ChatGPT that gives quick answers, Study Mode uses Socratic questioning and step-by-step guidance to help you truly master complex topics.

Perfect for Real Estate Deep Dives:

Instead of getting a simple answer, Study Mode will guide you through understanding like a world class professor. Try asking:

"How do Community Facility Districts (CFDs) work in the homebuilding space?"

Study Mode will:

• Start by assessing your current knowledge level

• Break down CFD mechanics step-by-step

• Use interactive prompts to ensure you understand each component

• Connect theory to real-world homebuilding scenarios

• Quiz you on key concepts to cement understanding

• Show you practical applications in different markets

Other powerful Study Mode queries for real estate:

• "How do impact fees affect housing affordability? I want to understand the full chain of effects"

• "Teach me how tax increment financing works in redevelopment projects"

To access: Select "Study and learn" from tools in ChatGPT, then ask your question. The AI becomes your personal tutor instead of just an answer machine.

BOTTOM LINE

The Great Rebalancing is here. The market has fractured, decisively shifting away from the national frenzy of 2021, creating clear winners and losers.

• The Winners: AI-powered operators, builders focused on the right strategies, cash rich investors targeting stable Midwest markets, and renters enjoying more options.

• The Losers: Sun Belt sellers clinging to peak valuations and anyone still running a 2021 playbook.

READY TO DOMINATE?

• Need entitlements or permit expediting in California? My team at JDJ Consulting moves complex projects from idea to permit, fast. We navigate the bureaucracy so you can focus on the deal. → jdj-consulting.com

  Book a call with my team!

• Want to leverage AI for your business? My team helps real estate professionals deploy the exact systems and workflows we've discussed today, from automated deal sourcing to advanced underwriting. Stop working harder; start working smarter.

Questions, deals, or AI geek outs? Hit reply. Always down to dive deep.

— Jake