THE VERTICAL - Weekly Brief

A QUICK SCAN 🚀

Lots are shrinking FAST. 65% of new homes now sit on sub 9,000 sf lots. That's smaller than a tennis court. Builders packing them in.

AI just broke real estate. Grok 4 crushed every reasoning test at 44.4% (doubling rivals), Google's AI calls contractors FOR you, and agents complete $100M analyses in 10 minutes. The future arrived this week.

Foreign money is making a comeback. $56B from international buyers (+44% YOY) with China leading at $13.7B. They're paying cash while Americans wrestle with 7% rates.

Builders wave white flags. 38% cutting prices (highest since tracking began in 2022), confidence stuck negative for 15 straight months.

The buyer's market is REAL. Record 26.6% of listings saw price cuts in June. Sellers finally blinking.

1 | LOT WARS: The Great Shrinkage

Remember when backyards were actually... yards? Those days are are coming to an end.

Today's median lot: 8,506 sq ft (near all-time lows) Lot values: $60K national median despite shrinking sizes

Regional reality check:

• New England: Still roomy at 0.6 acres (thanks, zoning!)

• Pacific Coast: Cramming at 0.13 acres but $152K median lot value

• Custom builds: 1 acre median (the rich get space)

Your move: Drive through any new development. The density will shock you. Builders aren't shrinking lots for fun, they're fighting land costs and affordability crises.

2 | AI SPOTLIGHT: The Tools That Change Everything 🤖

This week, AI officially broke real estate. Here's what just happened:

Grok 4 Heavy: Your New Super-Analyst

8 instant wins for real estate:

1. One click feasibility → Address + zoning = max units, FAR, density bonuses

2. Deal screener on steroids → Upload OM = red flags + value-add levers + pitch deck

3. Lease abstraction autopilot → 100 page lease = critical dates + gotcha clauses

4. Instant comp narratives → Raw MLS CSV = chart ready rent/ppsf summaries

5. Plan set code check → Upload PDFs = fire lane/ADA/zoning conflict flags

6. Portfolio health monitor → PM exports = delinquency trends + cost-cutting tasks

7. Permit whisperer → Plan corrections = auto drafted response letters

8. Capital markets translator → "Summarize Fed minutes + Sunbelt cap rate impact"

The prompt that unlocks it: "Analyze the property at [Your Address]. Lot size [X sq ft], zoning [Y], APN [Z]. Conduct comprehensive development feasibility study including zoning analysis, density programs, site constraints, development concept, and cost/yield estimates. Be specific and cite sources."

Google's AI Caller: The Game Changer

Google's AI now calls businesses for you and gets pricing automatically. Rolling out to ALL search users.

How it works:

1. Search "contractors near me"

2. Click "Have AI check pricing"

3. AI calls multiple businesses

4. Get consolidated quotes in 5 minutes

What used to take 3 hours now takes 5 minutes.

OpenAI Agents: Your Overnight Analyst

Real example: I watched AI complete a $100M property analysis in 10 minutes that would've taken an analyst team days.

Sample prompt: "Underwrite this 48-unit Austin multifamily. See attached rent roll and P&L. Research market rents, cap rates, expenses. Calculate exact price for 20% levered IRR on 10-year hold. Create investor presentation."

My testing this week: Underwriting a new subdivision with Manus and ChatGPT agent. ETA: 11 minutes.

The AI Real Estate Arsenal: 5 Tools You Need to Know

Beyond the big names, here are game changing tools most people haven't heard of:

🎯 TestFit - Real-time generative design tool for rapid feasibility studies. Input your site constraints and get dozens of optimized building configurations in minutes.

🔍 Deepblocks - Automated zoning analysis + 3D massing + financial modeling in one platform. Covers 120+ U.S. cities.

🏗️ ALICE Technologies - AI construction scheduling that runs millions of potential schedules to find the optimal path. Cuts project timelines by 15-20%.

📋 Leverton (MRI Contract Intelligence) - AI lease abstraction that pulls key terms from any lease document in seconds. No more manual reviews.

