Today’s Read Time: 9 minutes (totally worth it, we go deep).

This week, we’re talkin’ the real cost of operating a rental (it’s more than most renters can afford to pay), the quiet turn in national rents, Nashville’s job machine, and an indoor golf course the size of three Walmarts.

Let’s get into it.

Today’s Interest Rate: 6.81%

(☝️ .04% from this time last week, 30-yr mortgage)

Rates hit a three-week high Friday after the new Fed Chair’s Jackson Hole speech spooked the bond market: the 10-year Treasury pushed up to 4.71%, long yields are grinding higher, and bonds appear to be pricing in more inflation risk. It’s starting to get a little weird again.

More on what that actually means for us below.

The Weekly 3 in News:

1. Mortgage rates jumped to three-week highs after Jackson Hole gathering. Fed Chair Kevin Warsh used his first Jackson Hole keynote to voice concern about current inflation trends, and bonds sold off hard: the 30-year fixed rose to 6.81% and the 10-year Treasury hit 4.71%. (Mortgage News Daily, Aug 28)

2. Inflation’s last mile is stalled. Core PCE, the Fed’s preferred inflation gauge, held at 3.3% year-over-year in July; headline held at 3.7%. Personal income rose 0.4% and spending rose 0.2% on the month. (BEA, Aug 29). We need more progress on inflation (oil prices) for mortgage rates to come down.

3. The economy still looks hot. The Atlanta Fed’s GDPNow tracker estimates Q3 growth at 4.6% as of August 26, up from 4.0% earlier in the month. Whatever consumers say in surveys, the spending data isn’t cooperating with the doom narrative. (Atlanta Fed GDPNow)

Fun Things Happening in Nashville This Week:

• America’s first full 18-hole indoor golf course is coming to Nashville! CityGolf USA is building it inside a 174,000-square-foot building. High-tech simulators, real putting surfaces, an indoor driving range, a chefy restaurant, and PGA pros on staff. Opening this winter, and Nashville is the first of several planned US locations. (NewsChannel 5). Landlords near Centennial Blvd, your foot traffic may be about to change.

• Nashville Dance Fest, Vol. 4 takes over 90,000+ square feet at the Nashville Palace, Sept 4–6: five tented dance floors, honky-tonk competitions, live acts all weekend. Launch party Thursday Sept 3 at Category 10. (Visit Music City)

• Lee Brice, Gabby Barrett and Payton Smith play the Music City Kickoff Concert at Ascend Amphitheater, Saturday Sept 5, 7pm. Big outdoor country bill on the river for the holiday weekend. (Ascend Amphitheater)

The $600 Tenant Problem

Hat tip to housing economist Jay Parsons for laying this one out.

Think rents are too expensive? Landlords have to raise rents to cover operating expense inflation.

A not so fun fact: nearly one-third of American renters can’t afford to cover the landlord’s operating costs of a typical rental unit. Not the rent. Not the landlord’s profit. The operating costs: taxes, insurance, maintenance, utilities, payroll. The cost of keeping the lights on and the roof from leaking.

Here’s the math, from Parsons:

1)) Around 30% of American renters make less than $30,000 a year. More than a million of those renters earn $0.

2)) For rent plus utilities to be considered “affordable,” it shouldn’t eat more than 30% of income.

3)) That means rent plus utilities must come in below $600 a month, and that’s at the top of that income band.

4)) Ask any property manager: operating costs for apartments and single-family rentals usually run well above $600 a month, even for older, less-amenitized properties. Older buildings tend to have higher maintenance costs, not lower.

The national data backs him up. The National Apartment Association’s survey of over a million units put average operating expenses at $8,657 per unit in 2024. That’s $721 a month. Before the mortgage. Before a dollar of return. Taxes are typically the biggest single line item, roughly a quarter of the total.

$721 to operate. $600 affordable ceiling for a third of the renter population.

You can’t discount your way around that. The building doesn’t care.

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Why Costs Exploded

Now connect this to the inflation number in the Weekly 3. Core PCE stuck at 3.3% isn’t an abstraction: it lives in every line of your operating statement, and it has been compounding for five years.

Insurance: multifamily property insurance premiums in 2024 were roughly double 2021 levels, six times the CPI increase over the same period. The yearly increases stack: +14%, then +22%, then +45%. (National Apartment Association) The Fed’s own researchers measured real per-unit insurance costs going from about $465 in 2019 to about $821 in 2024. (Federal Reserve)

Construction and materials: construction input prices are up roughly 43% since February 2020. Iron and steel up 56%, concrete up 28%, lumber up 29%. (Associated Builders and Contractors) Every roof, every water heater, every turn costs more than it did when your pro forma was written.

Repairs and maintenance: up more than 28% since 2021, running about $1,098 per unit per year. (NAA data via Lula)

Key Takeaway: when someone says “the rent is too high,” the more precise statement may be “the cost of operating housing is too high, and incomes at the bottom third are too low.” Those are different problems with different solutions. If the narrative only ever talks about rent, nothing anyone does (short of vouchers and subsidies like LIHTC, the low-income housing tax credit) will make rentals affordable for a third of American renters.

This is also, frankly, why operators who survive are the ones who obsess over the expense side. Cash flow is the first of the five ways real estate builds wealth, and it’s the one you control most directly: I wrote a whole book about those five engines, and the expense line is where most of them get won or lost. One practical example from my own units: water damage drives a huge share of insurance claims, and insurance is the fastest-growing line on the statement. A pack of smart leak sensors under the water heaters and washing machines is about the cheapest premium protection you can buy.

Rents Just Turned. Quietly.

Speaking of rents…

The national median rose to $1,390 in August, up 0.1% from July: the seventh straight monthly increase, and the first positive August since 2022. (Apartment List; CNBC)

Year-over-year, rents are still down 0.8%, but that gap has been narrowing for months (it was −1.1% in July). One month is noise. Seven months in the same direction is a trend, cue the NBA Jam rule.

Regular Skeptical Investors readers saw this coming. I called the supply turn in the Apartment Glut Is Going Keto article back in July, and went deep on the disappearing construction pipeline last week. This week we confirmed it.

The Pipeline Is Emptying, Fast

Three numbers tell the supply story:

1)) Deliveries are falling off a cliff. New apartment deliveries went from 695,000 units in 2024 to 531,000 in 2025, and are projected at just 382,000 for 2026, a 28% drop. 2027 is forecast to fall another 24%, which pencils to roughly 290,000 units. (Apartments.com/CoStar)

2)) Under-construction counts have collapsed. Roughly 579,000 units were under construction in Q1 2026, down more than 50% from the early-2023 peak above one million. (CoStar via Multifamily Dive)

3)) Starts have basically stopped. About 55,000 multifamily units broke ground in Q1 2026, down 73% from the early-2022 peak and the lowest quarterly figure since 2011. (CoStar) RealPage counted just 75,205 completions in Q1 2026, the lightest quarter in four years. (RealPage)

Apartments take roughly two years to build. The units not started in 2025 and 2026 are the units that can’t deliver in 2027 and 2028. This locks in a supply hole, no matter what happens to rates. And as we covered above, building replacement cost is up 43% while insurance has doubled: the rent required to justify new construction keeps rising. That’s the connection between this section and the last one. Operating and construction costs aren’t just a landlord complaint, they’re the floor under future rents.

The Landlord’s Moat: It’s Expensive to Move and Buy

Demand has a second tailwind, and it’s the buy-vs-rent gap. One 2026 analysis puts average rent at $1,669 against $2,589 in monthly costs for a starter home: buying costs about $920 more per month, roughly 55% more, than renting. (Yahoo Finance) With the 30-year at 6.81% after Jackson Hole, that gap isn’t closing this fall.

So renters renew. Retention is running near record levels, and Jay Parsons says he’d “take the over” on the consensus ~2% rent growth forecast for 2026 if job growth holds. (Multifamily Dive)

My Take: the rent bottom appears to be in. Not a boom: a steady grind up as the 2024–25 supply wave gets absorbed and the pipeline behind it empties out. For operators, the next 24 months may be the window where patient underwriting gets rewarded: buy at today’s soft rents, hold into tomorrow’s supply hole. This is the same setup we described in The Housing Market Is Frozen, Not Broken: the freeze creates the discount, the thaw creates the payoff.

The Steelman: Jobs Must Remain Robust

The bear case on rents is not weak, so let’s give it its due. 1)) Demand is hostage to jobs, and July payrolls fell by 23,000, with labor force participation at a five-year low of 61.4%. (BLS) If hiring stalls, household formation stalls, and the absorption story with it. 2)) The national average hides a split: rents are still falling outright across much of the Sun Belt and Mountain West, where the glut was concentrated. If your market is Austin or Phoenix, “the bottom is in” may be a 2027 sentence, not a 2026 one. 3)) Shadow supply is real: a record-adjacent 117,000 completed-but-unsold new homes are sitting on builder lots (Census), and some of that inventory leaks into the rental pool as builders and investors rent what they can’t sell. 4)) The supply cliff can partially refill itself: if rates drop meaningfully, some shelved projects restart, and 2028 deliveries surprise to the upside. The cliff is locked for ~24 months, not forever.

Questions I’d want answered before sizing up: how much of the retention record is renters trapped rather than satisfied (trapped renters churn hard the moment the buy-vs-rent gap narrows)? And how much of the Q1 starts collapse is genuine capitulation versus projects waiting on a rate cut to un-pause? The first has no clean data. The second we may learn by year-end.

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Quick Take: Nashville Is Hiring

Nashville’s metro unemployment rate sat at 3.3% in June, against a national rate of 4.1% in July. (FRED, Nashville MSA; BLS) The metro ranked #2 among America’s 100 largest for job growth and income (Capital Analytics), and Tennessee is projected to add about 31,400 jobs in 2026, nearly double the national growth rate. (UT Boyd Center)

In a month when national payrolls went negative, that spread is the whole story. Jobs are renters now and buyers later. It’s why Nashville is grinding out positive price growth while Tampa, Dallas and Phoenix go backwards.

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My Skeptical Take

The financial commentary this week wants you anxious, hanging on every word from the Federal Reserve and Chair Warsh’s speech in Wyoming.

Don’t get caught in the noise.

Sure, the bond market wobbled, mortgage rates ticked up a tad, and the word “inflation” is everywhere in headlines.

Fine.

It’s starting to get a little weird again, and I’d rather look at what the weirdness is actually telling us.

Sticky inflation is a tax on everyone, but it is not neutral in who it taxes. It punishes the saver holding cash. It punishes the renter whose wages grow 3.2% while prices grow 3.7%. And it quietly rewards the owner of a hard asset financed with fixed-rate debt, whose replacement cost just rose 43%, whose competition just stopped building, and whose debt shrinks in real terms every year the numbers stay sticky.

Own assets. I choose real estate.

That’s the string running through this whole issue.

• Operating costs exploded: that’s inflation. The $600 problem: that’s inflation meeting incomes.

• The empty construction pipeline: that’s inflation meeting builder math.

• The rent bottom: that’s what happens when new supply can’t pencil below today’s rents.

Each is the same story wearing a different hat.

To be clear, I’m not celebrating any of it. A third of renters priced out of the cost of housing, before profit, is a civic problem that private owners alone won’t solve, and we should say so plainly.

But as investors, our job is to see the board as it is. Scarce assets, rising replacement costs, durable demand, shrinking future supply: that’s as clean a setup as one can ask for. The patient operator who buys carefully into today’s soft market will spend 2028+ very happy they did.

In the words of Louis Glickman, the old New York real estate mogul:

“The best investment on earth is earth.”

— Louis Glickman, 1957

Until next time. Stay Curious. Stay Skeptical.

Herzliche Grüße,

-The Skeptical Investor

-P.S. If this newsletter has been useful to you, the best gift you can give me is free: forward it to one person who’d benefit. I promise you 24 hours of good joo joo.

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Today’s Read Time: 20 minutes (totally worth it, we go deep).

This week we’re talkin’ the US economy is hitting the gas, Nashville now has the 2nd lowest unemployment number, the new apartment pipeline is (finally) running dry, and how Warren Buffett is getting deeper into real estate.

Let’s get into it.

Today’s Interest Rate: 6.77%

(☝️ .06% from this time last week, 30-yr mortgage)

The Weekly 3 in News:

1. US business activity just grew at its fastest pace in over four years. S&P Global’s flash Composite PMI (a monthly survey of purchasing managers) jumped to 56.0 in August, the strongest reading since April 2022, led by a services surge with hiring at its fastest clip since early 2025. (S&P Global, Aug 21)

2. The Fed heads to the mountains this week. The Jackson Hole symposium runs August 27–29, and new Fed Chair Kevin Warsh delivers his first keynote Friday morning, three weeks before the September interest rate decision. Markets are pricing roughly 33% odds of a September hike. (Yahoo Finance, TechTimes) My take: they will hold rates steady - and as I’ve written before many times - the next real move is more likely a cut, not a hike.

3. Warren Buffett’s Berkshire Hathaway went shopping for homebuilders. Berkshire’s second-quarter filing showed a 30% increase in its stake in homebuilder Lennar, now about $1.2 billion and 6.2% of the company, a small re-entry into D.R. Horton, and, separately, a completed $6.8 billion acquisition of builder Taylor Morrison. (Fortune, Kiplinger) More on this below.

Fun Things Happening in Nashville This Week:

• Titans preseason finale vs. the Chicago Bears — Nissan Stadium, Saturday Aug 29, 5:00 p.m. Last audition before roster cutdowns. (Titans)

• Jack Johnson, SURFILMUSIC Tour — Ascend Amphitheater, Tuesday Aug 25, 7:30 p.m. Banana pancakes on the riverfront. (Ticketmaster)

• The Piano Men: a tribute to Billy Joel & Elton John — Saturday Aug 29. Note-for-note renditions from some of Nashville’s best session players. (City Winery)

The Economy Just Hit the Gas

The American economy is quietly reaccelerating (and almost nobody is talking about it, for some reason).

Two numbers this week.

First, that flash PMI manufacturing number from the news? At 56.0 it’s the best since April 2022, with services activity at a 20-month high and hiring at its fastest pace since early 2025 (S&P Global).

Second, the Atlanta Fed’s GDP Now model (a real-time GDP estimate built from incoming data, not a survey) currently pegs third-quarter growth at 4.0% (Atlanta Fed, Aug 18). For context, Q2 came in at just 1.5% (BEA). So if the Fed’s model holds anywhere near 4%, that would be a meaningful acceleration.

Remember all those recession calls in the spring from the talking heads on TV?

Despite all the crazy stuff happening in the world, the economy remains robust and the doomers keep losing. Careful of those who cry wolf.

What’s Driving It: Chips, Concrete, and Hard Hats

The engine behind the reacceleration is the AI compute buildout: data centers, the power plants feeding them, and the semiconductors inside them.

Harvard economist Jason Furman ran the numbers: investment in information-processing equipment and software is roughly 4% of GDP, yet it accounted for 92% of GDP growth in the first half of 2025. Strip it out and the rest of the economy grew just 0.1% annualized (Furman, Fortune).

That was a year ago; the buildout has only gotten bigger. Private data-center construction spending is now running around $50 billion a year, reportedly more than public spending on transportation infrastructure (NetChoice).

Unions Enter the Debate

Fun fact, the loudest new advocates for data-center construction are now…. labor unions.

Yep, North America’s Building Trades Unions, one of the AFL-CIO’s largest members and representing roughly 3 million construction workers, has struck national partnerships with Meta, OpenAI, and Microsoft to build AI infrastructure with union electricians, pipefitters, ironworkers, and operating engineers (Spectrum News, Newsweek). Union training centers are expanding and apprenticeship ranks appear to be growing faster than many union leaders have ever seen.

Think about that for a second: the technology certain folks fear will kill jobs, is currently the biggest jobs program in American construction. This is a narrative violation for many of the political factions. I made a version of this argument back in June: AI is not a job killer, and blue-collar trades may be the biggest winners. Two months later, the hard-hats agree.

For real estate investors this matters twice over. Every data-center campus is a payroll: thousands of construction workers for 2-3 years (transient renters, furnished and mid-term rentals), then permanent operations staff (long-term renters, then buyers). I went deep on this in my data-center issue last week. Payrolls = rent checks.

Key Takeaway: the economy is speeding up, powered by a construction boom that hires the same trades that build apartments and houses. Demand is not the problem.

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The Steelman: Maybe the Boom Is Narrower Than It Looks

The honest counterargument is hiding inside Furman’s own stat.

If 4% of the economy is generating 92% of the growth, does that mean the other 96% of the economy is barely growing?

Kinda, yeah.

A boom that is narrow, is fragile.

If hyperscaler capital spending pauses (Microsoft and Meta can change their minds fast), the headline number could deflate quickly. July’s jobs report showed the economy shedding 23,000 jobs, and the national unemployment rate sits at 4.1% (BLS), which does not scream 4% growth. The bond market spent last week selling off, dragging the S&P 500 to a weekly loss (Yahoo Finance): long rates rising on fiscal worry, not growth optimism, is the less-friendly read. And GDPNow’s early-quarter estimates are data-thin and volatile.

But the most significant threat to the AI-driven economic and job growth is: government overregulation.

Politicos must be careful when introducing data center moratoriums etc….

The Take Away: the acceleration appears real, and concentrated. If you’re underwriting real estate deals, underwrite the strength of the economy and unemployment numbers in your market, not the national forecast. Watch out for the November elections. The rhetoric fueling campaigns, may be consequential.

The Apartment Machine Is Quietly Sputtering. Good.

Finally, some real breathing room for apartment operators.

Yardi Matrix’s new supply forecast landed this month, and buried in its tables is the most investor-relevant number I’ve seen all summer: 249,561. That’s how many market-rate apartments Yardi expects the entire United States to complete in 2027, down from 432,215 in 2024. A 42% collapse (calculated from Yardi’s table) in the type of apartment most of us own, operate, or compete against (Yardi Matrix, Q3 2026 Supply Forecast).

The headline forecast says total new supply bottoms in 2027 around 444,000 units, down from 697,000 in 2024. Sounds like a normal cycle. But the composition tells the real story, and almost every industry summary is missing it.

1)) The Market-Rate Apartment Is Disappearing

Total supply in 2027 will actually be about 10% higher than 2020. But market-rate supply will be 11% lower than 2020, down nearly 27,000 units. The entire increase comes from government subsidized product: partially affordable deliveries (buildings where 5-89% of units are income-restricted) will run 22% above 2020 levels, and fully affordable deliveries 44% above (all per Yardi’s bulletin; note their stated percentages, my recomputation from their own table suggests the affordable increases may be even larger).

Translation for operators: the only new apartment builds that still pencil at today’s rates and construction costs increasingly need a tax credit attached. Or are in the A Class bracket.

Building unsubsidized B-Class developments, the kind that competes directly with your Class B/C units on rent, appears to no longer work at current numbers. That is a quiet confession about building and regulatory costs. When paired with higher interest rates of today, developers just can’t make money.

I made the labor-cost half of this argument in Eggs Are Cheap Again. Electricians, Not So Much.: it now takes 349,000 missing construction workers’ worth of wages to build anything.

2)) The Pipeline Behind the Pipeline Is Draining

The under-construction pipeline peaked at 1.27 million units in March 2024. It ended Q2 2026 at 948,195, down 25% (calculated). More telling: units under construction and in pre-lease (the ones nearly finished) are down 21% year-over-year. The apartments that will deliver over the next 12 months are already largely spoken for (Yardi Matrix).

One wrinkle: 2026 construction starts are running about 20% ahead of last year’s pace, which is why Yardi nudged its 2028 forecast up. A building rebound may be coming; it’s just modest, and it lands in 2028, not next quarter. And 21 markets (Southwest Florida, Asheville, Miami, Charlotte, Salt Lake City among them) still have over 8% of their existing stock under construction; those markets eat another 18 months of supply pain. Know where your market is what is under construction. In my home market of Nashville, new development has fallen off a very high cliff. (Good for investors).

3)) Rents Have Already Bottomed

While the pipeline drains, demand keeps chewing through what’s left.

Apartment List’s national median rent rose 0.2% in July, the sixth consecutive monthly increase, and the year-over-year decline has narrowed from -1.6% in April to -1.1% (Apartment List).

RealPage’s second-quarter data showed occupancy at 95.5% with deliveries falling below the decade average for the first time in three years (RealPage).

Rental housing economist Jay Parsons reports first-half absorption came in hotter than expected, producing the best occupancy improvement since 2021, and says he’d “take the over” on the roughly 2% consensus rent-growth forecast (Multifamily Dive).

Remember my NBA Jam rule: one data point is noise, two is worth watching, three means something. Six consecutive monthly rent increases is a trend. Last month I told you the apartment glut was going keto. We are now losing the weight.

4)) Real Estate is Reaccelerating, Omaha Agrees

Which brings us to the most famous capital allocator alive. In the second quarter, Berkshire Hathaway increased its Lennar stake by roughly 30% to about $1.2 billion, 6.2% of the company (Fortune, SEC 13G), put a small toe back into D.R. Horton (Kiplinger), and completed a $6.8 billion acquisition of Taylor Morrison, taking an entire homebuilder private (24/7 Wall St.).

The timing is significant.

Single-family starts just hit a roughly 3.5-year low, homebuilder sentiment has been below 40 for 16 straight months (NAHB), and existing-home sales remain stuck near a 4.06 million annual pace (NAR), the frozen market I broke down three weeks ago. Berkshire is buying builders precisely when the industry is building the least. That is not a bet on today’s housing market. It’s a bet on what happens to prices / rents when years of under-building meet an economy adding payrolls at data-center campuses across the country.

The capital-allocation playbook here, buying productive assets when the industry that makes them is in retreat, is the oldest one in the book. Be greedy when others are fearful (And If you want the definitive study of how eight CEOs, including Buffett, did exactly this across cycles, William Thorndike’s “The Outsiders” is the best thing written on it.)

My Take: connect the three charts. Demand side: a reaccelerating economy hiring construction workers by the tens of thousands. Supply side: market-rate apartment completions down 42% by 2027, the pipeline down 25% from peak, and rents already turning. When demand accelerates into a supply vacuum, the pricing power goes to whoever already owns the asset. This is when the five engines of real estate wealth, cash flow, appreciation, loan paydown, tax benefits, and leverage, start pulling in the same direction (I wrote a whole book on those five, if you want the full framework).

You don’t need to time the bottom. You just need to own before it’s obvious.

The Steelman: Why the Supply Vacuum Might Disappoint

But you never truly know so, here are three counterpoints knocking around in my brain.

First, the affordable-supply wave is not nothing: 156,000-172,000 subsidized units a year still deliver (calculated from Yardi’s forecast rows), and at the margin they compete for the same renters as older Class B/C stock, especially in soft Sun Belt submarkets. “Market-rate supply is collapsing” is not the same as “no new competition.”

Second, Yardi’s own forecast assumes elevated rates persist, which is exactly what suppresses new starts. If I’m right that rates come down toward a 5.5% mortgage (my long-standing view), development math improves, starts rebound sooner, and the vacuum partially refills itself. You can’t have both maximum rent growth and maximum rate relief; the honest version of my thesis accepts a middle path. Note 2026 starts are already up ~20% year-to-date; developers may be front-running the recovery.

Third, on Berkshire: 13F-reading is a dangerous sport. The D.R. Horton position is $580,504, effectively a rounding error, likely an analyst’s tracking position, not an Omaha conviction call. The Lennar stake plus Taylor Morrison is real money, roughly $8 billion, but Berkshire holds about $340 billion in cash-like assets; this is a measured lean, not a table-pound. And one respected outlet spent last week asking whether Berkshire misjudged housing, again, noting new homes now sit about 9.3 months on the market (24/7 Wall St., Dallas Express). Early and wrong look identical for a while. I think the supply math wins eventually, but “eventually” can test your patience and your debt service.

