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- THE VERTICAL — Weekly Brief
A QUICK SCAN
Home cancellations hit record high: 15.3% of July contracts fell through - highest July rate on record. Buyers getting cold feet amid high costs.
Mortgage rates at 10 month low: Weekly average 6.58%, cutting typical payments by $224 from May's peak. Don't expect much lower near term.
Slowest summer in a decade: Typical home sits 43 days before contract, the longest July since 2015.
Existing sales rebound slightly: Up 2% in July; affordability still strained (Q2 2025 CHI: families need 36% of income for a median new home, 37% for existing).
Lowe's $8.8B bet on pros: Buys Foundation Building Materials, following Home Depot's distribution spree.
Quick move-ins spike: Builders sitting on 2.5 specs per community, matching 2022 correction levels; 77% of spec inventory has incentives.
EliseAI raises $250M Series E: Led by a16z; serving 75% of NMHC Top 50 and 10% of U.S. apartments.
Data centers' $1T buildout: Vacancy 2.3% despite record construction - "power is the new real estate."
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HOUSING MARKET UPDATE
1) Record breaking cancellations
Home purchase cancellations hit 15.3% in July, the highest July rate on record. Nearly 58,000 deals fell through as high costs and economic uncertainty made buyers skittish.
Why it matters: Buyers have more options and negotiating power, but it signals deeper affordability stress.
Regional leaders: San Antonio (22.7%), Fort Lauderdale (21.3%), Jacksonville (19.9%). Texas and Florida dominate the list.
Tip: Price aggressively and ensure homes are move-in ready. Overpriced listings are sitting longer than ever.
2) Mortgage rates drop, but don't get excited
The 30 year average fell to 6.58% (a 10 month low), cutting typical monthly payments from $2,838 to $2,614. But rates have already priced in September's Fed cut.
Why it matters: This gives buyers about $20,000 more purchasing power since May's peak, but further drops unlikely.
3) Summer selling slowdown hits hard
Homes took 43 days to go under contract in July, the longest for any July since 2015. Pending sales hit a two-year low. Inventory is near a five year high but dipped 1.1% from June, the largest monthly drop since 2023.
Why it matters: Sellers are pulling back as buyers gain more negotiating power with increased options.
Tip: Price realistically. The days of overpricing and waiting are over.
4) Affordability reaches crisis levels
NAHB data (Q2 2025 CHI) shows families need 36% of median income ($104,200) for new homes, 37% for existing homes. Low income families need 71-74% of earnings.
Severely cost burdened markets: San Jose (93% of income), Honolulu (73%), San Francisco (72%).
Most affordable: Decatur, IL (17%), Elmira, NY (18%), Peoria, IL (19%).
5) Big box retail wars heat up
Lowe's $8.8B acquisition of Foundation Building Materials targets the pro customer, following Home Depot's $5.5B EV GMS acquisition and $18.25B SRS deal.
Why it matters: Two step distribution is being consolidated by retailers who want direct pro relationships.
Tip: Review your supplier relationships. The distribution landscape is changing rapidly.
AI IN REAL ESTATE SPOTLIGHT
1. EliseAI's massive $250M Series E
Led by Andreessen Horowitz, this funding round values the housing automation company at new heights. They've doubled headcount to 300+ employees and surpassed $100M ARR.
The scale: Serving 75% of NMHC's Top 50 operators and powering 10% of the US apartment market.
Why it matters: Healthcare and housing represent 40% of household spending but remain highly inefficient. EliseAI is attacking $600B+ in annual administrative costs.
2. Morgan Stanley: AI to save S&P 500 nearly $1 trillion
New research projects massive productivity gains once AI adoption scales. That's 28% of expected 2026 pre-tax earnings.
The impact: 90% of jobs affected, but mostly through task automation rather than elimination. Real estate among sectors seeing productivity gains that could exceed 2026 earnings.
Market value: Could add $13-16 trillion to S&P 500 market cap, roughly 25% of today's total.
3. Data center market hits $1 trillion investment wave
JLL reports vacancy at just 2.3% despite record construction. 73% of projects under construction are already leased.
The shift: Power availability now trumps location. Companies booking space 2+ years ahead.
Hot markets: Columbus (1,800% growth since 2000), Atlanta (capacity doubling again by 2026).
4. NotebookLM for real estate document review
I can't stand reading dense legal documents like operating agreements or loan docs. They're long, technical, and draining. While you should always have your attorney review them (non-negotiable), NotebookLM makes the process way more engaging.
How it works: Upload any document and hit "Audio Overview." It creates a podcast style conversation between two AI hosts discussing the key points, risks, and terms.
Why it's better: Perfect for audio learners who retain more while driving or commuting. Turn a 40 page operating agreement into a 15 minute discussion you can actually absorb.
Pro tip: Listen first, then read the sections that stood out. Makes the full document review much more focused and efficient.
5. Tool spotlight: Henry.ai - Deal deck automation
AI copilot for CRE brokers that automates OMs, BOVs, loan packages, and syndication decks. Takes comps, rent rolls, and images to build branded presentations in minutes.
The problem: Brokers spending 3-4 hours daily on presentations instead of origination and relationships.
Market traction: Used by 5 of the top 10 national brokerages. Recently raised $4.3M seed funding.
Impact: Analysts previously spent 50% of time on manual deck building, now focuses on higher value work.
ChatGPT Prompt of the Week
Real Estate Document Analyzer
You are an expert real estate attorney reviewing documents for potential red flags and opportunities. I will upload a [operating agreement/loan document/purchase contract].
Your job:
1. Identify the 5 most critical terms that could impact my investment
2. Flag any unusual clauses or potential gotchas
3. Highlight opportunities I might be missing
4. Suggest 3 specific questions I should ask my attorney
5. Rate the overall risk level (1-10) and explain why
Present this as a clear executive summary I can discuss with my legal team.
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