🎯 Snappt - AI fraud detection for tenant screening. Analyzes bank statements and pay stubs to catch doctored documents.

Want the full arsenal? Reply "TOOLS" and I'll send you my complete list of AI real estate tools across every category-site selection, construction, leasing, underwriting, and more. This is the stuff your competition doesn't know about yet.

3 | FAMILY MONEY: The "Nepo-Home" Trend 💸

The new reality: With average down payments hitting $63K, nearly 1 in 4 young buyers needs family backup.

How Gen Z/Millennials are funding purchases:

• Saved from paychecks: 56.5% (still #1)

• Family cash gifts: 20.7%

• Sold stocks: 20.4%

• Lived with family: 18.1%

• Second job: 17.6%

• Sold crypto: 12.7%

• Inheritance: 10.8%

Your move: Wealth transfer is quietly dictating who buys and who rents. Adjust your marketing assumptions accordingly.

4 | FOREIGN BUYERS GO ALL IN 🌏➡️🏠

International investors just had their biggest shopping spree since 2017.

Top buyers:

1. China: $13.7B (15% of deals)

2. Canada: 14%

3. Mexico: 8%

4. India: 6%

5. UK: 4%

Where they're buying: FL (21%), CA (15%), TX (10%), NY (7%), AZ (5%)

Your opportunity: While American buyers struggle with 7% mortgages, nearly half of foreign buyers pay cash. Know your competition.

5 | BUILDER REALITY CHECK 🏗️

The confidence crisis is real.

Regional breakdown:

• Northeast: 45 (holding steady)

• Midwest: 41 (stable)

• South: 30 (declining)

• West: 25 (struggling)

Your move: 62% of builders using sales incentives. Ask about rate buydowns and closing cost credits. Lock contractors now, machinery costs up 24% YoY.

6 | MARKET PULSE: The Buyer's Market Arrives 📊

Market heat index: 22 of 50 major metros now "neutral" (triple from last year)

Strongest seller markets: Buffalo, Hartford, NYC, Minneapolis, Providence

Strongest buyer markets: Miami, New Orleans, Jacksonville, Austin, Tampa

7 | HOT MARKETS: Where Jobs = Housing Demand 🔥

LinkedIn's latest reveals the metros stealing talent:

The pattern: Mid size cities crushing coastal hubs. Job growth today = housing demand tomorrow.

Your radar: Watch these markets. They're affordable, growing fast, and attracting young professionals.

8 | DATA DROPS & POWER MOVES 💡

Producer price reality: Metals up 9-15% post tariffs, machinery +24% YOY. Smart contractors pre buying before August copper tariffs hit.

Construction split: Single family down 4.6% to 883K, but multifamily surged 30% to 438K. Apartments > houses right now.

Remodeler boom: 128,187 remodeling shops vs just 77,455 builders. Fixing beats building 62% to 38%.

Permit pressure: Down 5 straight months, -6.1% YTD. Only Midwest showing growth.

Your playbook: Use AI for data mining, cash for speed, and watch secondary markets for opportunity.

BOTTOM LINE

The housing market is in transformation mode. Lots shrinking, foreign cash coming in, AI revolutionizing workflows, and builders cutting prices. The buyer's market everyone predicted? It's here.

The winners: Buyers with patience, cash, and AI tools.
The losers: Anyone still doing things the old way.

Next week's watch: Tariff construction impacts, more AI launches, Fed rate signals.

READY TO DOMINATE?

Need entitlements or permit expediting anywhere in SoCal? JDJ Consulting moves projects from idea to permit, fast and drama free. → jdj-consulting.com

Want to crush it with AI? My team helps real estate professionals implement cutting-edge AI workflows that save hours and unlock hidden value. From feasibility studies to deal analysis, we'll show you how to work smarter while your competition works harder.

Ready to 10x your business? Hit reply. Let's chat about how AI can revolutionize your real estate operations.

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

— Jake