Nashville Is Hiring!

Nashville’s unemployment rate was 3.3% in June. The national rate is 4.1% (BLS via FRED, BLS). In May it was 2.8%, the 2nd lowest of any of the 25 major US cities. And Tennessee overall just posted 3.4% for July, well below the national average (TN Dept. of Labor).

I never get tired of this statistic, and here’s why you shouldn’t either: unemployment is the single most important number in residential real estate. People with jobs are happy and happy residents pay rent on time. People with jobs qualify for mortgages. People with jobs move here from metros that don’t have jobs for them. Capital Analytics just ranked Nashville the #2 metro in the country (behind only Raleigh) across seven measures including unemployment, labor-force growth, and per-capita income (Capital Analytics).

If the US economy is reaccelerating on the back of construction-heavy investment, a metro that starts with sub-3.5% unemployment, in a state chasing a large share of the country’s data-center construction, appears positioned to feel it first and hardest. Tight labor plus population inflows plus the national supply slowdown you just read about: that’s the whole Nashville investment case in one sentence. It’s the same engine I profiled in the $6.6 billion East Bank bet.

One caveat, because we’re narative/conventional thinking skeptics: June’s 3.3% ticked up from May’s 2.8% (these are not-seasonally-adjusted numbers, and summer always adds noise). One month is noise, two is worth watching. If Nashville prints above 3.5% for a few consecutive months, I’ll let you know.

Until then, this remains the tightest big-metro labor market story in the Sun Belt.

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My Skeptical Take

The financial commentary this week will be about Jackson Hole: what Warsh says, what he doesn’t, how many basis points hide between his sentences.

Fine. Watch it. I will. (I think 99% chance they hold interest rates steady.)

But while everyone stares at the podium, the physical economy is telling a bigger story: union apprentices are pouring into training centers to build data centers.

The Atlanta Fed’s model reads 4% growth. And the machine that builds America’s apartments is throttling down to levels that, for market-rate product, we haven’t seen in a decade. None of this is a secret; all of it is sitting in public tables at Yardi, the BLS, and the Atlanta Fed. It’s just not on the front page, because supply stories move slowly and slow stories don’t sell ads.

Here’s the thing about slow stories: they’re the ones you can actually invest in. Nobody gets an edge on the Fed statement; forty thousand terminals read it in the same millisecond. The edge is in the boring arithmetic of 2027 completions, compounding quietly while attention sits elsewhere. The renter demand is forming now, on payrolls being hired now, while the buildings that would house them in 2027 and 2028 are, increasingly, not being started. Prices respond to that gap with a lag, and the investors who position before the lag closes are the ones who look lucky in three years.

As the great Wayne Gretzky put it in his famous quote:

“I skate to where the puck is going to be, not where it has been.”

The puck is headed toward a supply gap. Buffett appears to be making a B-Line right to it. The builders will follow eventually; they always do. The question is whether you’ll already be standing there when everyone arrives.

Me? I’m looking for my next deal, and I’m going twice as big as my last. So if YOU have a multifamily deal in the greater Nashville or Knoxville area, email me. Let’s collaborate.

Until next time. Stay Curious. Stay Skeptical.

Herzliche Grüße,

-The Skeptical Investor

-P.S. If this newsletter has been useful to you, the best gift you can give me is free: forward it to one person who’d benefit. I promise you 24 hours of good joo joo.

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Today’s Read Time: 20 minutes (totally worth it, we go deep).

This week we’re talkin’ data centers.

Just data centers (and real estate of course). No briefs, no detours. The most hated building in America may just quietly be the best economic development deal your town can land. The U.S. is lapping the world at building them, and almost everything you’ve heard about them is wrong. This is Industrial Revolution 2.0, and we’re going deep: the myths, the receipts, with real life examples, and exactly what it means for your rentals, your land, and your listings.

Let’s get into it.

Today’s Interest Rate: 6.73%

(☝️ .02% from this time last week, 30-yr mortgage) Mortgage News Daily

The Weekly 3 in News:

1. American shoppers tapped the brakes — retail sales fell 0.6% in July, the steepest monthly drop since May 2025, led by a 2.2% slide in online spending and a 0.9% drop at gas stations as pump prices fell. Sales remain up 5.0% from a year ago. However, 1 month a trend does not make. (CNN, Aug 14)

2. Wholesale inflation is up and down: a tale of two energies — producer prices ran 4.7% over the past year, but July’s monthly reading was flat, held down almost entirely by a 5.7% collapse in wholesale gasoline prices. Oil is doing the disinflation work, expect this to remain volatile during the Middle East conflict. (BLS, Aug 13)

3. Wall Street just made AI infrastructure an asset class — Nvidia assembled six giants (Apollo, Blackstone, BlackRock, Brookfield, Goldman Sachs, KKR) to mobilize more than $500 billion for AI data centers and computing clusters. CEO Jensen Huang says “AI factories” can now be financed as productive infrastructure, like real estate or toll roads. This is a construction catalyst unlock. (CNBC, Aug 10)

Fun Things Happening in Nashville This Week:

• ⭐ Shakespeare in the Park (my favorite, a must see!) — The Bandshell at Centennial Park, opens Thursday Aug 20 and runs Thursdays–Sundays through Sept 20 (plus Labor Day Monday). This year: A Midsummer Night’s Dream. Free (suggested $20 donation), vendors at 5:15, pre-show concert at 6:00, curtain at 7:00. BYOB (bring your own blanket). (Nashville Shakespeare Festival)

• Buddy Guy — Ryman Auditorium, Wednesday Aug 19. The last of the great blues men, on the best stage in America. (Ryman)

Welcome to the Industrial Revolution 2.0

Meet Thomasina Minor, she teaches second grade at Start Elementary in Richland Parish, Louisiana.

She was sitting on her couch with her eight-month-old when she found out her end-of-year bonus was over $50,000.

Her word: “jaw-dropping” (Meta).

This is not a typo. Teachers in Richland Parish received bonuses up to $50,935 this year, 5x the normal bonus (GovTech). In a parish where teacher salaries run $29,504 to $52,335, that bonus is roughly a full year’s pay, landing on top of their salary.

What happened?

Meta is building its largest data center in history there, a $50+ billion campus called Hyperion.

Meta pays a 1% sales tax directly to the parish. A single one of those payments topped $22 million. The parish’s entire normal annual sales-tax haul was about $21 million (Shreveport-Bossier Advocate). One company, one year, more than doubled the town’s revenue.

Superintendent Sheldon Jones, a 30-year veteran: “It’s life-altering for our teachers and their families... This year, for the first time in my 30-year career, every teacher we interviewed was fully certified. With bonuses like that, the best educators come to you.”

Mark Zuckerberg put the same story in his “The Future Is for Everyone” essay, and CNBC ran it on air last week (clip): teachers are now moving to Richland Parish from across the country, and the superintendent believes it may become one of the nation’s best school districts.

Is this the same type of building that towns/activist groups across America are fighting to keep out?

Yep.

Same warehouse, same servers, same humming chillers. One town gets $50,000 teacher checks. Another gets a lawsuit and a Facebook group called Stop The Data Center.

Unfortunately, misinformation about data centers is rampant on the internet and even the news (shocking I know).

Importantly: This is not political.

We are just talking facts here today. No politics.

And the difference is the deal town/cities/states make with data center operators.

Let’s take a further look.

Made in America

Let’s talk scale.

Because most people, including most real estate investors and brokers, have no idea what’s being built around them.

Harvard and Obama White House economist Jason Furman ran the numbers: data-center-related investment accounted for roughly 92% of U.S. GDP growth in the first half of 2025. Strip it out and the economy grew 0.1% annualized (Fortune).

4% percent of the economy drove nearly all of its growth.

Renaissance Macro found something even wilder: in 2025, the dollars the AI buildout added to GDP growth surpassed the contribution of all U.S. consumer spending, for the first time ever (Yahoo Finance). Consumer spending is two-thirds of the economy. The buildout beat it.

Now that’s food on the table.

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This is an American Revolution.

The U.S. holds roughly 54% of the world’s hyperscale data center capacity and about 4,542 data centers, more than the next eight countries combined; the UK is a distant second at 562 (SDxCentral, Brightlio).

The first Industrial Revolution ran on British coal and steel.

This one runs on American chips, American power, and American builders.

Hyperscaler capex is nearing $400 billion a year, and the spending runs the entire vertical: chips and memory, transformers and switchgear, copper, steel, diesel, fiber, and yes, industrial air conditioning. Somewhere an HVAC company salesman is having the best year of his life.

Think about what the last buildouts of this scale did to real estate. The railroads decided which towns became cities. The interstates decided which suburbs got rich. The towns that fought the rail line are the ones you drive past today without stopping. That’s the stakes, and that’s why the mythology around these buildings matters. So let’s take the myths head-on, one by one, with receipts.

But there has been much false information and uninformed opinions, that while perhaps well meaning or intuitive, are just plain wrong.

Let’s start busting some of these myths, and there is plenty of nuance here.

Myth #1: “Data Centers Raise Your Electric Bill.”

This is the myth everyone “knows,” but the facts say the opposite.

Energy consultancy E3 studied the question with actual statistics instead of vibes and feelings: between 2015 and 2024, data centers pushed average U.S. residential electricity rates modestly DOWN, not up (E3).

How is that possible?

Because the grid is mostly fixed costs: poles, wires, substations, plants. When a giant, steady, always-on customer plugs in, those fixed costs get spread across vastly more kilowatt-hours, and everyone’s per-unit rate can fall. E3 went facility-level and found each Amazon data center it studied generated about $3.4 million a year in net surplus revenue for its utility: the data center paid in more than it cost to serve.

That surplus subsidizes everyone else’s bill.

The proof in writing. You can read it. Meta’s power agreement with Entergy Louisiana for the Richland campus is projected to save Entergy’s regular customers more than $2 billion over 20 years, on top of $650 million from the first agreement (Entergy). The deal funds seven new gas generating plants, three grid-scale batteries, and nuclear upgrades. Meta’s stated commitment: it pays the full cost of the energy, water, and infrastructure it uses so consumers don’t.

And it’s not just the trillion-dollar giants building, far from it in fact.

Nebius is building a ~350MW AI campus in Vineland, New Jersey, and its builder DataOne runs a public FAQ for the community (askvineland.dataone.eu). On power, verbatim: “We bring and pay for our own power.” The campus runs on Bloom fuel cells installed onsite, behind the meter, with only ~49MW of grid backup, “without increasing residential electricity bills.” Residents’ gas gets priority on the pipeline if it ever comes to that.

There’s a bonus effect hiding here: data centers are resurrecting American nuclear power. Microsoft’s 20-year deal with Constellation is restarting the Crane Clean Energy Center (the former Three Mile Island plant). Amazon bought 960 megawatts at the Susquehanna nuclear station (FTI Consulting). Firm, clean generation that the whole grid keeps for 40 years, financed by someone else’s balance sheet.

Now the steelman: The E3 result is not guaranteed, and local governments should remain vigilant. It holds when the data center pays its own way and generation keeps up with demand. Where policy lags, residents did pay more for power: Virginia residential rates in data-center country rose 13% in a year, and a state legislative report projects typical bills could rise $14 to $37 a month by 2040 from grid strain (Newsweek).

Those stories are real, or rather, were real.

In the past there were rate-design and policy failures, not data-center inevitabilities. But those stories are old and outdated. A review of reports of electricity price increases show that virtually ALL of them were contracted 6+ years ago, not tied to the AI revolution and before data centers were anywhere close to the builder scale they are today.

This is exactly why regulators have created at least 38 new “large load” tariffs since 2018, 30 of them in 2025-26 alone, with minimum-billing and protection terms so ratepayers don’t carry the risk (Data Center Knowledge).

Good, sensible pro-building policy. Not NIMBY nonsense.

Key Takeaway: a well-structured data center is the anchor tenant of the grid. It pays more than its cost to serve, and everyone else’s rate benefits. A badly structured one socializes its costs. The variable is the contract, not the building. If you are not paying LESS for your electricity in 2026+, it’s your local government’s fault.

Myth #2: “They Drain the Water Supply.”

The image in everyone’s head: a server farm guzzling a river while farmers watch their wells dry up.

The reality of modern data centers: they are closed-loop liquid cooling.

Fill the system once during construction, then recirculate the same water for years. Microsoft’s new zero-water-evaporation design cuts water use by more than 125 million liters per facility per year, and every Microsoft data center designed since August 2024 uses it (Microsoft). Satya Nadella’s comparison: a whole AI campus now uses about as much water annually as a single restaurant (Tom’s Hardware).

DataOne’s Vineland FAQ gets even more specific, and I love this detail: a one-time fill of 1 million gallons, then annual consumption “equivalent to eight to nine Olympic swimming pools, mainly for typical office building use.”

Read that again.

The ongoing water at a 350-megawatt AI factory is mostly sinks, toilets, and break rooms.

Office-building stuff.

The cooling loop just keeps recirculating. No discharge, no pollution, and draw rates tested to not touch neighborhood water pressure (DataOne).

Now put a real number on “office building.” The federal government tracks this.

In its most recent water survey, the EIA found that large commercial buildings, meaning anything over 200,000 square feet, averaged 20 gallons per square foot per year, 18,400 gallons per worker per year, and 7.9 million gallons per building per year (EIA CBECS).

On a daily basis that’s about 50 gallons per office worker, per day, mostly restrooms and cooling.

Now line those up against the AI factory. Eight to nine Olympic pools is roughly 5.6 million gallons a year (calculated, at about 660,000 gallons per pool).

So….Data centers actually use LESS water than typical US office buildings.

The math:

1)) A 350-megawatt AI campus uses roughly 29% LESS water per year than the average single large commercial building in America (5.6 million gallons vs. 7.9 million).

2)) At 20 gallons per square foot, an office building that drank the same amount of water would be about 280,000 square feet: one mid-rise tower. Meanwhile Meta’s Hyperion campus in Louisiana covers roughly 10 million square feet of building. The data center is vastly bigger and still uses less.

3)) Per person, that entire campus’s annual water use is equivalent to about 305 office workers going to work for a year (calculated, at 18,400 gallons per worker per year). Three hundred people. That’s a mid-size accounting firm.

The reason is simple once you see it: an office building’s water goes into people. Toilets, sinks, kitchens, showers, landscaping, cooling towers. A closed-loop data center has almost no people in it, and its cooling water goes around in a circle instead of out a drain.

Myth #3: Data centers are noisy! No longer.

The noise complaints you’ve read about are the old diesel generator construction, which is now rare. And, frankly, something where local/state governments should require other sources of generation.

The new format? Quieter than a vacuum cleaner.

An industrial diesel generator runs around 85 decibels (industry noise guides). Bloom Energy - a choice provider of natural gas fuel cells including the Vineland campus - runs about 65 decibels, roughly that of an outdoor AC unit, and quieter than a vacuum cleaner. And thats from 10 feet away (Bloom Energy) (remember decibels are logarithmic, 20 fewer of them means about 100 times less sound energy and roughly four times quieter to the human ear).

Couple this with data center construction now providing sound walls, managed construction hours adjusted at the community’s request, and retained sound specialist running real-time monitoring stations and noise is no longer a long term concern. The noisiest time will be the normal sounds of initial construction.

Noise has been solved.

Myth #4: “The Tax Breaks Mean the Town Gets Nothing.”

Loudoun County, Virginia is the data center capital of the planet: 200+ facilities.

What did this do to the county’s budget and people’s taxes?

Data centers occupy about 4% of Loudoun’s commercial land and generate 38% of its general fund revenue: a projected $1.3 billion this year, between $417 million in real property taxes and $879 million in personal property taxes on the computer equipment inside (Loudoun County). The equipment tax alone went from $466 million in FY22 to $795 million in FY26 (CNBC via Sara Eisen).

What did the county do with the windfall?

It cut the residential property tax rate.

Every year.

For a decade.

From $1.145 per $100 of assessed value in 2016 to $0.805 in 2026, the lowest rate in Northern Virginia, while still expanding services and pouring tens of millions of new dollars into the school system every year.

In fact, without data center revenue, Loudoun’s residential rate would need to rise about 91% to fund the same budget. The typical homeowner’s tax bill would jump roughly $5,800 a year (Progress Chamber). The silicon is paying for your kid’s school and your new highway.

Now, the windfall for companies. We shouldn’t pretend they don’t exist. Meta’s Louisiana project carries about $3.3 billion in tax breaks (Fortune). Virginia’s statewide sales-tax exemption on data center equipment costs over $1 billion a year (WUSA9). These are real, large subsidies, and any honest accounting shows both numbers.

But, net on net, both Loudoun and Richland counties saw windfall revenues.

What does a reasonable tax incentive/abatement for companies look like?

Here’s the math: DataOne’s Vineland New Jersey deal is a good template: full land taxes from day one, plus a 5-year escalating abatement on the improvement tax only: pay 0% year one, then 20%, 40%, 60%, 80%, then 100% forever after. The shortest program New Jersey offers (DataOne). The company is at full freight by year six, and the town owns a new tax base for decades.

And the tax prize can be back-loaded, it depends on how localities structure the deal.

Case in point: Prineville, Oregon (more on it below) gave Facebook and Apple 15-year abatements; those are now expiring, and roughly $2 billion of taxable value is landing on the town’s rolls, with annual revenue heading from $4 million toward $9 million (CNBC).

The abatement was the price of admission for the locality winning the data center project.

The tax base is permanent.

Let’s Run the Numbers on a Hypothetical Nashville Data Center

Enough about Louisiana and Virginia. Let’s do the arithmetic for Davidson County (aka Nashville), because Tennessee’s tax structure makes this fairly straight forward.

We have no state income tax. That means local government here runs on property tax to a degree that would surprise people in other states. And property tax rewards exactly one thing: capital intensity. Not headcount, not square footage. Dollars of assessed value per acre.

A data center may be the most capital-dense building humans currently construct. Roughly $7 to $15 million of investment per megawatt.

Here’s how Tennessee assesses it. Commercial and industrial real property (the land and the shell) is assessed at 40% of appraised value. Tangible personal property (the servers, the cooling plant, the switchgear, the backup power) is assessed at 30% (TN Comptroller). Metro Nashville’s 2026 rate is $2.782 per $100 of assessed value in the General Services District, or $2.814 in the Urban Services District (Nashville Property Assessor). A campus like this would almost certainly sit in the GSD, so let’s use $2.782 and be conservative.

Now take a mid-size hyperscale campus at $1 billion of investment. Call it 35% building and land, 65% equipment, which is typical for this asset class:

1. Real property: $350M × 40% = $140M assessed

2. Equipment: $650M × 30% = $195M assessed

3. Total assessed value: $335 million

4. At $2.782 per $100: about $9.3 million a year at full taxation

$9.3 million dollars. Every year. From one building on a few hundred acres, with little social services demand, no direct schooling demand, essentially no traffic at shift change, and no new fire or police station required. For scale, the average Nashville teacher earns about $59,891 (MNPS/PayScale), so that single facility’s full tax bill is roughly 155 teacher salaries. Over a 20-year horizon at full taxation, it’s about $186 million.

Myth #5: “The Forgotten Workers Never See a Dime.”

We opened with the teachers, but wages and bonuses from data centers don’t stop there.

• In Richland Parish: classified school employees (aides, cafeteria staff, custodians) got bonuses up to $17,472, up from $3,323 (GovTech).

• The sheriff’s office and the Holly Ridge Fire District got new equipment.

• Louisiana Delta Community College got $5 million for scholarships, and

• Every Richland Parish high school graduate, starting with the class of 2026, gets a full ride for any data-center-related trade certificate (Meta).

Holy moly!

Then there’s the wage floor, my favorite underrated effect.

Meet Scott Holmes, he has run a charter bus company for 29 years. Since Meta broke ground he’s gone from 40 coaches to 102, and his drivers on the site earn over $80,000 a year in a parish where median income is $42,000. A couple started Holy Tacos in Rayville “because Meta was coming to town”; it now feeds hundreds a day. HeBrews Coffee went from 40 customers on a good day to over 130 and is opening its fourth location.

When the biggest balance sheets on earth start bidding for local labor, everyone’s wages appear to get dragged up: the bus driver’s, the electrician’s, the teacher’s. We wrote about this exact force in Eggs Are Cheap Again. Electricians, Not So Much.

The data center buildout is a decades-long boom for the skilled trades and blue-collar workers.

Myth #6: “The Jobs Disappear When Construction Ends.”

Now this is more of a half truth, so let’s be precise.

True: construction employs thousands (500+ county workers are on the Vineland site right now, and $1.6 billion in contracts have gone to Louisiana businesses at Hyperion), and a finished hyperscale campus runs on far fewer people. Independent studies put typical permanent staffing at 50 to 200 per facility, with big multi-building campuses reaching 400-500 (Brookings). Meta says Richland will support 1,000+ ongoing roles across its 10-million-square-foot campus. Google’s Oklahoma campus runs about 400.

Also true: those jobs don’t leave. Servers need security, electricians, HVAC techs, network engineers, and facilities crews, 24/7, for decades. These are permanent, well-paid, recession-resistant jobs. And they multiply: supply chains, services, and vendors add roughly 2-3x the direct headcount.

But here’s the honest frame, and I’d rather you hear it from me: if a town evaluates a data center on permanent job count alone, it will lose to a distribution center every time. That’s not the prize. The prize is the tax base, the wage floor, and the infrastructure the operator builds and leaves behind: Meta is putting $1 billion+ into Richland’s roads, water, and wastewater systems. DataOne has committed that after construction, at least 20% of its construction workforce goes to Cumberland County infrastructure projects, pro bono. Judge the whole package, not the badge count at the gate.

Myth #7: “It’s a Bubble. They’ll Strip the Value and Leave a Stranded Box.”

This is the smartest objection, so it deserves the smartest rebuttal, and it comes from Gavin Baker of Atreides Management, one of the earliest Nvidia investors and probably the most-cited voice on AI infrastructure.

The dot-com comparison fails on the financing. The 1999 fiber buildout was debt-funded, and about 99% of the fiber sat dark when the music stopped. Today’s buildout is funded overwhelmingly from hyperscaler operating cash flow, and the GPUs run near full utilization the day they’re racked (a16z). No debt spiral, no dark capacity.

It’s also, per Baker, empirically productive: he points to audited financials showing the return on invested capital of the big AI spenders is higher today than before they ramped capex. Spending $400 billion a year and getting more profitable while you do it is not what a money pit looks like.

His frame for the whole cycle is “watts and wafers”: the buildout is constrained by physical supply of power and chips, and as long as those stay scarce, overbuilding is nearly impossible. He expects the power shortage itself to ease in 2027-28 as new generation comes online. His honest caveat, which I’ll adopt as mine: if the capex strains power, copper, and capital markets faster than AI raises productivity, the story turns into bottleneck inflation instead. Watch that. But a community weighing a 40-year tax asset against “what if AI slows down” should notice: the building, the substation, the fiber, and the tax bill stay put either way. This connects to the argument we made in Why I Think the Next Fed Move Is a Cut: AI-driven productivity is disinflationary over time, and the physical layer of it is being bolted to American ground right now.

Case Study: Prineville, What 15 Years Actually Looks Like

Every data center argument is a forecast except this one. Prineville, Oregon already ran the experiment.

In 2010, Prineville was a busted timber town: five shuttered sawmills, 20% unemployment. Facebook came in 2010, Apple in 2012, lured by cheap land and 15-year tax abatements worth about $45 million each. The town got called naive for giving away the farm.

Fifteen years later: roughly $2 billion in data center development. 400 permanent jobs in a small town. Weekly wages that went from the bottom of Oregon’s rankings into the top 10. A 5% electricity franchise fee that pays the city $2.2 million a year, up from $340,000 in 2010, because the campuses buy $40 million of power annually. And now the abatements are expiring, the $2 billion lands on the tax rolls, and annual revenue is headed from $4 million to $9 million (CNBC).

The town that was “wary of Facebook and Apple” now formally asks them to keep expanding. That’s the revealed preference of the one American town with the longest track record. Not a promise. A result.

The Nashville Angle: Our Turn at the Table

Tennessee isn’t watching this revolution from the bleachers. We’re in it.

Data center power use in the TVA region grew sevenfold from 2020 to 2025, to 8.3 million megawatt-hours (Think Tennessee). Tennessee now holds 16.7% of active data-center construction among emerging U.S. markets, the demand pipeline is five times TVA’s current load, and TVA is building 6.2 gigawatts of new generation to serve it, including new nuclear and gas (Utility Dive).

Fortunately, we have the land. We have the fiber. And we have the growth story (we made the case in The $6.6 Billion Bet on Nashville).

We have the tax structure that turns all of it into prosperity for everyone.

All it takes is sensible electric generation policy.

So what would it actually mean for TN real estate investors, agents and residents?

1. A tax base that funds city services without touching your bill. Loudoun County, VA cut its property tax rate ten years running. Nashville homeowners have watched reappraisals do the opposite!

2. Rural Middle Tennessee counties get the Richland effect. Robertson, Cheatham, Dickson, Maury: places where a single campus could transform a school district’s discretionary money and let it pay teachers competitively for the first time.

3. Two waves of housing demand for every landlord and agent within thirty minutes. Crews first, operations staff second. Landlords and realtors helping first time homebuyers are going to be busy!

Importantly: TVA has already pledged “electric rate fairness” so new demand pays its own way (Axios Nashville), and the state’s 2026 law makes facilities over 50 megawatts fund their own power infrastructure.

In other words, electricity for data centers in TN is BOYG: Bring Your Own Generator.

The arithmetic here appears friendlier than the politics. Nashville is working through moratoriums, zoning fights, and project-specific opposition, and honestly it’s all political and gross.

But if Tennessee’s cities and counties negotiate like Loudoun and Richland did instead of turning projects away, this will be an age of abundance for Tennessee residents.

What This Means for Real Estate Investors and Agents

Everything above is nice for civics class. Here’s why it belongs in YOUR underwriting. A data center doesn’t compete with your tenants or your buyers. It creates them.

The Wells Fargo receipts. Wells Fargo Securities tracks about 200 mega data centers (500MW+) and compared their host counties to the nation since 2024 (via Sara Eisen/CNBC).

Counties with OPERATING data centers saw:

1. New housing units built: up roughly 50%, while the U.S. overall built essentially zero net new. Read that again: the data center counties are out-building the entire country. The “they crowd out housing” claim appears not just wrong but backwards. Demand showed up, and supply followed.

2. Home values: up ~13-14% since 2024, roughly double the national ~7%.

3. Unemployment: ~3.5% vs. 4.2% nationally.

4. Job growth: ~3.8%, nearly four times the national ~1%.

One nuance worth respecting: counties where the data center is still under construction don’t show these gains yet. The benefits appear to ramp when the campus turns on and the permanent payroll, the equipment tax, and the vendor ecosystem arrive. If you’re investing in a host county, the reward comes on delivery, not groundbreaking. Patience is part of the strategy.

Two waves of housing demand, and you can rent to both.

Wave one is construction: thousands of workers for 18 to 36 months. They need somewhere to sleep tonight, not in two years. In small host markets this creates a mid-term rental gold rush: furnished units, extended-stay, room-by-room, RV pads. Landlords within 30 minutes of a groundbreaking are suddenly running hotels. (If you own in one of these counties, look up crew-housing rates before you sign your next 12-month lease at the old number.)

Wave two is operations: the permanent staff, plus the bus drivers, contractors, vendors, and coffee shops around them. These are $80K-$120K households in markets where that buys a house. They rent first, then they buy. Landlords capture wave one; agents capture wave two. Richland Parish home prices are up roughly 63% since Meta arrived (Yahoo Finance). That’s not a housing crisis, that’s what it looks like when high-wage demand lands in a market that never had any. Every owner in the parish got paid, and every agent’s volume went up.

Your land has a new buyer. Hyperscalers are paying premium prices for utility-served parcels near power and fiber (HousingWire). To be precise: they bid on land, not houses. Nobody is outbidding a family at an open house. But if you hold dirt near a substation, a transmission line, or a fiber route, the strongest balance sheets on earth just joined your buyer pool. Land near power infrastructure is the new corner lot.

The adjacent commercial / small business play. Holy Tacos and HeBrews Coffee exist because a campus came. Multiply that by every vendor, subcontractor, and service business a $50 billion project needs. Small commercial, flex space, and mixed-use near the site catch that wave, and those are exactly the assets readers of this newsletter actually buy.

The tax-base kicker for home values. This one is subtle and agents should use it. In Loudoun, silicon pays the county’s bills, so homeowners enjoy the lowest property tax rate in Northern Virginia while schools get funded. Lower carrying costs plus better-funded schools is a durable support under home values. “The data center pays your property taxes” is a listing-flyer line that happens to be true.

And the trades. The buildout is a ten-year bid for electricians, HVAC techs, and skilled labor. If you flip or renovate, this is a cost headwind: construction input prices jumped 2.2% in July alone (BLS PPI). If you’re advising a kid on a career, it’s the opportunity of the decade. Both are true.

The five wealth engines I lay out in the book: cash flow, appreciation, loan paydown, tax benefits, leverage. A data center county feeds the first two directly: rents from the demand waves, appreciation from the comps. The other three come along for the ride.

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My Skeptical Take

Every generation gets one major boom cycle.

Coal and then Oil energy revolution.

Railroads.

The interstate highway system.

The electrical grid itself.

The PC revolution/Internet.

Some were loathed while they were being built: loud, disruptive, enriching somebody else. And each one quietly decided which towns thrived for the next half-century and which ones you now drive past without stopping.

The data center is this generation’s version. Industrial Revolution 2.0, and America is winning it: more than half the world’s hyperscale capacity sits on our soil. Yet the discourse around it has the quality of a mob with pitchforks.

But the data is clear: electric rates down, low water use, property taxes down, and $50,000 checks landing on teachers’ desks in one of the poorest parishes in Louisiana.

I’m not asking you to love the windowless box that may get built next to your zoo.

I’m asking you to notice what it pays for.

The skeptic’s job isn’t to join the mob or the marketing department. It’s to read the contract. The towns cashing teacher bonuses and the towns suing over their power bills are hosting the same building; the difference is likely politics, unfortunately.

Communities don’t appear to get hurt by data centers. They get hurt by bad deals, and bad deals are optional.

And for us, the investors and agents: the map is being redrawn in public, county by county. The counties that land these campuses out-build the country, out-grow it 4-to-1 on jobs, and hand their homeowners a tax cut. That’s not a tech story. That’s a comps story, in my humble opinion the clearest one of the decade in real estate.

And Tennessee is holding one of the better hands at the table.

John F. Kennedy said it in his inaugural address: “Let us never negotiate out of fear. But let us never fear to negotiate.”

Don’t fight the data center. Negotiate it. Then buy that next rental deal two miles away.

Until next time. Stay Curious. Stay Skeptical.

Herzliche Grüße,

-The Skeptical Investor

-P.S. If this newsletter has been useful to you, the best gift you can give me is free: forward it to one person who’d benefit. I promise you 24 hours of good joo joo.

Need some personal help with your real estate portfolio?

You can consult one-on-one on the phone with me, The Skeptical Investor!

Get professional advice from someone who actually owns, operates, and brokers real estate. Not just some partner in a fund making money off others.

Want to Grow? - Get clarity on how to grow your business or scale.

Stuck? - Get answers to your problem, let’s hop on the phone and figure it out.

No “guru” trying to sell you an expensive course. No BS. No fluff. Only results.

I’ll give you my frank, brutally honest advice. Book a call with me today.

It’s 2026. Be an owner.

Schedule your 1-on-1 call now.

Today’s Read Time: 9 minutes

This week we’re talkin’ the first negative jobs number, the American consumer we keep underestimating, an economy that take a punch, and homebuyers munching through housing inventory like hungry hungry hippos.

Let’s get into it.

Today’s Interest Rate: 6.74%

(👇 .09% from this time last week, 30-yr mortgage) Mortgage News Daily

The Weekly 3 in News:

1. The Boring Company struck a deal to put a Music City Loop station at downtown’s JW Marriott. Announced August 1, the station will give the SoBro hotel direct access to the underground Tesla tunnel connecting BNA to downtown; two boring machines are already digging, a third arrives in September, and the company says more than 40 stations are in various stages of planning and design in Music City (Nashville Business Journal, The Boring Company).

2. A new round of U.S. tariffs takes effect August 19. The Section 338 package hits certain Canadian goods at 50%, Brazil at 25%, and roughly 60 other trading partners at 10–12%, including some goods previously covered under USMCA (Tax Foundation).

3. The Fed’s September path flipped in a single morning. After Friday’s jobs report, futures markets moved from pricing a likely September rate hike (~55% odds) to a hold as the base case, with hike odds falling to ~44% (CNBC).

A Few Fun Things Happening in Nashville This Week:

• ⭐ Foo Fighters — Nissan Stadium, Saturday Aug 15. Stadium rock on the East Bank; the marquee show of the summer (Nashville Guru).

• My Chemical Romance — Nissan Stadium, Thursday Aug 13. Two stadium shows in three days: a big week for downtown bars, hotels, and anyone who owns a short-term rental (Nashville Guru).

The Jobs Number Went Negative

America lost 23,000 jobs in July: the first monthly decline of this cycle, vs expectations of an 83,000 gain (BLS, CNBC). But, before you cancel your weekend plans, let’s look inside the number.

The private sector added 30,000 jobs. Government shed 53,000, with public education alone down 50,000 (BLS). Health care added 22,000, retail lost 19,000. The “job loss” was, roughly speaking, a government story, not a business story.

The more significant insight for me was in the fine print: previous jobs reports that were revised lower.

May was marked down from +129,000 to +63,000. June went from +57,000 to +20,000. That’s 103,000 jobs that were reported, celebrated, and then quietly erased (BLS).

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Wage growth cooled to 3.2% year over year, the slowest since May 2021, and unemployment ticked down to 4.1%, though partly because the labor force shrank (BLS, CNBC). I covered the report-then-erase pattern in The Curious Case of the American Non-Worker a few weeks back, and this trend has worsened. The first jobs number released has a high estimate, only to be revised lower.

However, my rule: one month of data is noise. Two months in a row, we’re heating up, start paying attention. Three months, it means something, (per NBA Jam rules of course). July is one month of negative job growth, and a government-heavy (aka non-productive work) one at that.

The steelman: the potential bear case is more about the pattern than anything else. When revisions run persistently in one direction, the labor market is usually weaker than the headlines said in real time. Job gains have also narrowed to basically health care and not much else, and decelerating wages mean workers are losing bargaining power. If August and September also come in negative, that’s a trend, and I’ll change my tune and tell you so. But betting on a recession every time one number disappoints has been the single most expensive trade of this decade.

Careful of those who cry wolf.

The Consumer Feels Terrible!? But they’re Spending Like Crazy.

Consumer sentiment hit a five-month high in July: the University of Michigan index rose 11.5% to 55.2, and year-ahead inflation expectations fell to 4.2% from 4.6% (Advisor Perspectives). Good news, right? Sure. But 55 is still miles below the long-run average of roughly 85. In fact, according to the survey, the American consumer has been ‘miserable’ for four straight years.

I suspect this is more an ideological/political feeling and not actually about the economy.

Frankly, I don’t put much weight on consumer surveys. And neither should you.

They measure moods, not money, and moods have been a lousy forecaster. Don’t take my word for it. Jerome Powell, when he was Fed Chair, said it plainly: “the link between sentiment data and consumer spending has been weak. It’s not been a strong link at all.” The Kansas City Fed studied 30 years of data and found that adding sentiment to a spending forecast changes almost nothing (KC Fed).

So ignore what consumers say. Watch what they do. And the people with the best view of what they do are the banks that process their paychecks and swipe their cards.

What the banks see. Bank of America CEO Brian Moynihan told analysts on the Q2 earnings call that consumer spending “picked up during the second quarter and now is running at 6%+ year over year,” up from 5% in the first half, with card spending up 9% to $266 billion. Consumers are “continuing to spend on discretionary items such as travel and entertainment,” the bank’s second-largest spending category (Yahoo Finance). And the credit side is the opposite of stressed: “Consumer credit quality remains strong,” with card charge-offs and delinquencies improving both year over year and quarter over quarter (BofA Q2 2026 call, transcript).

Wells Fargo CEO Charlie Scharf, on CNBC two weeks ago: “Our credit card spend is up 10%. Our debit card spend is up 7%.” And the detail that should end the doom-loop debate: “paychecks rising faster than inflation for our customer base,” with “delinquencies down, savings rates up.” About 70% of the spending increase came from mass-market customers, not the affluent (CNBC via 24/7 Wall St.).

Renters are in a Strong Financial Position

Housing analyst Jay Parsons has been making the same point from the rental side: renters are in remarkably good shape. Market-rate renters are spending roughly 21–22% of income on rent, the lowest rent-to-income ratios since before COVID, because “wage growth has outrun rent growth for more than 40 consecutive months.” Renter delinquencies have been improving too (Forbes/Parsons, The Rent Roll, EP#96).

Where’s the K? The fashionable take says we have a “K-shaped” economy: the rich soaring, everyone else sinking. Ed Yardeni, the economist who called this decade the “Roaring 2020s” back when that sounded insane, pushed back hard on that narrative on The Compound and Friends this week with Josh Brown and Michael Batnick. His evidence starts with his own eyes: stores, malls, and restaurants are full, and try getting a cheap Knicks ticket. His deeper argument is generational. Retiring Baby Boomers and the Silent Generation sit on roughly $100 trillion in combined net worth, and they are spending it down from assets, not paychecks. Flat disposable-income growth misses them entirely: their income statement looks boring while their balance sheet buys the vacation (TCAF #254).

The Fed’s own data backs him up: Boomers hold about $85.4 trillion in net worth, the Silent Generation and older about $20.2 trillion. Call it $105 trillion between the two groups (what’s a few trillion amongst friends, eh?), roughly 63% of all U.S. household wealth (Federal Reserve Distributional Financial Accounts, via SmartAsset). Yardeni calls it a “G-shaped” (generational) economy, and he thinks it powers consumption, corporate earnings, and yes, the Roaring 2020s, through the end of the decade; he has floated S&P 10,000 by then (TCAF #254).

Surveys suck.

The Bulletproof Economy

Is the economy…dare I say…bulletproof?

Despite the negative jobs news (again just a 1 month reading) the strongest stock market week of the year happened anyway: the S&P 500 closed Friday at a record 7,757, up 3.6% for its best week since April, with the Nasdaq up 5.2% and the Dow at a record too (CNBC).

One of these narratives is wrong, says the commentariat. The economy is decelerating, says the consensus.

I don’t think so. I think the economy is being underestimated, again, and the pattern is now six years long.

Consider what this economy has absorbed since 2020, a parade of grey swans (the cousins of black swans you can sort of see coming, and panic about anyway):

• a global pandemic that shut the country down.

• The fastest Fed hiking cycle in four decades.

• A land war in Europe, and an energy shock.

• Regional bank failures in 2023.

• A yen carry-trade unwind that vaporized markets for a week.

• Tariff wars, renegotiated twice.

• And this spring, an actual shooting conflict with Iran that closed the Strait of Hormuz and sent crude toward $90, but not to $150.

Every single time, the recession calls followed within days. Every single time, the economy took the punch and kept walking.

It appears to be doing it again. The rearview mirror says Q2 GDP grew a soft 1.5%. The windshield says the Atlanta Fed’s GDPNow tracker has third-quarter growth running near 5.8% as of August 6, with consumption strong and private investment surging (BEA, Atlanta Fed). Early-quarter nowcasts are volatile, direction not promise, but the direction is up, not down.

And inflation? Look at the trajectory before April: core CPI at 2.6%, core PCE in the low 3s, headline drifting down for months (BLS, BEA). What interrupted it wasn’t wages or demand: it was oil, spiking from about $69 to nearly $90 on the Iran conflict, and now round-tripping back to the high $70s as the war premium bleeds out (Trading Economics). Temporary, oil-driven, and unwinding: the argument I made in Inflation Reset still appears to be on track.

Meanwhile the jobs data has become so volatile, and so heavily revised, that the Fed can’t credibly tighten against it. You saw it in real time Friday: September hike odds collapsed from ~55% to ~44% within hours of the report (CNBC). A committee that was talking itself into a hike now has a negative payroll number and a −103K revision sitting on the table. Whatever your politics of monetary policy, the practical read for us is simple: financing costs appear more likely to drift down than up from here.

Robust is not the same as hot. I want to be precise: this economy is not running hot. Wage growth at 3.2% is not hot. A quarter of soft GDP is not hot. What it is, is durable: strong enough to absorb shock after shock without breaking, which is a more valuable trait than speed. Bulletproof beats fast.

Exhibit A: Housing

If you want proof the underlying economy is sturdier than the headlines, don’t look at the S&P. Look at the least affordable, most rate-punished corner of the economy: housing. It should be flat on the canvas. It isn’t.

Mortgage rates have been parked between roughly 6.6% and 6.9% since spring (Mortgage News Daily). That was supposed to be the demand-killer. Instead:

1)) Purchase applications have now been positive year over year for 25 straight weeks in 2026 (HousingWire).

2)) Weekly pending sales are running ahead of last year: 69,109 versus 68,413 in the same week (HousingWire).

3)) The inventory recovery is being eaten alive. A year ago, national active listings were growing 24.7% year over year and the “inventory is back” stories wrote themselves. As of July 31, that growth rate has collapsed to 2.1%, and total inventory still sits 9.1% below 2019 levels (ResiClub).

Picture the old Hungry Hungry Hippos game: every marble that rolls onto the board gets gobbled before it stops moving. That’s the American homebuyer right now, at 6.8% money. Sellers listed more homes this year (new listings are up), and buyers absorbed essentially all of it. I wrote in Revenge of the Seller’s Market that inventory was heading back toward scarcity, and last week in The Housing Market Is Frozen, Not Broken that volume, not price, was the frozen part. This is the sequel: the thaw is being bought as fast as it drips.

Logan Mohtashami, whose forward-looking weekly data leads closed sales by one to three months, put it two ways this summer: “Housing has weathered the 2026 storm of crazy headlines and inflation as well as it possibly can,” and “mortgage spreads being better in 2026 is the housing hero story of the year” (HousingWire, HousingWire).

Demand that holds through a hostile rate environment is pent-up demand, and pent-up demand is fuel. If financing costs drift toward 6% as the Fed’s hand gets stayed, the hippos don’t get less hungry. There will be more of them.

The steelman: the honest bear case has three legs. First, Mohtashami’s own caveat: “The longer we stay above 6.64%, the softer housing demand gets,” and the weekly pending edge over last year is thin, about 1% (calculated). Second, GDPNow’s early-quarter estimates are built on thin data and swing hard; 5.8% today could be 3% by September. Third, the growth that exists leans heavily on AI capital spending and asset-rich consumers, and both of those depend on markets staying at records. If equities correct 20% while payrolls come in negative for two more months, the bulletproof story takes real damage, and I’ll be the first to re-underwrite it. What I won’t do is call the fight against an opponent who’s still standing after six knockdown attempts.

What It Means for Investors

A durable-but-not-hot economy with sticky-scarce housing inventory is, in my humble opinion, close to ideal conditions for the patient landlord: enough growth to keep tenants employed and rents paid, not enough heat to reignite inflation and rates, and a for-sale market too tight to crash. While you wait for the obvious all-clear that never gets announced, the quiet engines keep turning: cash flow, loan paydown, tax benefits, appreciation, leverage. Those five engines are the whole architecture of my book on how real estate investors actually build wealth, and years like this one, boring on the surface, bulletproof underneath, are when they do their best compounding.

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Nashville: The Rent Bottom Is Forming

Nashville’s median rent sits at $1,358, still down 4.0% year over year, but up 0.7% on the month (Apartment List). The year-over-year number is the rearview mirror. The windshield is the pipeline, and the pipeline is shutting down.

Annual multifamily permits in the metro are down more than 50% from their peak. Units under construction are down about 25%. Deliveries are set to fall for the third straight year (Northmarq, Multi-Housing News). Rents lag supply, always. The discounting you see today is the echo of cranes that went up in 2022 and 2023. The cranes that aren’t going up in 2026 are tomorrow’s rent growth.

The national rental market is already showing us the movie. Apartment demand nationally has outrun new supply by roughly 100,000 units this year, occupancy is back to 95.5%, and Jay Parsons noted on his Rent Roll podcast that the apartment REITs reported improving rent growth, and rent growth momentum, on their Q2 earnings calls (Forbes, RealPage, The Rent Roll, EP#96). The Sun Belt, including Nashville, is the last region still discounting, because we built the most. That’s not a flaw in the thesis: that’s the sequencing. The markets that overbuilt hardest bottom last, and the operators who buy into the discount before the bottom is official are the ones who get the momentum.

My take: Nashville rents are about to reaccelerate, and our demand engines, the tourists, the tunnel-diggers, the corporate relocations I covered the other week in The $6.6 Billion Bet on Nashville, have not gone anywhere. Negative headline rent growth plus a collapsing supply pipeline is what a buying window looks like while it’s open.

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Ok, back to business.

My Skeptical Take

The old Hungarian-German speculator André Kostolany had a metaphor I think about every week like this one.

A man walks through the city with his dog. The dog runs ahead, doubles back, darts sideways after a pigeon, and covers five times the distance his owner does. But when they get home, they arrive together. The dog, Kostolany said, is the market. The man is the economy.

This was a week of dog.

Stocks sprinted to records. Jobs data darted the other way. Gold chased a pigeon. And every commentator with a microphone tried to divine the future from the zigzags.

Watch the man. He has walked through a pandemic, a war, an oil shock, a banking scare, and a tariff fight, and his pace has barely changed: consumers spending 6% more than last year, three-quarters of a trillion dollars swiped on two banks’ cards, renters healthier than they’ve been since 2019, and homebuyers absorbing every marble on the board at 6.8% money. That is not an economy decelerating toward recession. That appears to be an economy so durable that we’ve gotten bored of its resilience and gone looking for reasons to doubt it.

Skepticism, done right, points against the consensus, not the evidence. The consensus keeps predicting the man will collapse. The evidence says he’s still walking.

So the operator’s move this week is the same as it’s been all year: ignore the zigzags, underwrite the walk. Buy the discounts the doubters leave behind, in a city where the concrete is about to stop pouring.

In Kostolany’s words:

“The dog is the stock market. The man is the economy. In the end, they arrive together.”

Follow the man.

Until next time. Stay Curious. Stay Skeptical.

Herzliche Grüße,

-The Skeptical Investor

-P.S. If this newsletter has been useful to you, the best gift you can give me is free: forward it to one person who’d benefit. I promise you 24 hours of good joo joo.

Need some personal help with your real estate portfolio?

You can consult one-on-one on the phone with me, The Skeptical Investor!

Get professional advice from someone who actually owns, operates, and brokers real estate. Not just some partner in a fund making money off others.

Want to Grow? - Get clarity on how to grow your business or scale.

Stuck? - Get answers to your problem, let’s hop on the phone and figure it out.

No “guru” trying to sell you an expensive course. No BS. No fluff. Only results.

I’ll give you my frank, brutally honest advice. Book a call with me today.

It’s 2026. Be an owner.

Schedule your 1-on-1 call now.

Today’s Read Time: 9 minutes

This week we’re talkin’ numbers that fib, lie and signal, a GDP report that looked weak (but isn't), an inflation picture that keeps improving while oil remains volatile, a spooky home-sales figure that is just noise, and one number that does matter: America has been stuck at four million home sales for three straight years.

Let’s get into it.

Today’s Interest Rate: 6.83%

(☝️ .02% from this time last week, 30-yr mortgage) Mortgage News Daily

The Weekly 3 in News:

1. The U.S. and Japan jointly intervened to prop up the yen. After the dollar-yen rate hit 160, a four-decade low for the yen, Japan’s finance ministry spent roughly $53 billion buying yen on Friday while the U.S. Treasury sold euros alongside it: the first direct American yen-buying since 1998 (CNBC). To be clear, the US intervened to protect our own Treasury market and limit a trade disadvantage. This is important to know for real estate markets, as it lowered the risk of upward pressure on US Treasury yields (ie stopped interest rates from spiking).

2. Oil fell about 5% Monday to roughly $80 a barrel as the Middle East war premium unwinds, again. Renewed Washington–Tehran diplomacy and recovering tanker traffic through the Strait of Hormuz drained the fear that had pushed crude near $90 in mid-July (MarketScreener). This dynamic will remain volatile but trend down, as I have written about many times over the last 3 months.

3. AI is carrying company earnings season. Several of the largest technology companies beat expectations on sustained AI-infrastructure spending, powering a roughly 1% weekly S&P 500 gain despite a midweek 1,100-point Dow drop (Seeking Alpha). Most important earnings report was Amazon, who was able to illustrate real earnings gains from AI technology, despite massive CapEx spend.

Fun Things Happening in Nashville This Week:

• ⭐ Tomato Art Fest — Historic East Nashville, Five Points, Friday Aug 7 (5–10pm) and Saturday Aug 8 (9am–7pm). Free. The 23rd annual, gloriously weird celebration of art, costumes, food, and the noble tomato. Quintessential East Nashville (Tomato Art Fest).

GDP and Housing: Remember, One Quarter A Trend Doesn’t Make

The economy grew 1.5% in the second quarter, down from 2.1% in the first and below the 1.8% economists expected (BEA). Cue the headlines about a stalling economy.

“Ah the economy is tanking we are headed for recession…maaaaaaa!”

Not so fast.

One quarter is a single data point, and single data points have a habit of being noisy lies.

Further, let’s not stare at the rearview mirror, but instead look through the windshield: the Atlanta Fed’s GDPNow model, which tracks incoming data in real time, opened its third-quarter estimate at 5.0% (Atlanta Fed, via MarketScreener). The tracker appears to be pointing at reacceleration, not recession.

Sources: BEA, Atlanta Fed GDPNow.

The bond market seems to agree that growth is not collapsing: the 10-year Treasury yield has climbed from about 4.40% at the end of June to 4.69% (Deloitte; MND). Yields generally do not rise like that when investors smell recession.

Sources: Deloitte weekly economic update, Mortgage News Daily.

The steelman: The counterpoint? The slowdown case is not totally crazy. GDPNow’s opening estimate for any quarter is built on thin data and swings hard as the quarter fills in, so 5.0% is a direction, not a promise. Consumer spending growth did cool in Q2. And the growth that remains is increasingly concentrated in one theme: AI capital spending. If that spending pauses, the economy may be softer underneath than the headline suggests. Fair points, worth watching.

But a forecast built on one weak quarter, against a real-time tracker pointing the other way, is not analysis: it’s emotion.

The lesson, and it’s the theme of this whole issue: one number is noise. Trends are signal.

Inflation Will Keep Cooling Regardless of Middle East Action

The Fed’s preferred inflation gauge came in tame again in June: core PCE rose 3.3% year over year, and the headline measure actually fell 0.1% for the month (BEA). Core CPI sits at 2.6% (BLS). The trend has been one direction, down, for months.

Sources: BLS, BEA.

The one genuine threat to that trend was oil. Crude spiked from roughly $69 at the start of July to nearly $90 mid-month on Hormuz and Red Sea fears, and that spike was leaking into mortgage rates and inflation expectations.

This will remain volatile, and that is just fine. A healthy sign in a healthy market.

This week starts with another move down: WTI dropped about 5% on Monday to roughly $80 as diplomacy between Washington and Tehran gained traction and tanker traffic recovered (MarketScreener).

Sources: Trading Economics, MarketScreener. July 1 level calculated from the reported 23% monthly move.

I’ve been arguing since the spring that energy is the swing factor in this inflation cycle, first in Inflation Reset and before that in Energy Prices Have Peaked. Rents Are Turning.

And once the war premium stays out of crude, the last real obstacle between the Fed and lower rates will dissolve.

The steelman: Counterpoint?

Of course inflation is not beaten. We are, and will be for years to come, in a long COVID / zero interest rate / free money etc…. hangover.

This is what injecting $10+ trillion into the economy does.

Producer prices are still running 5.5% year over year (BLS), headline PCE is 3.7%, and three Fed officials were worried enough to dissent in favor of a rate hike at last week’s meeting, where the committee held at 3.50–3.75% on a rare 9–3 vote (CNBC). And oil diplomacy can fail as fast as it started. If crude re-spikes, this paragraph ages badly. That’s the honest risk.

But notice the pattern again: the hawks are reacting to where inflation has been. The forward indicators, cooling core, falling crude, appear to be pointing much friendlier.

That Scary Home-Sales Number? Noise.

You may have read this last week that pending home sales fell 5.4% in June, the biggest monthly drop of the year, with contract signings down in all four regions (NAR).

Spooooooooky.

Sounds ominous.

But don’t fret.

Here’s what most coverage left out: it followed three straight up months. March rose 1.5%, April 1.4%, May 3.8% (NAR March, April, May).

Source: NAR pending home sales reports, 2026.

My rule: one month of housing data is noise. Two months in a row, start paying attention. Three months, now it means something. June is one month.

What likely caused the dip is no mystery. Mortgage rates spent July climbing a quarter point, from 6.59% to 6.83%, back within a whisker of their 52-week high of 6.85% (Mortgage News Daily). NAR’s chief economist Lawrence Yun named it plainly: “the highest mortgage rates in nearly a year and the record-high national median home price” (NAR).

Source: Mortgage News Daily daily rate index.

So if one down month is noise, what’s the signal? Glad you asked. That’s the deep dive this week.

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The Great Freeze: Three Years at Four Million

Here is a number that is not noise.

Americans bought 4.09 million existing homes in 2023. Then 4.06 million in 2024. Then 4.06 million again in 2025 (Fannie Mae). The historical norm is around 5.2 million. Three straight years, roughly a quarter of the market’s normal transaction volume, gone.

That is a trend.

That is signal.

Sources: NAR annual data, Fannie Mae. (2019–2022 figures from NAR historical releases.)

And here’s the strange part: prices never fell. The median existing home sold for a record $440,600 in June, the 36th consecutive month of annual gains (NAR). Record prices, dead volume. Most people assume those can’t coexist. They’ve now coexisted for three years.

Why Nobody Moves

The mechanism is brutally simple: the monthly payment.

In 2021, the median existing home cost about $346,900 and a 30-year mortgage ran about 2.96% (NAR; Freddie Mac). Put 20% down and the principal-and-interest payment was roughly $1,164 a month (calculated).

Today the median is $440,600 and the rate is 6.83%. Same 20% down: roughly $2,305 a month(calculated).

The payment on the median American home appears to have nearly doubled, up 98%, in five years (calculated).

Sources: NAR, Freddie Mac, MND. Payments calculated: 20% down, 30-year amortization. Verify the 2021 median/rate inputs before publish.

That doubling froze both sides of the market at once. Buyers can’t stretch to the payment. And sellers, roughly speaking, ARE buyers: most people who sell must then buy at the same prices and the same rates, while surrendering the 3% mortgage they locked in years ago. So they don’t sell. Volume dies, but because nobody is forced to transact, prices don’t fall. The market doesn’t crash. It simply stops.

Washington’s response to all this, by the way, was the ROAD to Housing Act, which I covered two weeks ago in The Apartment Glut Is Going Keto: a law aimed at a villain who owns about 1% of the housing stock. The freeze has nothing to do with Wall Street. It’s arithmetic.

What Breaks the Ice

Three levers could thaw this market. Watch them in order.

Lever one: rates. Fannie Mae’s July forecast has the 30-year averaging 6.4% through 2026 and easing to about 6.3% in 2027 (Fannie Mae). My own view, which I laid out in Why I Think the Next Fed Move Is a Cut, is that fading oil inflation eventually lets the Fed cut more than consensus expects, and this week’s crude unwind is the first live evidence. Somewhere between 5.5% and 6%, the payment math starts working again for millions of households.

Sources: MND, Fannie Mae forecast; the 2027–28 band is my view.

Lever two: builder capitulation. Builders can’t sit on frozen inventory the way homeowners can, so they cut: new-home prices have been falling while resale prices set records. New construction is where the negotiable deals are right now, and where the first cracks in seller pricing appear.

Lever three: time. Incomes grind higher every year while the payment stays flat. This is the slowest thaw, but it’s always working in the background.

And the forward indicators, the windshield view again, suggest the thaw may already be starting. Weekly pending contracts are running at 75,856 versus 72,039 a year ago, up about 5.3% (calculated), and purchase applications opened 2026 up 13% year over year (HousingWire). Housing analyst Logan Mohtashami, whose weekly demand data I trust precisely because it leads closed sales by one to three months, thinks total 2026 sales could approach five million (Benzinga). Against Fannie’s 4.76 million forecast and last year’s roughly 4.74 million (calculated: 4.06M existing + ~0.68M new), that would be the first meaningful volume growth in four years.

Sources: Fannie Mae, HousingWire/Mohtashami; 2025 total calculated.

The steelman: Counterpoint time again.

Frozen markets can break downward instead of thawing. Inventory is building toward six months in a growing list of metros, builders are already cutting, and if the labor market cracks, forced sellers meet a thin buyer pool and the standoff resolves in price declines, not volume recovery. Japan’s property market spent a decade proving that “frozen” can simply mean “slowly deflating.” The honest counter is the labor market: unemployment is 4.2% (BLS), and without forced sellers there is no mechanism for capitulation. Watch jobs. If unemployment starts climbing month after month, and remember, that means a trend, not one report, the freeze thesis needs rewriting.

What It Means for Investors

A frozen market is not a dangerous market: it may be the most negotiable market in years. Thin volume means the sellers who must move, the relocations, the estates, the tired landlords, face a shallow pool of buyers, and that is where deals get made. Meanwhile the rental side quietly pays you while you wait: rent, loan paydown, tax benefits, appreciation, and leverage don’t need transaction volume to work. Those five engines are the entire subject of my book on how real estate actually builds wealth, and frozen years like these are exactly when the non-price engines carry the load.

Another Quick Break: Try My Free DealLab Real Estate Calculator

Want help running numbers on your next deal (or an existing property you have)?

I built a free real estate deal analyzer, including an Advanced Mode for the pros.

DealLab, the deal analyzer.

It’s in beta, which means two things: it’s free, and I want your feedback. Run your next deal through it, kick the tires, and reply to this email with what’s missing, and what would make it indispensable for you and your business.

Bookmark it. It will come in handy.

Nashville: The Engine Under the Ice

The freeze is national. Nashville shows why a strong jobs market is the most important measure for local housing/renting/land-lording.

The Nashville metro labor market is one of the healthiest in the country.

Davidson County unemployment sits near 3.0%, and Tennessee has held 3.6% for four straight months.

Both are comfortably below the national 4.2% (TN Dept. of Labor).

Forecasters project the metro to add roughly 31,400 jobs in 2026, growth of about 0.9%, nearly double the national pace (Boyd Center; USAFacts).

Sources: TN Dept. of Labor & Workforce Development, BLS, Boyd Center.

Remember the steelman above: frozen markets break downward when forced sellers appear, and forced sellers come from job losses. A town where nearly everyone who wants a job has one produces very few forced sellers. Record prices on six months of inventory is a standoff, and the jobs engine is what keeps the standoff from becoming a rout.

Prices are still on their way up here in a slow, steady, and healthy way.

My Skeptical Take:

Markets punish impatience, and frozen markets punish it doubly.

Three years into the freeze, the loudest voices have been wrong in both directions: the crash-callers and doomers who promised 2008 every autumn, and the boom-callers who promised rates back at 4% every spring.

What actually happened was more boring and instructive: volume died, prices held, landlords got paid, and the market slowly built the conditions for its own thaw.

Real estate keeps on chugging.

Now the forward indicators - cooling core inflation, oil giving up its war premium, weekly purchase demand quietly rising - do appear to be leaning toward that thaw.

Not a boom, but a drip. And drips are easy to miss if you’re tilting on headlines after one poor month.

Peter Lynch, who compounded at 29% a year while everyone around him panicked over headlines, put it best:

“The real key to making money in stocks is not to get scared out of them.”

Swap “stocks” for “real estate” as your asset of choice and you have the operator’s playbook for a frozen market: don’t get scared out by one ugly month, don’t get lured in by one hot one, watch the trend, watch the forward data, and be the patient buyer in a market full of nervous ones.

In fact, the savvy investor uses this for their next buy.

Market is lookin good, keep on drippin’.

Until next time. Stay Curious. Stay Skeptical.

Herzliche Grüße,

-The Skeptical Investor

-P.S. If this newsletter has been useful to you, the best gift you can give me is free: forward it to one person who’d benefit. I promise you 24 hours of good joo joo.

Need some personal help with your real estate portfolio?

You can consult one-on-one on the phone with me, The Skeptical Investor!

Get professional advice from someone who actually owns, operates, and brokers real estate. Not just some partner in a fund making money off others.

Want to Grow? - Get clarity on how to grow your business or scale.

Stuck? - Get answers to your problem, let’s hop on the phone and figure it out.

No “guru” trying to sell you an expensive course. No BS. No fluff. Only results.

I’ll give you my frank, brutally honest advice. Book a call with me today.

It’s 2026. Be an owner.

Schedule your 1-on-1 call now.

Today’s Read Time: 9 minutes

This week we’re talkin’ supply: the apartment glut that appears to be dying of natural causes, the new law that “bans” Wall Street from buying houses (it’s theater), and why homebuilders are cutting prices while your neighbor’s house sets another record.

Let’s get into it.

Today’s Interest Rate: 6.78%

(☝️ .15% from this time last week, 30-yr mortgage) Mortgage News Daily

The Weekly 3 in News:

1. The apartment market may have finally hit bottom: national vacancy fell for the first time since 2021, absorption topped 250,000 units in the first half, and quarterly rent growth hit a four-year high (Jay Parsons; RealPage 2Q Update)

2. Wall Street’s biggest landlords are now net sellers of homes: institutional owners listed 9,447 single-family rentals in July, more than double February’s count, as the new ROAD to Housing Act’s purchase ban looms for January 2027 (CNBC)

3. New-home prices keep falling while existing-home prices set records: June’s median new home sold for $398,300, down 2.7% from a year ago, while the median existing home hit an all-time high of $440,600 (Census; NAR)

Bonus! Waymo expanded its Nashville robotaxi zone again in late June and is testing airport service. The robots like the Sun Belt too (Axios).

A Few Fun Things Happening in Nashville This Week:

• ⭐ Bob Dylan with Lucinda Williams — Ascend Amphitheater, Saturday Aug 1, 7:00 pm. A living legend on the riverfront, with a Southern-songwriter icon opening. (Ascend)

• Pavement — Ryman Auditorium, Monday July 27, 7:30 pm. ‘90s indie-rock royalty at the Mother Church. (Nashville Guru)

• Train, “Drops of Jupiter: 25 Years” tour — Ascend Amphitheater, Friday July 31. Singalong radio hits by the river. (Ascend)

• Nashville Sounds vs. Charlotte Knights — First Horizon Park, homestand through Aug 2. Cheap tickets, cold beer, minor-league fireworks. (Nashville Guru)

Washington Just Banned Wall Street From Buying Houses. It’s Theater.

This month, Congress passed The 21st Century ROAD to Housing Act in a rare bipartisan vote of 358-32 in the House, 85-5 in the Senate (Goodwin Law). The marquee provision is titled: "Homes Are For People, Not Corporations."

Any for-profit investor controlling 350 or more single-family homes is barred from buying additional existing single-family houses starting January 2027, penalties up to $1 million or three times the purchase price per violation (H.R. 6644).

“Yeah, homes are for living, not for Wall Street!”

Well, careful. That’s misleading, at best.

I’ll explain.

First, I’ll acknowledge that there are some markets where large companies do own a decent concentration of the housing stock. These markets are: Atlanta, where 25% of the single-family rental market is owned by institutions, 21% in Jacksonville, and 18% in Charlotte (GAO). Surprisingly, in metro Atlanta’s Henry County, corporate owners hold 64% of single-family rentals; in Paulding County, 78% (Georgia State research via GPB).

If you were a first-time buyer in those ZIP codes in 2021 losing every bid to a cash offer from a company with a $10 billion balance sheet, your anger is not theater, it’s very real.

Wow, I didn’t know this until this week, researching for this article.

So the problem can be significant, in specific places. The question is 1) is this widespread and 2) whether the policy remedy will affect the outcome.

It turns out, for both, no.

Institutions own very few homes.

Just 3% to 5% of single-family rentals, and about 1% of all single-family homes (Parcl Labs via CNBC; Urban Institute).

Even in the latest government data (which is not terribly accurate unfortunately) institutions own between 4% and 22% of single-family rentals across six studied metros, but 3% or less of all single-family homes in every one of them (GAO).

Remember, this important differentiator: rentals owned (and which they likely built for the purpose of renting) vs the narrative of owning a home someone would buy.

And the data keep confirming it: the big landlords have been net sellers for years. This year alone they’ve sold 3,180 more homes than they’ve bought, and their July listings (9,447) are more than double February’s (CNBC). Congress has heroically banned people from doing something they had already stopped doing.

Jay Parsons has been the loudest truth-teller here. His read: single-family rental investors have been selling more homes than they’ve been buying for a decade, and markets with higher institutional presence haven’t seen outsized spikes in home prices or rents (Parsons). Before the final version passed, he called the harsher Senate draft a “supply killer stuffed with red tape.”

The final law got partially defanged: build-to-rent purchases are exempt, buying new homes from builders is allowed, and the Senate’s forced-divestiture mandate got stripped out (John Burns Research). Good thing, because BTR is actual new supply and it was already shrinking before Congress showed up: from roughly 84,000 starts in 2024 to 68,000 in 2025 to a 62,000 trailing pace, down 26% year over year (NAHB/Census via Eye on Housing).

Remember, We Need More Rentals Too!

Now, the law does include a renovate-to-rent exemption, where institutions can still buy existing homes if they substantially rehab them, with improvements valued at no less than 15% of the purchase price (Goodwin).

The problem is, operationally, because renovate-to-rent homes must be sold off to individual buyers within 7 years (with a tenant right of first refusal) (Goodwin), the likely outcome is developers step back, and stop building to rent. The sale exemption is too operationally heavy to use at scale.

Who fills that rental gap? Mom-and-pop investors, maybe, and I hope we do, but probably not and definitely not at the scale of building institutions are with their cheap access to capital/lending.

But if we don’t, the second-order effect of a law will likely be fewer renovated rentals and more deferred maintenance in exactly the neighborhoods it claims to protect.

My Take: if you want affordable housing, you build more housing.

Full stop.

I wrote a whole piece on this: ‘Affordable Housing’ is Not Possible without a pro-development environment executed over years.

And there’s an opportunity cost to the theater: every month Washington spends litigating a 1% ownership slice is a month not spent on zoning reform, permitting timelines, or the construction labor pipeline.

Further, we are short roughly 349,000 construction workers, a problem I covered in Eggs Are Cheap Again. Electricians, Not So Much.

That shortage will still be here in January 2027.

The “Wall Street landlord” mostly won’t be.

And that is not a good thing.

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Is the Apartment Glut Finally Starving?

This is the big one for us landlords, apartment deliveries are continuing to crater. Supply glut continues to die. Or at least, is going Keto.

Chart on.

Trailing-year apartment deliveries have fallen from roughly 588,000 units at the late-2024 peak to 340,200 as of Q2: six straight quarterly declines, a 42% drop, and the first reading below the decade norm (RealPage 2Q Data Update). Only about 150,000 units were completed in the entire first half (Parsons).

This story has been building since I highlighted it a few weeks back.

Housing economist Jay Parsons, has tracked this cycle as honestly as anyone, summed up where we are:

“We’re still in a [supply] hole, but now we’re starting to dig our way out.” (jayparsons.com)

The evidence:

1)) Demand never left. Absorption exceeded 250,000 units in the first half, per both RealPage and CoStar (Parsons). Renters kept showing up through the entire glut; they were simply spoiled for choice.

2)) Occupancy is healing. National occupancy is back to 95.5%, up two consecutive quarters (RealPage), and Apartment List’s vacancy index just declined for the first time since late 2021 (Apartment List).

3)) Pricing is responding. Effective rents grew 1.4% quarter over quarter, the best pace in four years, though still down 0.2% year over year (RealPage); Apartment List’s national YoY has improved from April’s record low of -1.6% to -1.2% (Apartment List).

Where You Own Matters

“National” hides a wild split. San Francisco rents are up 7.4% year over year while San Antonio is down 5.0% and Austin down 4.3% (Apartment List). The Sun Belt is where the glut concentrated, so it recovers last, but even there the direction flipped: Austin has improved 360 basis points since March (Parsons).

The supply side of this story is close to locked; you can’t un-cancel a project that never broke ground, and the architects’ phones (ABI above) say no new wave is being drawn.

But the demand side deserves harder scrutiny.

One large factor, which the Fed has acknowledged too, is how much of the record absorption (ie renters) was immigration?

More than most people think.

Harvard’s Joint Center finds recent immigrants accounted for roughly two-thirds of renter household growth in 2024, and about 20% of all U.S. renter households are headed by someone foreign-born, renting at double the rate of the native-born (Harvard JCHS via Multifamily Dive; CoStar). That tailwind is reversing fast: net international migration halved in 2025 and is projected to fall roughly 75% further this year, to about 321,000 (Census projections via JCHS). The foreign-born population actually shrank in the first half of 2025, the first decline in over fifty years (Pew).

Where does that bite? The bottom of the stack first. RealPage’s Carl Whitaker says immigration effects are already “starting to trickle into” Class C performance, and his recovery ordering puts Atlanta and Nashville among the fastest healers while Austin, Phoenix, and San Antonio may wait until 2027 (Whitaker).

My Take: Cheaper rents are killing new construction, and dead construction resurrects rent growth.

This is the market working as it should.

The 2027-2028 will be a time of rent growth, after the market finishes absorbing the apartment glut"

For operators who held on through two years of concessions, the next few years will quietly pay for the last two, with the demand caveats above held firmly in the other hand. And remember: even in the flat-rent years, rentals kept paying the other ways, loan paydown, tax benefits, appreciation on the land underneath. That’s the whole thesis of my book on the five ways real estate builds wealth: rent growth is only one engine of five, and the four others never took a quarter off.

Yes, I love a good seamless book plug :).

Another Quick Break: Try My Free DealLab Real Estate Calculator

Want help running numbers on your next deal (or an existing property you have)?

I built a free real estate deal analyzer, including an Advanced Mode for the pros.

DealLab, the deal analyzer.

It’s in beta, which means two things: it’s free, and I want your feedback. Run your next deal through it, kick the tires, and reply to this email with what’s missing, and what would make it indispensable for you and your business.

My Skeptical Take

There’s an old line commodity traders use, and housing - whatever HGTV story we tell ourselves about fancy kitchens - is a commodity business: the cure for low prices is low prices.

Nobody planned this diet.

Cheap rents (and high interest rates) made the next apartment project impossible to pencil, the construction loans dried up, and the cranes moved on. Two years later, the market is moving on, one unit at a time.

The glut is going keto, the market cut off the carbs.

Now compare that to Washington’s approach this month: a law with a self-righteous name, a non-existent “villain” who owns millions of homes, and a ban on future purchases.

But it’s all theater (unless you are in Atlanta, wow!).

The real lesson of this week is that markets correct through prices. Politics corrects through applause. Only one of those pours concrete.

So the operator’s job is to notice which forces are self-correcting, position downstream of the correction, and be patient while the market works.

Every project that didn’t break ground this summer will bring a story of rent growth in 2027-28.

Howard Marks, who has made a career of buying well when cycles turn, wrote down the only two rules you need this week:

“Rule No. 1: Most things will prove to be cyclical. Rule No. 2: Some of the greatest opportunities for gain and loss come when other people forget Rule No. 1.”

Right now, a lot of people are forgetting Rule No. 1. Renters think the concessions are forever. Congress thinks a villain, not a cycle, sets their rent. And plenty of investors still think the glut is permanent. Meanwhile: deliveries down 42% from the peak, occupancy climbing, absorption holding. The cycle is turning while everyone argues about the last one.

That’s not a market to fear. That may be a market to underwrite.

Until next time. Stay Curious. Stay Skeptical.

Herzliche Grüße,
-The Skeptical Investor

-P.S. If this newsletter has been useful to you, the best gift you can give me is free: forward it to one person who’d benefit. I promise you 24 hours of good joo joo.

Need some personal help with your real estate portfolio?

You can consult one-on-one on the phone with me, The Skeptical Investor!

Get professional advice from someone who actually owns, operates, and brokers real estate. Not just some partner in a fund making money off others.

Want to Grow? - Get clarity on how to grow your business or scale.

Stuck? - Get answers to your problem, let’s hop on the phone and figure it out.

No “guru” trying to sell you an expensive course. No BS. No fluff. Only results.

I’ll give you my frank, brutally honest advice. Book a call with me today.

It’s 2026. Be an owner.

Schedule your 1-on-1 call now.

Today’s Read Time: 9 minutes

Read more

Today’s Read Time: 8 minutes

Before we do anything else this week: thank you for being here.

Thank you for reading… or… at least asking your AI to summarize it for you. :-)

If nobody read this, I’d probably just…. well I may do this anyway. But it’s been great having you along for the ride. Keep brining those smart comments, I can take a punch.

This week we’re talkin multifamily, I give away my top 25 secrets to underwriting your next deal. Plus jobs data and a free Nashville economic and housing report for all of you.

Let’s get into it.

Today’s Interest Rate: 6.64%

(☝️ .04% from last week, 30-yr fixed mortgage)

The Weekly 3 in News:

1. Jobs Tuesday. We get a much anticipated June CPI inflation print at 8:30am ET, the last major inflation reading before the July 28–29 FOMC meeting (BLS release schedule). May ran hot at +4.2% YoY, driven by a 23.5% surge in energy prices (BLS). Consensus sees June cooling as oil rolled over; Truflation’s forecast (my preferred measure/source) pegs headline at 3.9% (Truflation). PLUS, five megabanks (JPMorgan, Goldman, BofA, Wells, Citi) report Q2 earnings before the open (Motley Fool). Watch what the banks say about credit and commercial real estate reserves. One morning, two readings on the economy.

2. The disinflation engine is still running. WTI crude sits near $71 a barrel, down from a first-quarter peak near $118, which was the largest inflation-adjusted quarterly jump since 1988 (Fortune, EIA). I wrote in April that energy prices had peaked and doubled down in June with Inflation Reset. Oil is doing exactly what the thesis needed it to do. The risk that remains: the Strait of Hormuz premium puts a floor under crude, and any re-spike would put the whole disinflation story on ice.

3. The labor market is quietly cracking. June payrolls came in at +57,000 against roughly 115,000 expected, and April and May were revised down a combined 74,000 (BLS, CNBC). Unemployment fell to 4.2%, but for the wrong reason: participation dropped to 61.5%, the lowest since March 2021. Construction unemployment jumped a full point to 6.2%, the highest since July 2021 (NAHB). This is the thing I keep repeating: forget inflation, watch the labor market. Labor is what moves the Fed, and labor is softening.

A Few Fun Things Happening in Nashville This Week

• Paul Simon at FirstBank Amphitheater, Franklin: Wednesday, July 15. The “A Quiet Celebration” tour, a legacy act in an intimate outdoor room, and one of the last chances to hear “American Tune” under an actual open sky (tickets). [Note: Live Nation shows 8:00pm, AXS shows 9:00pm; double-check start time before publish.]

• Tori Amos at the Ryman: Friday, July 17, 8:00pm. The “In Times of Dragons” tour with Bartees Strange opening, at the Mother Church, where the room itself is half the ticket (Ryman).

100 Issues In: Grading My Own Calls

We made it!

One hundred issues.

That’s two years of Sunday mornings, 13.5 lbs of coffee, 265 charts, several thousand data points, and at least one call I got wrong bad enough to mention.

Speaking of which, let’s take a quick look at the bold calls I made.

After all, a newsletter called The Skeptical Investor should be skeptical of its own author too.

So for issue #100, here’s my report card. Real calls, real dates, real links, graded against what actually happened.

Does Being Skeptical Pay?

***Full disclosure, and to help be objective, Claude, Grok and Chat GPT all were very useful here in looking back on what I did and did not get right. Man, these research tools are getting good.

Still shit writers though 😂.

Ok, the bold calls in question are:

It seems like market pundits are never wrong; they just neglect to mention the calls that didn’t work.

Me? I like my laundry flowing in the wind.

Fun fact: Research on “expert” forecasting has found the same thing for decades: the more confident the forecaster and the bigger the audience, the less anyone ever checks the tape.

A newsletter named The Skeptical Investor should hold itself to a different standard. I try to be contrarian and steelman the case if I’m wrong when I can.

So for issue #100, I pulled my own tape. Eight bold calls, dates, links, and grades against what actually happened.

Although I will say, I was pretty spot on :).

So without Further Ado…

My Bold Calls Report Card

“Headlines Scream Crisis. Data Say Calm.” (April 20). Grade: A-

The headlines that month were recession, CRE collapse, consumer cracking. I argued the underlying data said “slowdown, not crisis.” Since then: the S&P sits near 7,575 (CNBC), existing home sales rose 3.2% in May (NAR), and no crisis arrived. Great call. The negative: the labor market is now softening, so “calm” has an expiration date I need to keep an eye on this.

“Energy prices have peaked” (April 27). Grade: A.

WTI was coming off a quarter that touched roughly $118, the largest inflation-adjusted quarterly jump since 1988. I said the peak was in. It’s around $71 today (Fortune, EIA). BOOM! I nailed this. Iran conflict is noise, and even this week with all the new news. Investors should ignore it. This was the call the entire disinflation thesis hung on, and it’s the one I’d least like to have gotten wrong. Watch inflation trend continue down from here, with some volatility.

“Rents are turning” (also April 27). Grade: B+.

RealPage just printed the strongest quarterly rent growth in years, occupancy is up two straight quarters, and vacancy is falling for the first time since 2021 (much more on this below). But national rents remain slightly negative year-over-year, so the call was early. Early is a polite word for wrong until the day it isn’t; ask anyone who shorted housing in 2004. So far, a little early but on target.

“Forget inflation. Watch the labor market.” (May 18). Grade: A−.

The argument: inflation headlines were backward-looking energy noise, and labor would be what actually moves the Fed. Since then payrolls decelerated to +57,000, prior months were revised down 74,000, and participation hit a four-year low (BLS). The miss: honest bookkeeping. the Fed hasn’t actually moved yet, so the mechanism is confirmed but the payoff isn’t. Wait a few months, it will.

The Fed holds while the market flip-flops (May 26). Grade: A.

Four consecutive holds at 3.50–3.75% (Federal Reserve), while the market swung from pricing cuts, to a hike, to roughly nothing. Fading the bond market’s mood swings has been the most reliable trade in this newsletter’s brief history. Nailed this. Don’t listen to any consumer sentiment charts/stories. Those surveys are famously terrible predictors / measures.

“Revenge of the Seller’s Market” (June 1). Grade: C+.

Here is my one flub. I predicted that for-sale inventory would flip negative and the balance of power shift back to sellers. Hasn’t happened yet. Partly because inflation stagnating has put the breaks on interest rate cuts. In fact, this tracker whipsawed almost immediately after I published the article. The direction may still prove out, but the timing was just wrong. Lesson re-learned, and it’s tattooed on the inside of my eyelids now.

“The $6.6 Billion Bet on Nashville” (June 8). Grade: B.

The claim: Nashville’s demand engine (jobs, in-migration, capital investment) would hold up even while national data wobbled. The jobs half is aging well; metro unemployment sits near 2.9% against 4.2% nationally (BLS). But Nashville rents are still down roughly 4% year-over-year (Apartment List) as the supply glut works through the system with positive net absorption numbers. So the investment case remains a demand story waiting on supply. Half right, half pending. I think both will be right though by the end of the year. I’m doubling down!

“The next Fed move is a cut” (June 22). Grade: To Be Determined.

TB here. Markets currently price roughly zero cuts in 2026 and Goldman pushed its first-cut call to mid-2027 (Forbes). But many analysts and investment banks are still calling for rate hikes! (they are wrong). I still think the labor data gets there first, and Tuesday’s CPI is the next domino either way. Ask me again at issue #150.

What I Learned

My bolder larger/bolder structural calls were quite accurate, but when it comes to timing calls, that’s far more difficult. So with this in mind, our weekly deep dive into multifamily real estate below is about process, not prediction.

Lessons learned.

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Ok, back to business.

How to Actually Succeed in Multifamily: 25 Items for Great Success

First, the market: rents woke up

Apartment rents just posted their strongest quarter in years.

RealPage reports effective asking rents rose 1.4% in the second quarter, after barely inching up in the first, with net absorption of more than 187,000 units, a pace notably above seasonal norms for what is already the strongest leasing season of the year (RealPage 2Q 2026 Data Update). Occupancy climbed to 95.5%, up two straight quarters and a touch above the decade average.

But the negative supply is what makes me think this will continue. For the first time in three years, annual apartment deliveries (roughly 340,200 units in the year ending Q2) dropped below the decade norm, the 6th consecutive quarter of declining supply since the peak near 588,000 units in late 2024 (RealPage). The Census data shows the same wave cresting:

Apartment List’s independent data corroborates. Their national vacancy index is declining for the first time in over four years (now 7.2%), year-over-year rent growth has ticked up two straight months off its April bottom, and the national median rent has risen five consecutive months (Apartment List National Rent Report). There’s even evidence of renters trading up: with concessions widespread on new Class A product, would-be Class B renters can afford Class A units, opening up B units for C renters, a filtering effect RealPage has documented in its concession data (RealPage concessions report).

A skeptical caveat.

Rents are still 0.2% below a year ago on RealPage’s data, and 1.2% below on Apartment List’s. Roughly a quarter of all units (24.6%) are still offering concessions averaging 7.6% off (RealPage). CoStar’s June report reads notably cooler than RealPage’s, with national rents up just 0.1% in June (CoStar/Apartments.com). And the recovery is wildly uneven:

San Francisco rents are up 7.4% year-over-year on Apartment List’s estimates (RealPage has it at +10.6%), powered by AI hiring. San Antonio is down 5.0%, Austin down 4.3%, and our own Nashville down roughly 4.0% as the Sun Belt keeps digesting its supply hangover (Apartment List, RealPage). “Apartment rents are back” is directionally right and locally wrong in half the country.

This brings me to the real subject this week.

My Top 25 Multifamily Deal Criteria

Every week someone asks me some version of “should I buy multifamily when rates come down?” And every week I give the same unsatisfying answer: rates are one input. A multifamily deal is a machine with dozens of moving parts: capex, legal, debt terms, operations, taxes, insurance, supply, submarket, exit. Each one has to be weighed and stress-tested, because any one of them, ignored, can take the whole machine down.

After 100 issues and a couple decades of doing this, here is the checklist we actually run.

Feel free to steal it.

Buy right

Criteria. We underwrite to stabilized cash flow and equity multiple, targeting 8%+ cash-on-cash at stabilization, ideally 10%. We get there with reasonable in-place rents and defensible rent growth, using roughly 33% of median household income as our rent affordability ceiling (this is a calculated affordability assumption, not a market forecast). Cash flow is your buffer. If your deal needs a refinance or heroic rent growth to cash flow, it is not a deal. It’s a hope.

Deal basis. We are deal-dependent, not market-timing dependent. For Class C property we target 75% of replacement cost. For Class B we want 50% below replacement cost or better. Basis is the one variable you lock in permanently on day one; everything else you manage.

Shamless plug: This is exactly what I built my DealLab deal analyzer to pressure-test, and I just added an Advanced Mode for the pros: full stress-testing, exit sensitivity, the works. It’s free and in beta, which means two things: bookmark it, and tell me what to improve. Reply with anything that annoys you about it. I’d appreciate the feedback.

A Gift For You (and a Vote)

You made 100 issues possible. So here’s something useful, free:

I built a full Nashville economic and housing report: jobs, migration, supply, rents, prices, the works.

Every Skeptical Investor reader gets it free!

Just hit reply to this email with the subject or body “Free Report” and it’ll land in your inbox.

And a vote: I’m thinking about building the same report for the three most-requested US cities. Which city do you want next? Hit reply and name it, or drop it in the comments. Austin? Tampa? Columbus? Your call. The top three vote-getters get their market analyzed.

Ok, now back to our regularly scheduled program.

Due diligence: you, personally, in every corner

Walk the whole property yourself. Every unit. Every closet, every mechanical room, all grounds, all common areas. Do not outsource this to a firm. This is not a house; this is a serious business with serious money at stake, and nobody inspects your business like you do. Hot tip, I bring this laser measurer with me on all my property walks, the Fanttik Pro. Super helpful for planning my CapEx vision.

Build a unit-by-unit renovation and capex budget while you walk. Then bring in specialists for the big-ticket systems: a roofer, a plumber, an electrician, a structural engineer, a concrete contractor. Not just a general inspector. Single-family habits have no place here; a surprise roof, water management, retaining wall or structural issue can be a six-figure hole.

Two additions most checklists miss: audit the lease files and collect estoppels (does the rent roll you were sold match what tenants actually signed and actually pay?), and get a Phase I environmental report (if need…this may be up to your lender and state/location. Some lenders will usually require the Phase I anyway; the lease audit is most important.

Paper it

Legal. For the record: a reputable attorney should draft your PPM, operating agreement, and subscription agreement. I do much of this work myself, but I’m a broker and former policymaker, I’m confident in my numbers and drafting, and I still have the title company’s lawyers review it. If you are raising outside money or bringing in partners, an attorney stops being optional. Securities law does not care about your good intentions; sloppy fundraising documents can genuinely land you in prison. For reelz.

Lender documents. Lenders can bury language in loan docs that can hurt you, including vague provisions letting them call the loan if they “deem themselves insecure.” Have your attorney comb through it and strike what you can; lenders have always negotiated these points with us. And here’s a modern trick that costs nothing: feed the loan docs to your favorite AI model and ask it to tell you what questions you should be asking. AI is great at answering questions with a clear answer, like many legal questions, it’s like an English math problem. And a cheap second set of eyes before the $600/ hour attorney.

Debt: boring on purpose

Fixed rate, five-plus years of term, 75% LTV, or lower if you want to sleep well. Get as much interest-only as they’ll give you, for as long as they’ll give it. And I strongly recommend against variable-rate debt. The floating-rate bridge loan is the single biggest reason 2021-vintage syndications died; the ones that survived bought rate caps that then cost hundreds of thousands to renew. If you must float, price the cap, then price renewing the cap, then calculate if the deal still works. It usually doesn’t.

Underwrite like a skeptic

Cap rates. Always assume expansion at exit, at least 10-15 basis points per year of hold, assuming you’re operating in a normal cap rate environment. If you’re buying at record-low cap rates, assume reversion to the mean instead. Here’s what expansion does to your exit, holding NOI perfectly constant:

Same property, same $1M of NOI: 100 basis points of expansion erases roughly 17% of your exit value (calculated: value = NOI ÷ cap rate). Your entire projected profit can live inside that 17%.

And don’t forget the tax-adjusted exit cap. THIS IS IMPORTANT. Your buyer will underwrite the reassessed property taxes based on their purchase price (just like you did when you bought it, right?), not your current tax bill. If you’ve meaningfully increased the value, that difference is material, and it comes straight out of the price they can pay you. Market dependent; know your county.

Exit price per door. Stress test it. Am I underwriting a record-setting sale price at exit? The answer needs to be no. I assume median pricing against comparable properties, which should flatter your renovated asset anyway. A reasonable exit per door is the underwriting; a record price is the cherry on top.

Interest rates. Assume a slightly higher rate at exit and during the hold. You never, ever underwrite rates declining. If rates fall, great, you get a cherry. A deal that requires the bonus is not a deal. (Yes, I still very much think the next Fed move is still a cut. I still won’t underwrite it. Opinions are for newsletters; underwriting is for money.)

Rent growth. Do not underwrite rent growth above inflation, and honestly, I include zero rent growth for the first five years. If your submarket just ran 30-40% during Covid, flat-to-negative for a few years is the likely path, and the market data above (concessions on a quarter of all units, Sun Belt still soft) is the proof. If your submarket is genuinely supply-starved like in a city that cant build anything (**cough San Francisco cough**) you may get consistent growth; treat it as upside, not base case.

Expense growth. If you’re assuming inflation carries your rents, it carries your expenses too. Insurance and payroll have been growing faster than rents in most markets. Maybe you have systems and scale that break the 1:1 link; most buyers don’t.

Breakeven occupancy. Is your breakeven occupancy for debt service palatable? Would Great Financial Crisis or Covid-level vacancy and delinquency blow you up?

The gap between a deal that breaks even at 78% occupancy and one that breaks even at 92% is the gap between a bad year and a foreclosure (illustration calculated on a 40-unit example; run your own numbers). If a recession-grade shock kills the deal, I’d pass (or better yet, offer less).

Deal timelines. You may want a 3-5 year hold but the market doesn’t care what you want. Exit liquidity is not guaranteed; there are stretches when lenders simply aren’t lending and buyers can’t transact (we just lived through one). Your deal must cash-flow on a 10-year hold even if you never intend to hold ten years. If holding to year ten bankrupts you, you are fucked.

Capital is oxygen

Reserves. The deal needs ample reserve cash, and you personally need ample reserve cash behind it. Go in on the razor’s edge, praying cash flow covers capex, and the probability of a capital call approaches certainty. Capital calls destroy your partner’s trust, and that trust is the actual asset of a GP’s career. I don’t raise money anymore and I still always make sure I have cash on the sidelines just in case.

Capex budgeting. Be lax here and you will get bodyslammed, especially on pre-1990s vintage buildings. Assuming future cash flow will fund the renovation isn’t a gamble, it’s recklessness with other people’s money. Raise the capex budget up front, fully funded, before close.

Insurance. Get a real quote during due diligence, and make sure the carrier knows the actual condition of your roofs and electrical. Do not lie about the structure’s integrity, a rescinded policy after a fire is bankruptcy. And this can also blow up a deal halfway through DD. Do this ahead of time.

Tax reassessment. Every market is different. If your state caps reassessment, easy to model. If it’s variable, stress test the taxes at 100% of your purchase price. Add the commercial-use business taxes and any special levies, like school funding taxes (looking at you, Texas). If you can’t confidently model the post-sale tax bill, you shouldn’t be buying the property.

Know things other buyers don’t

New supply. Talk to local brokers, not just databases. Commercial real estate is still an “old boys network” and brokers have the keys. There is no MLS for commercial real estate. Plus, your ideal property is likely owned by somebody who wants to sell. They just don't know yet. Prospecting is your friend.

National deliveries are rolling over hard (see the chart above), but the remaining lease-ups will still force concessions and vacancy in specific submarkets. Your deal has to tolerate local softness even while the national picture improves.

Occupancy reality. Research historical market occupancy, then overlay the supply risk. And remember: rental rate is the ultimate competitive advantage. If your underwriting depends on scratching $25 above market rent in an affordability-first market, you’re in for a reality check.

Macro awareness. You can’t operate with your head in the sand. You need to know what’s happening (this newsletter is my attempt to help) and your portfolio needs to absorb stress-level disruption: vacancy, delinquency, supply-chain problems for your renovation materials. Covid taught everyone that lesson.

Third-party management. Trusting someone else to run your property adds a variable, and variables are risks. Some folks “manage the manager” with excellence. But it is another cog that can break, and usually the one that breaks quietly, for months, before you notice. After a few deals, consider bringing this in house.

Submarket mastery. The hardest edge to quantify and the one that has protected me most. Know every street, every corner, the cops, the city staff, the culture of each pocket. A lot of people think CoStar plus AI equals market research.

No.

You need boots on the ground. Shop the local businesses. Meet your city council representative; they are genuinely eager to meet property owners, and that relationship pays off the day you want to build or renovate.

Pound the pavement.

Economic occupancy vs. physical occupancy. A building can be 95% physically full and 85% economically occupied once you subtract loss-to-lease, concessions, bad debt, and non-paying tenants. Post-Covid, application fraud and delinquency have become their own underwriting line: screen hard, budget bad debt explicitly, and in DD, compare the rent roll to actual bank deposits, not to the seller’s pro forma.

Regulatory risk. Rent regulation, source-of-income laws, eviction laws, and mandatory inspection regimes vary wildly by state and city, and they change. A jurisdiction’s regulatory direction belongs in your underwriting the same way its tax regime does. Tennessee, Texas, and Florida are friendly; California, New York, Washington, DC, and Illinois are not; underwrite what happens to your business plan if your market politics/policies start to drift.

Your exit buyer’s financing. You will sell into someone else’s debt market, not today’s. Small deals under roughly $2M trade to buyers using local bank debt; institutional deals need agency financing to be flowing. Part of the reason transaction volume collapsed in 2024-25 was that nobody’s buyer could borrow. Ask yourself: who is the realistic buyer of this asset in year 7, and what does their lender need to see? If the answer is “a syndicator using bridge debt,” your exit depends on the most fragile buyer in the ecosystem.

Will everything go wrong? No. Will everything go right? Also no.

A deal should not require perfection from every variable, or it is not a deal. They’re called variables for a reason. Some will move against you no matter how well you plan, which is precisely why you build the buffer.

Shamless plug, this is, incidentally, the core argument of my book, The 5 Ways Real Estate Investors Make Money and Build Wealth: cash flow is only one of the five profit centers, and the investors who last are the ones who structure deals where no single profit center has to carry the whole thesis. Its a quick 50 page read “Cliff Notes” for investing that all new investors should read.

Thanks for giving this a read. If even one point in here gives you or your GPs (or LPs) some added perspective, it was worth my 15 minutes. And I’m sure those of you smarter than I am have excellent additions: drop them in the comments. Issue #100 seems like a good week to learn something from my readers.

My Skeptical Take

One hundred issues ago I started writing this newsletter for those who saw the genius in looking at markets with a contrarian and skeptical eye.

Too many believe things they read or watch because smart-sounding people pronounced them confidently.

The cure for that, I’ve learned, isn’t cynicism, however. Cynicism is just credulity wearing a leather jacket; a cynic believes every bad headline as uncritically as the optimist believes every good one. The cure is diligence. Rigor. First Principles. Truth Seeking. Transparency.

In other words, a Skeptical mind.

When you read something, ask who benefits from the framing. Grade your own calls in public, and when you get something wrong, say that. That’s what this newsletter tries to be.

But I couldn’t do this alone.

Every reply that’s challenged me, every comment that sharpened an thoughts, every one of you who forwarded an issue to a friend or trusted me enough to read a 3,000-word essay about cap rate expansion on a Sunday morning: you built this as much as I did.

One hundred issues is not my milestone.

It’s ours.

Thank you. Sincerely, truly, thank you.

The market this week will hand us a CPI number, five bank earnings calls, and a thousand confident takes within the hour. Some of them will even be right. Our job, yours and mine, issue #101 and beyond, is the same as ever: stay curious, stay humble, check the data, and never outsource the thinking.

Richard Feynman said it best, and this idea has permeated this newsletter since issue #1:

“The first principle is that you must not fool yourself — and you are the easiest person to fool.”

Here’s to a hundred more issues of not fooling ourselves. You are awesome folks. I’m glad you’re here.

Until next time. Stay Curious. Stay Skeptical.

Herzliche Grüße,

-The Skeptical Investor

-P.S. If this newsletter has been useful to you, the best gift you can give me for issue #100 is free: forward it to one person who’d benefit. I promise you 24 hours of good joo joo.

Need some personal help with your real estate portfolio?

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Today’s Read Time: 8 minutes

This week, we’re talkin’ the weak jobs report but now with AI, homebuilders slamming the brakes, a city that just made building easier, and then a deep dive back into a beast I first hunted eighteen months ago: the insurance industry. Spoiler alert: insurance companies suck.

Let’s get into it.

Today’s Interest Rate: 6.59%

(☝️ .07% from last week, 30-yr fixed mortgage)

The Weekly 3 in News:

1. June jobs came in at a puny 57,000, half the ~115,000 expected (BLS). Worse under the hood: April and May revised down a combined 74,000, leisure and hospitality shed 61,000, and the trailing 12-month average is a limp 36,000/month. Unemployment ticked down to 4.2% — but for a rotten reason: participation fell to 61.5%, lowest since March 2021 (CNBC). Why I care: the entire bond-market case for “zero cuts in 2026” rested on a labor market that refused to quit. That story is wobbling. FedWatch still prices a 75.6% hold on July 29 (CME FedWatch), but the surprise has flipped from “might hike” to “how soon do they cut.” That’s the ballgame.

2. Homebuilders slammed the brakes. May starts collapsed to a 1.177M annual rate, down 15.4% in one month — lowest since May 2020 (Census). Multifamily cratered 41.6%. This is the ZERP 2020–21 supply wave finally exhausting itself, with 6%-plus construction financing choking off the next one. Positive for rent growth.

3. Austin did what almost nobody does: made building easier. Its Development Services department is auto-cutting plan-review turnaround by 59% for residential (July 1) and 43% for commercial (July 15), no applicant action needed (AustinTexas.gov). Residential new-construction review drops from 15 business days to 10 per cycle — a two-cycle review may fall from ~30 days to ~17. While the country wrings its hands about the housing shortage, one city fixed the part it actually controls: the permitting bottleneck. Count me impressed, and a little envious. (Metro Nashville, you listening?)

A Few Fun Things Happening in Nashville This Week

• Music City Grand Prix (July 18-19, Nashville Superspeedway) — It’s a bigger event this year (moved to prime-time, under-the-lights, 400 miles, airing after the World Cup final).

• Bluegrass Nights at the Ryman — Ricky Skaggs & Kentucky Thunder, July 21.

Brief: Builders Continue the Slowdown

Single-family starts have slipped to an eight-month low.

A 15.4% single-month drop to a pandemic-era low (Census). Meanwhile, the multifamily side is falling off a cliff, down 41.6%. Builders are, in aggregate, telling you they do not want to break ground into 6%-plus money and a market still digesting the last supply wave.

Supply is a pig moving through the python. The enormous wave of apartments that has kept rents flat, the wave born during the 2020 to 2022 Zero Interest Rate Policy era, is nearly through the system. When starts collapse today, deliveries collapse roughly 18 to 24 months later. That sets up a supply air pocket in 2027 and 2028, right about when I’ve argued rents turn back up.

Headline CPI inflation was running 4.2% year-over-year in the May reading, still uncomfortably hot (BLS), and the next print lands July 14. Yet payrolls just missed badly at 57,000 against a 115,000 expectation, with the prior two months revised down (BLS). Hot inflation, cooling jobs. That is a central banker’s nightmare, and it is why I think the pressure builds toward the Fed cutting rates, not a hike, as we move through the back half of the year.

The AI Effect Looks Positive (so far)

Thus far, the labor market isn’t breaking; AI is shaping up to be a job accelerator, not the job-killer folks fear, that a lot of the soft hiring is companies quietly unwinding pandemic over-hiring and blaming the robots. Ramp’s Economics Lab, linking actual AI spending to workforce records across 21,559 U.S. firms, found that the heaviest AI adopters grew headcount 10.2% over the two years following adoption, with entry-level roles growing even faster at 12%.

Meanwhile, low-intensity AI adopters saw no meaningful change (Ramp Economics Lab).

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Nashville: A Housing Market Gift

Nashville is officially a buyer’s market.

Finally! An investor gets a break and can pickup a deal (I am).

Redfin’s data has Nashville pegged as roughly the third most oversupplied major metro in the country, with about 104% more sellers than buyers, trailing only Austin (114%) and San Antonio (106%) (Redfin via TheStreet). Locally, the latest Greater Nashville REALTORS data showed 3,370 closings in May, up 6% year-over-year, even as inventory kept building (Greater Nashville REALTORS). Homes are sitting longer. Sellers are offering concessions and rate buydowns.

Now, many would say that, on paper, this looks like a “soft” market.

Not so.

The oversupply pressuring Nashville right now is the tail end of that ZERP apartment and construction wave of 2020-2021. But look back up at the Weekly 3: starts just cratered nationally, and the multifamily pipeline that feeds this glut is drying up fast. Nashville still has roughly 17,470 multifamily units under construction as of the most recent count (Multi-Housing News), but once those deliver, there is far less coming behind them.

At the same time, prices are up 5%+.

So the setup is this: the savvy investor can finally grab a deal in a soft, negotiable, concession-heavy market right now, while sellers are motivated and inventory is deep, precisely because the market is absorbing the last of a supply wave that is ending. A market with accumulating inventory and patient buyers is the kind of market that springs to life the moment mortgages cross that 6% rubicon and head toward 5.5%. When that happens, the deals dry up, competition returns, and the window closes. I’ve said before I give it roughly 12 months, absent another Middle East side quest from our lovely government.

Shameless plug alert: This is exactly the kind of underwriting problem I built a tool to solve, and it’s FREE for all to use.

DealLab analyzer lets you underwrite a rental, a BRRRR, a flip, or a property you already own in a couple of minutes, using live mortgage rates, with cap rate, cash-on-cash, DSCR, and a deal heat score baked in. Plus, for you savvy investors, I have added Advanced Mode for the real estate pros. I’m still building it out, so kick the tires and tell me what’s missing, I read every note. Bookmark it here — it’ll come in handy the next time a motivated Nashville seller lands in your inbox.

Feeling glum about your soft market? It could be worse. You could own real estate in China.

A little perspective, because I think American investors take the resilience of our housing market for granted.

China’s real residential property prices, adjusted for inflation, have now erased roughly 20 years of gains, with the Bank for International Settlements real index sitting at about 85 in Q1 2026, below where it started when the data series began in 2005 (The Deep Dive). New-home prices there have fallen for 35 straight months (The Deep Dive).

This is what an actual, structural housing collapse looks like. Oversupply built for a population that is now shrinking, wealth concentrated 70-80% in property, and a demand base that keeps deferring.

I’ve made this point before in my article “Are We in a Bubble?”, but it bears repeating.

U.S. real estate is the single largest, and one of the most resilient, asset classes on earth. It can really take a punch.

But what China is going through is a different species of problem entirely. Count your blessings, then go underwrite your next deal.

The Weekly Deep Dive: Insurance Posted a Record Year.

A year ago, I wrote a piece called “Insurance is on Fire,” and I argued something that got me a fair amount of angry email: that the homeowners insurance “crisis” was, in significant part, a repricing dressed up as an emergency, and that the industry was crying poverty on its way to the bank. Well, the 2025 numbers just landed, and folks, they did not make me any less skeptical.

The record year

In 2025, the U.S. property and casualty insurance industry posted a net gain of roughly $63 billion, nearly triple the $23 billion it earned in 2024 (Verisk/APCIA). Fitch pegged record net income of $135.9 billion, up nearly 49% year-over-year, on a near-record-low combined ratio of 93% (Fitch via Business Insurance). Industry surplus, the cushion of capital sitting above what they need to pay claims, swelled to $1.24 trillion (AM Best via Reinsurance News).

That’s one of the most profitable years the sector has ever recorded.

Now hold that $63 billion in your head, and look at what happened to your bill over the same stretch.

Meanwhile, your premium

Since 2021, the national average cost of home insurance has climbed roughly 46% (Insurify). The national average premium is on track to cross $3,000 in 2026, a fifth consecutive annual increase (Insurify). Insurance now eats about 9% of the typical homeowner’s monthly mortgage payment, the highest share on record (HousingWire). Back in my 2025 piece I flagged that ICE number at 9.4% and called it understated. Eighteen months later it’s still climbing, and I feel pretty good about that call.

Here’s the mechanism I want you to understand. When an insurer wants to raise your rate, it files with the state and points to catastrophe losses and reinsurance costs. Fair enough, some of that is real. But 2025’s monster profit was driven, in the industry’s own words, “more by unusually low catastrophe losses rather than a fundamental shift in industry risk” (Verisk/APCIA). Translation: they priced in disaster, it didn’t happen, and they kept the difference. The premiums are sticky on the way up and slow to come down.

The peril doing the real work

If you want the legitimate cost driver, it isn’t hurricanes anymore. It’s severe convective storms, the meteorologist’s term for the hail, tornado, straight-line wind, and thunderstorm complexes that increasingly hammer the middle of the country. These have now overtaken tropical cyclones as the costliest insured peril of the 21st century, generating more than $50 billion in insured losses for three straight years (Insurify/Aon).

Hail alone shreds roofs, and roofs are the single most expensive routine claim in the book.

This is where it stops being abstract for us: construction costs in Tennessee (and higher in much of the nation) have roughly doubled, from about $180 to $350 per square foot since before the pandemic (MoneyGeek), which means every hail-damaged roof costs the insurer far more to replace, and that flows straight into your renewal. Tennessee homeowners are seeing annual increases in roughly the 6% to 15% range depending on the carrier and your roof’s age (Bridgeway Insurance, Thompson Insurance). Watch for one quiet trick in particular: wind and hail deductibles are increasingly written as a percentage of dwelling coverage, not a flat dollar amount. On a $400,000 home, a 2% wind/hail deductible means you eat the first $8,000 of a storm claim before a dime of coverage kicks in (Thompson Insurance). That’s the industry keeping headline premiums competitive while quietly shifting risk back onto you.

The Insurance ‘Tax’

Insurance isn’t a nuisance line item, it’s a lever on your entire equity position. Researchers at Florida State University found that a 10% rise in the price of homeowners insurance drives a 4.6% decline in home prices (FSU via The Hill).

Sit with that.

The thing quietly compounding on your renewal statement is, at the margin, deflating the value of the asset itself, and squeezing the DSCR on every rental you underwrite. If you’re a landlord, the Federal Reserve has documented that higher property insurance costs get passed through into rents, which sounds great until you remember your tenants have a ceiling on what they can pay, and in an oversupplied market like Nashville right now, you may eat that cost rather than pass it on.

Stop treating your insurer as a partner and start treating it as a counterparty.

Hot Pro tip: on typical asphalt shingle roofs I never ever use insurance. I pay cash. The increase in premium and having to tell the next insurance company on my next property that I made a claim in the last 5-7 year makes it a terrible financial decision to use insurance on something that a roof (unless its fancy/commercial and super expensive).

For a financially strong investor (I hope you all are), the move is often to raise your deductible as high as you can comfortably self-fund, and effectively self-insure the small and mid-size stuff with a dedicated cash reserve per property. In Tennessee, bumping a deductible from $1,000 to $2,500 can cut a premium 10 to 20% (Bridgeway Insurance).

I set my deductibles at the max the bank will let me, usually $10k.

This is because insurance should be for exist existential use only, in my opinion.

You’re not buying insurance to cover a $8,000 roof repair you could self-fund; you’re buying it for the catastrophic loss that would actually wreck you. Pay for the tail risk, self-fund the noise, and pocket the premium difference into that reserve. Just be honest with yourself about whether you actually have the reserve, because self-insuring without the cash behind it is just being uninsured with extra steps.

If you’re going to self-fund the small stuff, you want to actually know the condition of your roof and systems before a storm forces the question, and before a claim adjuster does. A decent moisture meter and a basic roof/attic inspection kit runs a few bucks and can tell you whether that 12-year-old roof is a renewal-repricing time bomb before your insurer figures it out first.

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My Skeptical Take

The great distortion of the 2020 to 2022 Zero Interest Rate era is finally, grindingly, working its way out of the system.

The apartment glut that flattened your rents is nearly through the python. The construction that fed it just seized up. And the cost of owning the asset, taxes, and especially insurance, keeps ratcheting up regardless of what the Fed does with interest rates.

That last one is the quiet lesson. We spend all our energy staring at the mortgage rate, the one number the Fed touches, while insurance compounds in the background and does real damage to affordability and to home values. The industry posted a record, near-$136 billion year while telling you it’s under siege (Fitch). That’s not a conspiracy, it’s just an asymmetry, and asymmetries are where disciplined operators make their money.

Housing markets across the country have deep inventory right now. More choice means better deals and more motivated sellers The market is still absorbing the last of a supply wave that is ending. If you have the cojones, this window will reward the patient and the prepared, and it may not stay open long once rates break lower. Buy the deal because the deal pencils, insure it like a counterparty, and keep a fat reserve for the roof and HVAC systems if old.

The late Sam Zell, who built one of the great real estate fortunes of the last half-century by buying what everyone else was too scared to touch (they didn’t call him “the Grave Dancer” for nothing), put the whole discipline into six words:

“If everyone is going left, look right.” -Sam Zell

Right now, in real estate, damn near everyone is going left: they see deep inventory, patient buyers, and sellers cutting deals, and they read it as a market to avoid.

Look right.

That is precisely the setup that rewards the operator who does the homework and the math while everyone else is busy being afraid.

I’ve spent this whole newsletter arguing that the returns in real estate come from understanding the whole machine, not just the mortgage rate: the supply cycle, the cost structure, the local market, the counterparties. That’s actually the entire thesis of the book I wrote, The 5 Ways Real Estate Investors Make Money and Build Wealth, which walks through how the returns really stack up across cash flow, appreciation, loan paydown, tax benefits, and inflation, none of which depend on you calling the next Fed meeting correctly. That’s rather the point. Understand the machine, let the noise pass through.

Until next time. Stay Curious. Stay Skeptical.

Herzliche Grüße,

-The Skeptical Investor

-

Need some personal help with your real estate portfolio?

You can consult one-on-one on the phone with me, The Skeptical Investor!

Get professional advice from someone who actually owns, operates, and brokers real estate. Not just some partner in a fund making money off others.

Want to Grow? - Get clarity on how to grow your business or scale.

Stuck? - Get answers to your problem, let’s hop on the phone and figure it out.

No "guru" trying to sell you an expensive course. No BS. No fluff. Only results.

I'll give you my frank, brutally honest advice. Book a call with me today.

It’s 2026. Be an owner.

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Today’s Read Time: 8 minutes

This week, we’re talkin’ the economy is growing faster than the economists gave it credit for, eggs are back near their pre-bird-flu price, and electricians are the new diamonds. The country is short hundreds of thousands of skilled tradesmen, and the gap is growing. Real estate up.

Let’s get into it.

Today’s Interest Rate: 6.53%

(👇 .05% from last week, 30-yr fixed mortgage)

Rates barely moved, even after Thursday’s inflation reading came in hot.

The Weekly 3 in News:

1. The economy grew faster than expected. Q1 GDP was just revised up to +2.1%, up half a point from the prior estimate, mostly on softer imports (BEA). Steady growth, not great, not bad.

2. Eggs have come back to earth, cheapest since 2023. A dozen eggs averaged $2.19 in May, down about 2.6% from April and more than 50% off this year’s record peak of $6.23 in March 2025 (BLS). Why? The bird-flu flock the was culled has rebuilt, and producers have swung from shortage to oversupply (CNBC). Fresh Example: Whole Foods has my favorite eggs on sale, all month.

3. You know what’s not inflating? Diamonds. Prices are down more than 50% since their 2022 peak and sit at the lowest level on record (Apollo/Bloomberg Diamond Index). The cause? Folks are good with the manmade stuff now. Lab-grown stones now make up about 61% of U.S. engagement-ring center stones, up from roughly 18% in 2020 (JCK / The Knot), and they retail for a fraction of the price. De Beers’ owner, Anglo American, took a $3.7 billion loss in 2025 on the back of repeated De Beers write-downs and is trying to sell the business (MINING.com).

Why open a real estate letter with eggs and diamonds?

Keep reading…. :)

Oh and…

A Few Fun Things Happening in Nashville This Week

• Let Freedom Sing! Music City July 4th — downtown, Friday July 3 and Saturday July 4. Nashville’s free, five-stage Independence Day blowout, this year tied to America’s 250th. The lineup runs from Boyz II Men to Brothers Osborne to Nick Jonas, capped by what the city bills as its largest-ever fireworks and drone show (Visit Music City). If you own short-term rentals near downtown, this is one of your highest-occupancy weekends of the summer.

• New tables at Nashville Yards. Two notable openings worth a reservation: Prime + Proper, a modern steakhouse, and Earls Kitchen + Bar, both now open in the Nashville Yards district (Nashville Guru). The dining scene keeps following the corporate campuses.

US Labor Market Not Breaking

The labor market is cooling, but only a little and slowly, and not in the way the doom crowd online and the major news outlets keep predicting.

May payrolls added +172,000 jobs, and unemployment held at 4.3%, where it has sat in a tight band since last summer (BLS). Job openings actually jumped back to 7.6 million in April, which works out to roughly 1.03 openings for every unemployed worker, about the pre-pandemic norm (BLS JOLTS).

We are not at the white-hot 2022 peak, but we are also nowhere near the cliff.

The people losing jobs are taking a little longer to find the next one, which is what a soft landing looks like from the inside.

Now, last week I wrote about the 1961 “automation jobless” panic and how every generation convinces itself that this time the machines really will take all the work. This time is no different and it is my view is that AI is about to become a job accelerator, lifting both productivity and, eventually, headcount. I am extremely skeptical of the narrative that AI will lead to net job loss. And we are just starting to see this filter through the real economy.

Let’s start with the productivity side, with hard data.

US Labor Productivity is UP

U.S. labor productivity grew 2.8% year-over-year in Q1, and the current business cycle has averaged about 2.1%, well above the roughly 1.5% pace of the 2007–2019 decade (BLS). Studies out of Stanford and MIT looked at thousands of customer-support agents, found generative AI lifted output about 14% on average, and around 30% for the least-experienced workers (NBER). AI is not replacing those agents. It is making the newest ones nearly as good as the veterans, fast.

A Bolder Call

On the question of whether AI is destroying jobs in aggregate, the best evidence so far says no. The New York Fed studied job postings around ChatGPT’s launch and found no clear divergence between AI-exposed and non-exposed roles. A Federal Reserve Board study of company hiring found AI adoption was associated with neither net job gains nor losses.

Compare this with the tech coming out party of the last century.

In 1960 the U.S. civilian labor force was about 69.6 million people. Today it is 170.5 million (BLS), even after we automated away the farm, the factory floor, the typing pool, and the telephone switchboard. The workforce did not shrink. It multiplied by two and a half. Every time we made human effort more productive, we found more for humans to do, and the things they did were better-paid than what came before.

The steelman: where the AI-optimists could be wrong

I’d be doing you a disservice if I only argued my own side (which is right, of course :)

The most rigorous warning sign comes from Stanford too, it’s “Canaries in the Coal Mine” study, which used real payroll data and found a 13% relative decline in employment for workers aged 22 to 25 in the most AI-exposed jobs since late 2022, with entry-level software roles down around 20%. If AI eats the bottom rung of the career ladder, you do not feel it in this year’s unemployment rate. You feel it in five years, when there are no mid-career workers because nobody got to start. Separately, the outplacement firm Challenger has tracked 87,000-plus layoffs attributed to AI so far in 2026, already more than all of last year (Challenger report).

I take that seriously.

I’d also note, in the spirit of skepticism, that many companies appear to prefer blaming “AI” for layoffs because it sounds better to investors than “we over-hired,” so the Challenger figure is probably inflated. And the entry-level softness may be as much about a frozen white-collar hiring market as about the machines. But I won’t pretend the displacement signal is zero.

My bet is that it stays at the edges, and the productivity boom pulls total employment up the way it always has. That is a bet, not a certainty.

Why a real estate investor should care:

Productivity growth is the roaring engine under wage growth, household formation, and rent. A more productive economy can afford higher rents without breaking the tenant. And if I’m right that AI grows the pie rather than shrinking it, the demand side of housing stays healthy for a long time. That is a very positive backdrop.

Now, here’s the supply side, and it’s even more interesting.

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The Deep Dive: We Are Running Out of People Who Can Build

Like diamonds and eggs show us, when we can manufacture something at scale, whether that is a million year old protein or a new gemstone, the price falls.

Hard.

The things that stay expensive are the things we don’t.

In real estate, that rare commodity is the…journeyman.

We just don’t have enough skilled tradesmen and even fewer are in the pipeline.

Every housing-shortage story you read blames the same suspects: zoning, interest rates, land costs, lumber. All real. All worth discussing. But there is a constraint that gets a fraction of the attention and may matter more than any of them over the next decade. We do not have enough skilled workers to build the things we say we want to build.

This is getting worse.

The Associated Builders and Contractors estimates the construction industry must attract 349,000 additional workers in 2026 just to keep the supply and demand for labor in balance (ABC). That is actually down from 439,000 in 2025, which sounds like progress until you read the fine print: the gap shrank only because construction spending slowed. ABC already projects the need rebounds to 456,000 in 2027 as spending resumes.

Contractors I work with feel it on the job. In the most recent industry workforce survey, 92% of firms reported trouble finding qualified workers, 88% had open craft positions they could not fill, and worker shortages were the single most common cause of project delays (AGC). When nine out of ten builders say they cannot find hands, that is not a soft spot. That is the binding constraint.

ABC’s chief economist, Anirban Basu, notes that the majority of the 2026 worker demand comes from retirement, not growth. The industry is not mainly trying to staff up for new projects. It is trying to replace the people walking off the job for the last time. The median construction worker is now 42 years old (NAHB), and roughly one in five electricians is over 55.

This is a workforce aging toward the exit faster than it is being refilled.

Where the squeeze is tightest

Not all trades are short by the same amount. The crunch is worst in the licensed, can’t-fake-it specialties, and it is about to get worse because of one word: electricity.

The BLS projects roughly 81,000 electrician openings every year through 2034, with 9% job growth, faster than the average occupation (BLS). HVAC technicians are close behind at 8% growth and about 40,000 openings a year (BLS). Plumbers and pipefitters round out the trio (BLS).

The AI Datacenter Buildout Effect

Ironically, while AI will help tradesmen companies be more efficient, the MASSIVE current data center build-out is makes this much worse in the short to medium term.

The data-center boom that everyone is treating as a software story is, on the ground, an electrician story. Hyperscalers compete for the same finite pool of licensed electricians that homebuilders and commercial developers need (CNBC, Fortune). A data center is, in cost terms, largely an electrical project wrapped in a building. When Microsoft and a Nashville apartment developer are bidding for the same crew, the apartment developer is going to pay more, wait longer, or both.

The technology we’re all betting will automate away jobs is, right now, creating a desperate shortage of exactly the human, hands-on jobs that can’t be automated.

You can’t prompt a chatbot to bend conduit, yet.

The immigration variable

Immigrants make up a record 26.3% of the total construction workforce as of 2024, and roughly a third of the actual tradespeople (NAHB). In some trades the share is far higher: about 57% of drywall installers, 53% of roofers and painters, half of all tile and flooring workers.

This matters NOW, because the flow of new immigrant labor has slowed sharply, and 28% of contractors report that immigration enforcement has already affected their workforce in the past six months (AGC).

This is not political. As an investor, the fact is a large share of the people who physically build housing are foreign-born, that pipeline is narrowing. Tighter labor supply, meet tighter labor supply, means higher prices.

What it does to the only number you underwrite

All of this shows up in one place on your spreadsheet: cost. Construction wages rose 4.4% over the past year, to about $41.20 an hour, outpacing the 3.4% gain for private workers overall (BLS). Skilled-trade pay is rising faster than the broader market, and it has been for a while.

On net, this is good news for anyone who already owns buildings. Rising labor costs raise the replacement cost of every existing structure. When it costs more to build the competing apartment across the street, two things happen. New supply gets harder to pencil, so less of it shows up, and the building you already own becomes more valuable relative to a world where anyone could cheaply build its twin.

A permanent labor shortage is a permanent governor on how fast supply can grow, and right now the brake is on.

Construction Employment Is the Signal for Recession

Construction employment does more than build houses: it forecasts the business cycle.

Going back to World War II, payrolls in the building trades have peaked and started falling before nearly every U.S. recession, then dropped hard once the downturn arrived. The Bureau of Labor Statistics put the pattern right in the title of a 2011 study, “Construction Employment Peaks before the Recession and Falls Sharply Throughout It.” The logic is intuitive. Builders commit capital and crews on their read of the next 12 to 18 months, so when they start trimming, they are telling you what they see coming.

The 2008 crash is the cleanest example: residential construction employment had already fallen about 11% before the recession was officially dated (BLS). It is not a flawless signal. It missed the 2020 shock, which arrived from a virus rather than the credit cycle, and it has thrown the occasional false alarm. But as cyclical tells go, it has a better track record than most of what gets airtime.

Which makes the current reading worth sitting with. Construction employment is parked near an all-time high, around 8.3 million (BLS), and it has not rolled over. Under the leading-indicator logic, that appears to be a quiet green light for the broader economy, and it squares with everything else in this issue: the reason builders are not shedding workers is that they cannot find enough to begin with. A labor shortage may turn out to be its own kind of recession insurance.

This is exactly the kind of second-order thinking I try to bring to every deal, and it’s the reason I built a tool to force myself to underwrite honestly. If you want to pressure-test how rising construction and replacement costs change a deal’s math, run a few scenarios through my DealLab analyzer. It underwrites a rental, BRRRR, or flip in seconds, with live mortgage rates, cap rate, cash-on-cash, DSCR, and a deal heat score. I just added an Advanced Mode for the pros who want to get into the weeds. It’s free, it’s in beta, and I genuinely want your feedback to make it better. Bookmark it. It will come in handy the next time a deal lands in your inbox.

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My Skeptical Take

We can grow a diamond in a lab now.

We can pump out eggs by the billion once the flock recovers.

We are teaching software to do a junior analyst’s first year of work in an afternoon.

Anything we can systematize, we eventually make cheap. That is the deflationary miracle of a productive economy, and it is mostly good news, especially when it puts a 137-year-old diamond cartel out of business.

But notice what stays expensive. A person who can climb into a 120 degree attic in July, read a load calculation, and wire a house so it doesn’t burn down. A framing crew that shows up at 6 a.m. and gets the deck right. The hands that actually build the thing. We have spent thirty years telling a generation of kids that those jobs were beneath them, and now we are 349,000 workers short and writing checks that grow 4.4% a year to the ones who stayed.

For an owner of real estate, the cost of creating new competition for your building keeps rising as building gets harder, and the people required to create it keep getting scarcer.

Mike Rowe, who has spent more time than anyone making the case for the trades, put the cultural root of the shortage better than I can:

“We’ve waged war on work. We’ve declared that a four-year degree is the only path to success, and we’ve treated the skilled trades like a vocational consolation prize. The skills gap is just a reflection of what we decided to value.”

The gap is real. The buildings are getting more expensive to replace. And the people who own the ones that already exist, and who keep their numbers honest while everyone else chases the shiny thing, are positioned about as well as I’ve seen in this cycle.

But eventually, we need to get back to building more than datacenter in this country.

Until next time. Stay Curious. Stay Skeptical.

Herzliche Grüße,

-The Skeptical Investor

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Today’s Read Time: 12 minutes

This week, we’re talkin’ remembering Alan Greenspan and forecasting the new Fed’s actions, where oil/inflation are headed, a Nashville buyers market but with resilient price increases, and I go off on the luddite AI job loss claims.

You won’t want to miss the ending.

Let’s get into it.

Today’s Interest Rate: 6.66%

(☝️ .10% from this time last week, 30-yr fixed)

The Weekly 3 in News:

• The Fed held, then turned hawkish, and the chairman wouldn’t sign his own forecast. The FOMC kept rates at 3.50–3.75% in a unanimous vote, but the new “dot plot” erased the rate cut it had projected in March and put a possible hike back on the table. Tellingly, Warsh declined to submit his own dot, because he distrusts forward guidance. (CNBC, Jun 17.) (CNBC)

• Housing starts fell off a cliff. New construction dropped 15.4% in May to a 1.18 million annual pace, down 8.7% from a year ago. The tap that fills the future supply pipeline is closing. (Census, Jun 18.) (Census)

• Existing-home sales rose, and prices held. Sales climbed 3.2% in May to a 4.17 million pace, with the median price up 1.3% from a year ago to $429,300, the 35th straight month of annual price gains. (NAR, Jun 18.) (NAR)

A Few Fun Things Happening in Nashville This Week

• Alan Jackson’s farewell finale at Nissan Stadium, Saturday, June 27. The country legend closes his “Last Call” farewell run with a stadium send-off in Music City. A real bucket-list night, and a reminder that this city’s economy runs on people wanting to be here. (Visit Music City)

• Yacht Rock Symphony at Ascend Amphitheater, Tuesday, June 23, 8pm. The Nashville Symphony plays smooth-sailing ‘70s and ‘80s hits on the riverfront. Peak summer-evening Nashville. (Visit Music City)

• Dolly Parton’s “Threads: My Songs in Symphony,” multiple dates through June 26.A symphonic celebration of Dolly’s catalog. It is, after all, still Nashville. (Visit Music City)

Remembering Alan Greenspan, and a Hope for His Successor

This week we lost a giant, and we met the new version 2.0, Kevin Warsh.

Alan Greenspan died Monday at 100 (CNBC, NPR). He ran the Federal Reserve for almost two decades, under four presidents, and his record is not without controversy. But I want to honor the part of it that every investor/operator should study, because it is the rarest quality a central banker can have: restraint.

Now, Fed Chair Warsh takes the reins.

The contrast between the two could not be sharper, and it happens to sit right on top of the question every one of us who borrows money is asking: where are rates going?

In the mid-1990s, unemployment kept falling, and the entire economics profession told Greenspan to slam on the brakes. The models said low unemployment had to mean runaway inflation, and the consensus wanted rate hikes to head it off.

Greenspan refused.

He had a hunch that the personal computer and the early internet were quietly lifting worker productivity, raising the economy’s speed limit, which meant the country could grow faster and hire more without prices catching fire. He let the boom run (Brookings). He turned out to be right. Growth averaged roughly 4.5% a year in the late 1990s, unemployment fell to about 4%, and inflation stayed tame (Brookings).

Sit with how lonely that call was. The pressure to act, to look busy, to satisfy the cable-news demand for a response, is enormous. The harder thing, the thing Greenspan did, was to look past the panic of the moment, trust what the data actually showed, and let a good thing keep being good.

Now, Kevin Warsh steps in.

He held his first meeting as chair last week. My hope, and I mean this as a challenge, not a jab, is that he has Greenspan’s spine

Because right now the dramatic instinct and the patient one are pulling in opposite directions, and last week the new Fed appears to have chosen drama.

RIP.

The Fed Flashed Hawkish. Don’t Fret.

Here is what happened, and then here is why I am fading it.

The committee held the funds rate at 3.50–3.75%, which everyone expected. The news was underneath, in the Summary of Economic Projections. In March, the median Fed policymaker still penciled in a rate cut by year-end. Last week, that same median moved up to a 3.75–4.00% range, which implies the next move could be a hike, and the Fed raised its 2026 inflation forecast to 3.6% on headline PCE (Fed SEP, CNBC). Nine of eighteen officials now see at least one hike this year; exactly one sees a cut.

I strongly believe that will NOT happen.

But, fun fact, Warsh, declined to place his own dot on the chart (CNBC).

He has long argued that forward guidance boxes the committee in and makes it harder to change course when facts change, and we now see a chairman who is quietly telling us not to over-read the forecast.

Instead he announced a sweeping overhaul of the institution to get it less involved in the day-to-day of the economy: five task forces to review the Fed’s communications, its balance sheet, its data sources, its work on jobs, and its inflation framework, and he slashed the post-meeting statement to roughly 130 words while abandoning forward guidance altogether. One observer called it “regime change in a velvet glove” (CNBC).

There is a macro backdrop that makes patience the reasonable choice, not the reckless one. The labor market is steady, not overheating: employers added 172,000 jobs in May and unemployment held at 4.3% (BLS). The Fed itself projects the economy grows about 2.2% this year (Fed SEP).

And here is the Greenspan influence that I think Warsh will implement: over the past year, worker productivity rose about 2.8% while unit labor costs rose just 0.5% (BLS). When output per hour grows faster than the cost of labor, you can pay people more and still keep a lid on prices. That is the same signature Greenspan bet on in the 1990s.

The steelman. Sure, headline CPI inflation did hit 4.2% in May, the hottest reading in three years (BLS). Seventeen of eighteen Fed officials judged the risks to inflation as tilted to the upside, and these are people with far more data than I have. So the new chair carries a special burden: if he cuts too early and inflation reignites, he spends his entire tenure fighting for credibility he can never fully win back. From that seat, leaning hawkish would be a reasonable insurance policy, even if it costs the rest of us a little growth. And a hawkish reputation, established early, could itself pull long-term inflation expectations down, which does some of the Fed’s work for it.

So, it you believe May’s 4.2% was the start of something broad rather than an oil spike passing through, the dot plot is not panic; it is prudence.

BUT, I don’t think that is the right read, let me lay out my reasoning.

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The Inflation Scare Was an Oil Scare, and Oil Is Falling

The whole hawkish case in the media and on Wall Street rests on that 4.2% inflation reading. So let’s look at what actually drove that theory.

Energy did more than 60% of the monthly inflation damage, while core inflation, which strips out food and energy, sat at a much calmer 2.9% (BLS). May’s inflation was, in large part, a tax imposed by a spike in oil during the worst of the Iran conflict.

That tax is being erroded in real time. WTI crude today has fallen again, back to about $73.55, down roughly 3% on the day I’m writing this and well off the $90-plus levels it touched at the June war-premium peak (Yahoo Finance, CNBC). The energy line that pushed inflation to a three-year high is now deflating, which means the scary headline number may already be peaking.

Households can feel it already.

Consumer sentiment jumped about 9% in June’s preliminary reading, to 48.9, on the back of cheaper gasoline, and Americans’ expectations for inflation a year out fell to 4.6% (University of Michigan). The people filling their tanks are pricing in the relief that the Fed is still discounting. That gap, between what consumers sense and what the committee projects, is the heart of this week’s disagreement.

Anecdote: I filled up today for $3.19 here in TN. Not back to pre-Iron conflict levels but we are now in striking distance.

Why the Next Move May Be a Cut, and How We Get to a 5.5% Mortgage

In the span of three months, the Fed’s projected path for interest rates moved up, while the thing that caused the inflation it’s worried about, oil, moved sharply down.

The committee got more hawkish precisely as the case for hawkishness was weakening underneath it.

Consumer inflation expectations fell over the same window. You rarely see the policy signal and the underlying data point in such opposite directions.

The Fed has told us, repeatedly, that it is “data dependent.” If oil keeps fading and pulls headline inflation back toward that calmer 2.9% core, a data-dependent committee follows the data down. That is the path to roughly 75 to 100 basis points of cuts over the next year or so.

Not because the Fed wants to look dovish, but because the numbers will eventually give it no reason to stay this tight.

Here is the part that matters for your portfolio, and the part most media outlets get backwards. The mortgage rate you pay does not come from the Fed funds rate. It tracks the 10-year Treasury yield plus the spread that lenders add on top. So the road to a meaningfully lower mortgage runs through two levers,

Neither one requires the Fed to do anything dramatic.

Today, the 10-year sits around 4.49% (CNBC), and the spread between the 30-year mortgage and the 10-year is running near 2.0%, which adds up to roughly today’s 6.5% rate. The catch is that this spread is unusually wide. Historically it runs closer to 1.6–1.8% (HousingWire). That gap is not permanent. It widens in times of fear and uncertainty, and it narrows as conditions calm.

So here is the arithmetic.

If disinflation resumes and the Fed eases, the 10-year could drift toward something like 3.8%. If the spread normalizes toward 1.7%, we add those together and we land near a 5.5% 30-year mortgage. Two gentle, plausible moves, neither one heroic, and the headline number that governs affordability drops by a full point.

You can already see the early appetite for this.

Even with rates near their highs for the year, refinance applications were running about 20% above year-ago levels in late June, as borrowers with older, pricier loans moved to lock in the current ones (Mortgage News Daily / eciks summary). And demand on the purchase side is levitating higher, not collapsing: existing-home sales rose 3.2% in May (NAR), even as new construction fell 15.4% (Census).

I believe demand will continue to rise, while the future supply pipeline thins.

If rates then ease toward 5.5%, you have buyers with a fresh reason to act meeting a market that built fewer new homes to sell them.

But, hope is not a strategy

This is exactly the kind of environment where doing your own underwriting separates real investors from the posers.

A deal that doesn’t pencil at 6.5% but sings at 5.5% is not a deal you buy today on hope; it’s a deal you model both ways, so you know your margin of safety before you sign. Real estate builds wealth through several engines at once: cash flow, appreciation, loan paydown, tax benefits, and leverage. When the appreciation story gets loud, as it is now, the cash-flow math is what keeps you solvent while you wait for it. (If you want the long version of that framework, it’s the whole premise of my book.)

So, remember to run your numbers tight. Need help? I built a free deal analyzer so you can underwrite any rental, BRRRR, or flip in seconds, with live mortgage rates, cap rate, cash-on-cash, DSCR, and a deal “heat score.” Model your next deal at 6.5% and again at 5.5% and watch what a single point does to your returns.

Plus, I just added Advanced Mode for the pros who want to get into the weeds. It’s in beta, so kick the tires and tell me what to fix or add. Feel free to bookmark it; it’ll come in handy later. 👉 nashvilleinvestoragent.com/deal-analyzer

Nashville: The Market Quietly Tilts Toward Buyers

In my home market of Nashville, the data tells an interesting story: inventory is tilting towards buyers but prices are still creeping up.

Months of supply jumped 25%, to 5.23 months. New listings fell 31%, and closings dropped 16%. At the same time, the median sale price actually rose about 5%, to $665,400 (source: RealTracs MLS, Residential Single-Family, Nashville, TN, 5/22–6/21/2026). So we have an interesting setup for the second half of 2026: fewer homes trading hands, inventory accumulating relative to that slower pace, and sellers holding on their sales price.

This split is fascinating, and could only be true in a resilient market that we have here.

Why?

Business are expanding here and jobs are plentiful.

Unemployment remains far below the national average (3% vs 4.3%).

For an investor, this setup presents a future opportunity. Make sure this is the case in your target city.

Because, a market with accumulating supply and more patient buyers is one that springs to life when mortgages cross the 6% rubicon and head toward 5.5%.

I give it 12 months, absent another middle east side quest by our lovely government.

This is why, for me, I’m a voracious buyer today. I’m looking over the horizon for what 2027 will look like. And so far its low supply, higher rents, fewer deals to be had.

My Skeptical Take

I’d like to touch on a little something different. AI fear over job loss.

First, some history.

In February 1961, TIME magazine ran a piece called “The Automation Jobless.” with the subtitle: “Not Fired, Just Not Hired.”

Sound familiar?

“The election of President Kennedy in 1960 intensified the focus on technological unemployment. The Kennedy administration took automation concerns more seriously than its predecessor, with the US Secretary of Labor warning of workers being left on a "slag heap." 1961 would see Time Magazine publish an article titled ‘The Automation Jobless’ and predictions were made that automation would end most unskilled jobs. One professor predicted counter revolution (PA).”

The country had 5.4 million people out of work, the Labor Secretary had just convened a special panel to study the threat, and a respected expert was quoted calling automation “the nation’s second most important problem.” First, he said, was peace. Second was the machine (TIME, Feb 24, 1961).

The evidence looked obvious. In the chemical industry, production jobs had fallen while output soared. Steel was making far more with thousands fewer workers. And the line that ought to stop every doom-monger cold: on the farm, the article noted, one man could now grow enough to feed 24 people, where in 1949 he could feed only 15 (TIME).

The experts looked at all of it and concluded the economy had finally run out of room to put people to work.

Here is what actually happened.

1961 began one of the greatest job-creating stretches in American history. The labor force roughly doubled in the decades that followed. The farm and factory work they feared losing did largely vanish, and it turned out to be one of the best things that ever happened to the American worker, because we did not run out of jobs, we ran out of those jobs, and built new ones the 1961 experts could not have named.

The fear of new technology and and job loss has repeated time and time again.

Heck, it may be the single most reliable pattern in economic history.

“In a 1922 commencement speech at Wellesley College, President of the Rockefeller Foundation - Raymond B. Fosdick pondered: “Can education run fast enough” for people to beat the machines. A number of books would be written regarding the subject. ‘Social Decay and Regeneration’ - published in 1921 - would be reviewed by the New York Times, who asked ‘Will Machines Devour Man?’, accompanied by an provocative illustration of someone being fed into a sausage making machine (PA).”

The New York Times asked “Will Machines Devour Man?”

In the 1930s, Keynes coined the phrase “technological unemployment,” while Henry Ford countered that for every job a machine takes, it creates many more. In 1955, President Eisenhower waved off the automation panic, noting it had “plagued people for 150 years and always proved groundless.” In 1965, Peter Drucker wrote a piece titled, plainly, “Automation Is Not the Villain.” In 1995, Jeremy Rifkin published The End of Work, at almost the exact moment America began posting its best employment numbers in a generation (Pessimists Archive).

It seems like every generation produces a confident class of luddite forecasters, who count the jobs a new technology will obviously destroy, but forget to count the ones it will create.

Nassim Taleb, who has built a career pointing at the emperor’s wardrobe, or lack thereof, is less polite about that crowd than I would be:

“Those with brains no balls become mathematicians, those with balls no brains join the mafia, those with no balls no brains become economists.”

The man has a point.

The people most certain about the future tend to have the worst record of predicting it, and a credential on the wall doesn’t fix the batting average. We moved from an agrarian economy to an industrial one to a manufacturing one to a service one, and at every handoff the smart money swore the music was about to stop.

It never did.

The pie did not get carved into thinner slices. It got bigger, and there turned out to be more than enough for everyone willing to step up to the table. (I came to a similar conclusion a few weeks ago, when I argued that AI may be adding jobs rather than destroying them.)

I don’t say this to dismiss the risk. It is real, and it lands on real people; the worker who is “not hired” is not a statistic to the family living it. But there is risk in everything, even crossing the street. I see great optimism for AI and can hold two things in my head at once: 1) technology displaces specific people in specific roles for a short time, and 2) it has expanded the overall economy, without exception, for two centuries, and will continue to do so.

Anyone telling you this time the machine finally wins is selling the same forecast that has been wrong since the spinning jenny.

And that is exactly how I read AI.

The automation panic, the end-of-work panic, and yes, the inflation-can-never-come-down panic all rest on the same four words from Sir John Templeton, who made a fortune buying precisely when everyone else was sure the world had changed for good, named them:

“The four most dangerous words in investing are: ‘This time it’s different.’”

Alan Greenspan understood this in his bones.

In the 1990s, the whole industry, and much of the body politic, told him a hot economy had to mean runaway inflation, and he had the nerve to trust the productivity data instead and let the thing run.

We lost that man this week.

My hope is that his successor remembers the lesson: that the patient call, the one that looks past the noise of the moment, is usually the hard one, and usually the right one. The oil scare fades, the inflation panic ages as badly as the automation panic did, and the rate normalizes.

That, I think, is the trade worth making, made with your eyes open to the ways it could be early.

Until next time. Stay Curious. Stay Skeptical.

Herzliche Grüße,

-The Skeptical Investor

—

P.S. If you want a smart, hopeful book to put that whole pattern in perspective, I’d point you to “The Rational Optimist” by Matt Ridley — the definitive, readable case that human ingenuity keeps expanding the pie. Perfect fit for this essay; reads like a recommendation, not a sales pitch. Amazon link.

—

Need some personal help with your real estate portfolio?

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Today’s Read Time: 8.5 minutes

This week, we’re talkin’ Iran sidequest has (almost officially) ended but what happens to inflation for the rest of 2026? I go deep dive on oil, treasuries and interest rates.

Let’s get into it.

Today’s Interest Rate: 6.58%

(👇 .10% from this time last week, 30-yr fixed)

The Weekly 3 in News:

1. The Iran conflict is ending, and oil round-tripped the whole thing. WTI crude fell more than 5% to roughly $80 a barrel, a two-month low. (Al Jazeera, NewsX) Oil sits upstream of everything else investors care about this week: oil feeds inflation, inflation feeds the 10-year Treasury, and the 10-year feeds your mortgage rate. Equities agreed, with the Dow jumping about 600 points to a fresh record and Asian markets surging as the deal came into view. (CNBC)

2. New Leader Kevin Warsh chairs his first Fed meeting with a hot but cooling tape. The Federal Reserve meets June 16–17, and markets price a hold at roughly 97–99%. (CME FedWatch) He inherits the hottest headline inflation since 2023, but he gets to talk about it on a day when oil is falling and stocks are at records. Whether his first press conference leans into the improving forward picture or anchors on the rear-view number is what may move the bond market.

3. Housing inventory turned negative year over year, and demand is the reason. Active listings reached 816,924 the week of June 12, against 825,718 a year ago, a decline of about 1.07% (calculated from the two counts). (HousingWire / Altos) Weekly pending sales ran 75,856 versus 72,039 last year, and purchase applications were up 17% year over year, all with the 30-year near its 2026 highs. It is the cleanest rebuttal to the “it’s a buyer’s market everywhere” consensus, and it gets stronger if the deal pulls rates toward 6%.

A Few Fun Things Happening in Nashville This Week

• Winstock Music Festival, June 19–20, with Luke Bryan and Dierks Bentley headlining. Two nights of mainstream country at full volume.

• Nashville Predators Craft Beer Festival, Saturday, June 20. Local breweries, a hockey crowd, and downtown in mid-June. A good read on how much disposable income is still sloshing around the city.

• Dolly Parton’s “Threads: My Songs in Symphony” at the Schermerhorn, running mid-to-late June. The Nashville Symphony plus the Dolly catalog is about as Music City as it gets.

The Iran Side Quest is Over

On Sunday, the United States and Iran announced an end the conflict, with an agreement set for signing on June 19, the U.S. naval blockade lifting, the Strait of Hormuz reopening, and a 60-day window of talks on dismantling Iran’s nuclear program. (NBC News, CNN)

The market response has been swift. Oil is falling, equities pushing to records, and Treasury yields are resuming their downward trajectory that was interrupted back in March.

I called this.

Back in March, when crude was climbing and every news outlet and wall street analyst was absolutely losing their minds, I wrote two back to back articles on the Iran Conflict.

My argument was a little unpopular at the time (I got quite the earful) and it went something like this:

This is noise.

And from an investing perspective, it won’t matter, even in the medium term.

In fact, it couldn’t even be positive.

There are weeks when the smartest thing an investor can do is sit on his hands, and the spring of 2026 was a long stretch of exactly those weeks. The temptation was to react: to oil at $108, to a 4.2% inflation headline, to a war that filled every screen. The skeptical position, the one I argued in Scary Movie 7 and again in Energy Prices Have Peaked, was that almost all of it was noise dressed up as a regime change, and that it should not alter what a disciplined investor/operator does with a good deal in front of him.

A reminder: Iran’s tax is over

For years, Iran, through the threat of military strangle on the Strait of Hormuz, had imposed an invisible risk premium on oil prices. A tax, effectively.

And when the conflict comes to an end, and it will in a few months, oil prices will be lower in 2027 than in 2025. I say 2027 because it will take a few months for oil supply to catch up to demand.

And to add to this prediction, OPEC, the cartel of oil producing countries that price fix their product to the world, is effectively over, with the UAE leaving the group, a likely unintended result of this conflict.

The end of both the Iran risk premium and OPEC price fixing will result in lower oil prices than before we started this side quest.

This is extremely important to know. And I assert it to be correct.

Further. In April, with gasoline still surging, I followed up with another article, saying: Energy Prices Have Peaked. While the energy spike was real, it was temporary, and experienced investors/real estate operators can easily manage through it by properly underwriting.

True, once again.

So, I’m giving myself 2 back pats.

I nailed it.

Nanna nanna boo boo, stick your head in do do all you doomers.

Ok enough of self-aggrandizement, let’s look at what’s next.

I Said It Was Noise.

Now, we do have a bit to go from here.

The May inflation number that landed last week was ugly, but only on the surface. My underlying logic is now playing out, so let’s look at the evidence honestly, in three charts.

Oil has round-tripped

Starting with the black slimy commodity that started it all, WTI crude climbed from roughly $70 before the conflict to about $108 at the early-May peak, then drifted lower through late May and fell off a ledge this weekend, to near $80 after the deal framework. (Al Jazeera)

The premium that built up was a fear premium, and fear premiums are, by nature, temporary. It just took 56 years…

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When the fear resolves, the price retraces. That is what appears to be happening, and it is why I argued against rearranging a portfolio around an oil chart, and that the bond market (ie treasuries, ie interest rates) was offsides.

The inflation scare was an energy scare wearing a disguise

This is the chart I would put in front of anyone who told you in May that inflation was “back.” Headline CPI did race higher, to 2.8% in February, 3.3% in March, 3.8% in April, and 4.2% in May, the hottest in three years. (BLS) But core CPI, which strips out food and energy, barely moved over the same stretch, sitting at 2.5% in January and February and reaching only 2.9% by May. (BLS)

Put the two together and here is the setup for real estate for the end of 2026:

For-sale housing inventory tightening on resilient demand, and the new-construction pipeline that punished rents now thinning out.

2027–2028 will be the year of rent recovery, and it is showing up in the data before the headlines.

The inflation scare, was just that.

This is the chart I would put in front of anyone who told you in May that inflation was “back.”

Headline CPI did race higher, to 2.8% in February, 3.3% in March, 3.8% in April, and 4.2% in May, the hottest in three years. (BLS) But core CPI, which strips out food and energy, barely moved over the same stretch, sitting at 2.5% in January and February and reaching only 2.9% by May. (BLS)

The gap between the red and teal lines, about 1.3 points in May, is almost entirely energy.

In fact, the Bureau of Labor Statistics attributed more than 60% of the entire monthly increase to energy, with gasoline up about 7% on the month and roughly 40.5% over the year. (BLS) Even Morningstar, hardly a cheerleader, headlined its May review “energy-driven inflation is contained, for now.” (Morningstar)

If the energy premium drains, as oil suggests it is doing, the headline should converge back toward the core over the next couple of releases. That is the bet I have been making since March. It is not a bet, it is just arithmetic.

The war premium in rates is draining out

As the energy premium pushed headline inflation up, it dragged the 10-year Treasury up with it, and the 30-year mortgage followed. The 10-year briefly pushed above 4.60% at the height of the conflict, sat at 4.48% on June 12, and eased to about 4.42% by Monday on the deal. (Federal Reserve H.15) Freddie Mac’s 30-year averaged 6.52% on June 11, and daily quotes had ticked toward roughly 6.35% by Monday as oil fell. (Freddie Mac, Money/U.S. News)

Downward pressure on rates should resume.

In my May 31 issue I wrote that the strongest argument against my “rates grind higher” caution was a let the oil market, and that if a credible Iran de-escalation held, crude could keep sliding, the energy contribution to inflation could reverse, the 10-year could follow it down, and the 30-year mortgage could be back near 6% within weeks.

That was the bull case.

It is now the case unfolding in front of us.

A little macro context to keep this grounded, because the rate path is not only an oil story: The labor market is still firm and will keep rates high for the next few months.

May payrolls were very strong, growing by 172,000. And unemployment held at 4.3%. (BLS) The Fed’s target range sits at 3.50–3.75% and is very likely to stay there this week. (CME FedWatch) Meanwhile, stocks are back to record highs. (CNBC) A resilient job market and a Fed that will likley not ease into a 4% inflation print are the reasons I say rates are headed toward 6% mortgage rates. But we aren’t there yet.

So what does a skeptical operator actually do with this?

Mostly, what we are already doing. The energy spike hit your common-area utilities, your maintenance fuel, your turn costs. Those are real, and they are also exactly the costs a disciplined owner plans for. The durable variables, supply and demand for housing, the cost of long-term capital, the trajectory of local jobs, were quietly improving the whole time the headlines were screaming. And they will continue to do so.

On the cost side specifically, one cheap lever that paid off this spring was tightening up energy usage in the units. Even something simple like a programmable smart thermostat for your rentals, which allows you to keep tabs on energy usage, is the kind of small, boring upgrade that trims a controllable cost.

The steelman, because I owe you the other side. The honest counter has two parts, and both have merit.

First, the inventory figures come from a weekly tracker, which is noisier than the monthly releases and can wobble around zero; one or two weeks below the line is a trend only if it persists, and a move back toward 7% on the 30-year would likely refill the shelves quickly as demand cools.

Second, “supply is thinning” is not the same sentence as “rents are rising.” Nationally, apartment occupancy just slipped to 94.1%, the lowest reading since 2013, which tells you there is still slack to absorb before landlords get real pricing power back. (Multi-Housing News) Less new supply matters, but it sets the table for a recovery. We still need a bit of time for this to happen.

The lesson of the last three months is not that geopolitics is irrelevant, just that it tends to move temporary line items.

I lean bullish on the demand floor here, and I will hold that view as the weekly data strings together a few more postitive weeks.

I’ll keep you updated. But so far so good.

Nashville: The Jobs Engine Is Still Running

The reason I keep coming back to Nashville (besides being a homer :) is that our local economy keeps on chuiggin.

Music City’s unemployment is holding near 3.0% (more than a full % below the national average), we added roughly 28,000 jobs over the past year, and the City ranks second among the 100 largest U.S. metros for combined job growth and income. (Capital Analytics) Health care, manufacturing and entertainment are have remained undeterred. (RE Business Online, Hoodline)

On the apartment side, multifamily asking rents have been running around $1,642, down roughly 1.2% over the year, lagging the national figure precisely because of the sheer number of completed units that hit the market over the last 2 years. (Multi-Housing News) As that wave fades into 2026 against a still-tight labor market, the local rent picture should firm.

The for-sale side is where the latest MLS data tells a more textured story than the metro aggregates do. Over the last 30 days, from May 15 to June 14, Nashville single-family homes carried a median sale price of $649,500, up about 4% from the prior 30-day window, while the average held essentially flat at $921,046. (RealTracs MLS) Homes that did sell moved quickly, with average days on market for closed sales falling to 24 from 32, a meaningful improvement of 25%.

Underneath that firm pricing, though, the market, like many large metros, is still loose. Months of supply went from 5.42 from 4.12, an increase of about 32%, as new listings fell 33%, closings fell 19%, and average active inventory rose 9% to 2,162. (RealTracs MLS)

The read: well-priced homes still sell fast, but we still have excess inventory to work through (again like most cities).

As new apartments coming on market continue to dwindle, 2026 should end with higher rents and fewer options for the 80+ folks moving here every day.

My Skeptical Take

The theme of the last 3 months is less about oil, and more about temperament.

We had a sea of frightening headlines, which were, for the most part, noise, while the fun the fundamental picture was improving.

Unemployment low, job hiring re-accelerating, housing demand holding, housing supply pipeline thinning, and an energy shock that is fading, not festering.

The operators who did well were not the ones with the best geopolitical forecast. They were the ones who knew their numbers cold, planned for the potential for prices to pop, and refused to renegotiate their long-term thesis (and leases) over a one-month inflation reading.

As Warren Buffett’s mentor Benjamin Graham put it in The Intelligent Investor:

The spring of 2026 was a long, loud test of that idea, and the people who stayed disciplined are the ones now watching oil round-trip and rates ease, with calm.

I am bullish on real estate as a long-term wealth engine, and I have laid out the full case for why in my book, The 5 Ways: How Real Estate Investors Make Money and Build Wealth, which walks through how the returns actually stack up across cash flow, appreciation, loan paydown, tax benefits, and inflation. None of those five engines depend on calling the next oil price correctly.

And that is rather the point.

Let the noise pass through.

Until next time. Stay Curious. Stay Skeptical.

** Before you go: a tool I’d like your help on **

I built a free deal analyzer, and I want your feedback on it!

It is called DealLab, and it lets you underwrite a rental, BRRRR, a flip or a property you already own in a couple of minutes.

It uses live mortgage rates, with cap rate, cash-on-cash, DSCR, and a deal heat score built in. I just added an Advanced Mode for the pros who wanted more control over the assumptions. It is still in beta, so I genuinely want to hear what is missing or clunky.

Take it for a spin, run a real deal through it, and reply with what you’d change. Bookmark it too, it will come in handy the next time a potential deal crosses your desk.

Herzliche Grüße,

-The Skeptical Investor

—

P.S. Want to level up your real estate game?

You can consult with me, The Skeptical Investor! Get professional advice from someone who actually owns, operates, and brokers real estate.

Want to Grow? - Get clarity on how to grow your business or scale.

Stuck? - Get answers to your problem, let's hop on the phone and figure it out.

No "guru" trying to sell you an expensive course. No BS. No fluff. Only results.

I'll give you my frank, brutally honest advice. Book a call with me today.

It’s 2026. Be an owner.

Schedule your 1-on-1 call now.

Today’s Read Time: 8.5 minutes

This week, we’re talkin’ a hot jobs report - that everyone hated, what if AI is actually adding jobs to the economy, and concrete trucks are multiplying like rabbits in Nashville.

Let’s get into it.

Today’s Interest Rate: 6.66%

(☝️ .10% from this time last week, 30-yr fixed)

The Weekly 3 in News:

1. The hiring ‘recession’ may be ending. U.S. employers added 172,000 jobs in May, well above the ~88,000 expected, and March and April were revised up by a combined 93,000. Thats after multiple downward revisions. Plus, unemployment held at 4.3%. (BLS; CNBC, Jun 5)

2. The largest job openings beat on record, jumping ~731,000 in April, when the market expected no change, the biggest surprise in the history of the series. A question I now have: is AI (finally) creating more roles than it’s replacing? (KL)

3. Productivity is doing the heavy lifting. Over the past year, labor productivity rose 2.8% while unit labor costs rose just 0.5%. Signature healthy, supply-driven growth, not an inflationary boom. (BLS Productivity and Costs, Q1 2026 revised)

4. Bonus! Nashville’s East Bank moved from paper to dirt. Oracle filed permits to demolish roughly 515,000 square feet across its ~80-acre assemblage, and the broader Eastpoint development broke ground in late May. The $4.5B campus is officially a construction site! My 12-yr old self will be staring at it this week. (Axios Nashville, Apr 13; Fox 17)

A Few Fun Things Happening in Nashville This Week

• The Country Music Festival takes over downtown. Four days, ten-plus stages, nightly shows at the new and old stadium footprint, and a lineup that ran from Luke Bryan and Tim McGraw to Shaboozey. The festival draws north of 95,000 people a day and is, quietly, one of the best live demonstrations of why this city’s tourism numbers keep breaking records. (CMA Fest)

• Nashville Sounds at First Horizon Park. Triple-A baseball in the middle of Germantown, walkable from the same neighborhoods we’ll talk about below. Cheap seats, cold beer, skyline views.

The Jobs Report Came in Hot

Let’s start with the number that set the tone last week.

The U.S. economy added 172,000 jobs in May, nearly double the ~88,000 economists expected, and the prior two months were revised up by a combined 93,000 (BLS). Average hourly earnings rose 0.3% on the month and 3.4% over the year (BLS). Unemployment sat at 4.3%.

Economists, who are normally pretty boring, were elated:

• Heather Long at Navy Federal: “The hiring recession is over. American firms are hiring again. This is a strong jobs report from every angle.”

• Gus Faucher at PNC: “This is a labor market that is stronger than it was last year and is looking pretty darn solid. There’s no indication that the labor market needs support.”

• Ellen Zentner at Morgan Stanley, with the line that matters most for our mortgages: “More solid jobs data leaves the Fed where it’s been for a while, watching and waiting, focused on the inflation side of its mandate.” (CNBC, Jun 5)

Where the jobs came from. Here’s the part most coverage skipped: the gains were led by leisure and hospitality (about +70,000, mostly restaurants and bars), local government (+55,000), and health care (+35,000). Manufacturing added a thin +7,000, and financial activities actually lost about 22,000 (BLS; NPR, Jun 5).

This was a waiters-and-nurses month, not a software-engineer month (keep reading).

This a strong, broad labor market is exactly the backdrop that supports renters staying strong and young folks saving for their first home.

A steelman thought: the honest counterargument is that this report is softer underneath the headline. The job growth was concentrated in lower-wage, cyclical sectors, restaurants, bars, and government, rather than high-paying private industry, and finance shed jobs outright. A separate read of the data even argued the labor market is “freezing” beneath the surface, with hiring narrow and churn low (Verified Investing). If most of the hiring is in sectors that get cut first in a downturn, then the strength is may be more fragile.

Counterpoint: But then I think, even a hospitality-led labor market is a labor market that pays rent, and can sock away money in the savings account. Plus the upward revisions to prior months argue the trend is firming. That was new and consequential.

Plus, what if……

But What if AI Is also Adding Jobs?

Now for the real contrarian view.

The fear for 2+ years has been that AI would hollow out employment.

But while this feels correct, and sounds good….is this actually true?

The jobs data is pointing the other way, at least so far. In April, job openings surged by roughly 731,000, the largest upside surprise in the history of the JOLTS series, when forecasters expected no change at all (The Kobeissi Letter). That is not what tech displacement looks like.

LinkedIn’s data shows AI has already been associated with about 1.3 million NEW roles, like AI engineers and data annotators (World Economic Forum). U.S. job postings requiring AI skills have grown sharply year over year (Index.dev), and PwC’s analysis finds AI-skill roles command a wage premium and are growing while postings overall have softened (PwC AI Jobs Barometer).

The World Economic Forum’s framing captures it: it projects roughly 170 million new roles created and 92 million displaced by 2030, a potential net gain of about 78 million jobs (World Economic Forum).

Displacement is real and it will hurt specific people in specific roles.

But on net, the forecast is for more work, not less.

The Deflation Engine

The stock market sold off on the strong jobs number last week because it assumed strength means inflation.

History suggests that’s not automatic.

Over the past year, productivity rose about 2.8% while unit labor costs rose just 0.5% (BLS). When output per hour grows faster than what labor costs, employers can pay people more and charge customers less.

Deflationary + productivity improvement = AI Jobs.

If you believe this, then a strong labor market is not a reason to fear the Fed.

I’ll say this again, the Fed is NOT going to raise rates (absent a new Black Swan event).

In fact, it is a reason to expect lower rate policy down the road.

Further, this Fed Chair wants to get the Fed out of the news and stop their constant market intervention, which will significantly help to stop the reoccurring inflationary whiplash.

The steelman: What if I’m wrong?

Productivity in Q1 2026 alone grew only 0.3% and unit labor costs actually rose 1.8% on an annualized basis (BLS). One soft quarter doesn’t a trend make, but it does mean my deflation call is just starting to happen, it’s not actually happened yet. Energy prices will be a headwind until we get that damn Gulf straight open. A sustained energy price shock can lift inflation regardless of what AI does to productivity.

Sidebar: Saudi Arabia is fast moving to move operations out of the Gulf and on the other side of the country (the Red Sea) where they don’t have to deal with Iran. This is a multi year endeavor, but once complete, the Straight will be largely irrelevant for global energy production.

But I digress…

The next two quarters of productivity and oil will tell us whether it holds. If oil keeps climbing, I’m wrong on the timing.

I do think the market sold off last week for the wrong reason, marking my second week in a row call that the bond market is offsides. And I put my money where my mouth is, moved most of my free cash to 30-yr bonds.

Which brings me home to Nashville, because there’s one city where you can watch all of this, labor strength, corporate investment, and the productivity boom’s winners…

…turn into concrete!

A Quick Ad Break

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The 5 Ways: How Real Estate Investors Make Money and Build Wealth.

Real estate pays you five different ways simultaneously: cash flow, appreciation, loan paydown, tax benefits, and forced appreciation via renovation. Investors who win in choppy markets are the ones who understand they are never betting on just one of them.

Just ~50 pages, and you are ready to rock and roll.

Remember, anyone can build wealth with real estate.

Even you.

Nashville Is Building: What $6.6 Billion of Concrete Tells You.

The cranes are up!

But, first, the local labor picture summary. The Nashville metro had about 1.21 million jobs as of late 2025, up roughly 12,400, or 1.0%, year over year (BLS Nashville Area Summary).

And, the big number, our metro recently ranked #2 among the 100 largest U.S. metros for job growth and per-capita income, behind only Raleigh (Capital Analytics).

That is the demand engine, and why there is so much building here.

What is being built? Three Biggies:

1. The stadium. The new Nissan Stadium, a $2.1 billion, 60,000-seat enclosed venue, was about 75% complete as of late March and remains on track to open in 2027 (NewsChannel 5; Construction Dive). It already locked in Super Bowl LXIV in 2030, the first Super Bowl in Nashville (WSMV, May 19). Roughly $1.26 billion of the cost is public money, the largest stadium subsidy in U.S. history, which is its own debate, but for an investor the relevant fact is simpler: this is the anchor the entire East Bank development.

2. Oracle’s campus. Just a stone’s throw away, Oracle now controls nearly 80 acres on the East Bank for a campus that has grown into a projected $4.5 billion investment, with more than 8,000 jobs committed, over 2 million square feet of office, a Nobu hotel, and public riverfront park space (Axios Nashville; Grant Hammond; The Real Deal). Oracle just started demolition of 515,000 sq/ft of old industrial buildings, and a new river cresting pedestrian bridge to Germantown is in design (Arch Paper, May 2026). The stadium and the Oracle campus, total about $6.6 billion of announced investment. That doesn’t count the public infrastructure, the parks, or the residential breaking ground around them. Total investment could be double that.

   

3. Nashville Corporate is Booming. Starbucks is moving a satellite headquarters to Nashville, along with 2,000 tech workers at $125,000 average salary. Amazon has a large presence. Meta’s data center in Gallatin keeps expanding. And In-N-Out Burger is building a 100,000-square-foot Eastern Territory office in Franklin (just south of Nashville) — a $125.5 million project housing roughly 200 corporate employees, opening late this year. Plus Nashville is likely getting a 46-story St. Regis (which would be the city’s tallest hotel) and a Ritz-Carlton in The Gulch neighborhood, both accommodating the higher end luxury consumer.

An important note: all this building is happening as we continue the 2020-2021 zero interest rate apartment boom and bust. New apartment supply peak mid last year and will continue downward.

More folks seeking jobs with fewer housing units coming online = future rent growth.

The People Keep Coming.

Tourism also has not slowed, down, quite the opposite.

Nashville drew a record ~17.3 million visitors in 2025, who spent about $11.6 billion, up roughly 3.7% year over year and a new high (Whiskey Riff, Mar 2026; Visit Music City research). For comparison, the prior record was $11.2 billion in 2024 (Visit Music City). For context, the city drew 15.5 million visitors in 2019 and bottomed at 9.9 million in the pandemic year of 2020 (Connolly Cove). The trend is up and to the right.

This is on a population of fewer than 700,000.

These numbers were blockbusting, despite a headwind from slower international travel. International visitation fell about 13.4% in 2025 to roughly 363,764 visitors, and since about half of Nashville’s international visitors are Canadian, the ~20% drop in Canadian arrivals likely affected the numbers significantly (WKRN; Whiskey Riff). But domestic travel, up about 3%, more than filled the gap.

What the hell Canada?

Bunch of silly geese.

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My Skeptical Take

Every week, it seems like the financial news arrives dressed like a firefighter, ready for some emergency.

Calm down people.

The jobs report did not describe an economy running too hot, but one where the economic pie is enlarging and becoming more productive. Over the past year, the output of an hour of work grew faster than the cost of that hour.

This is the unglamorous engine of real progress: not a boom to be feared, but the slow compounding that happens when an economy learns to do a little more with a little less.

If AI is actually adding work rather than erasing it, and lifting productivity rather than hollowing it out, then the bond market is merely having a childish tantrum.

Instead we could be in for faster growth.

Cooler prices.

And a gentler path for interest rates.

Sometimes good news is just good news. Stop overthinking it.

The temperament for a moment like this will favor the calm investor.

It belongs to the person who can hold a long horizon while everyone around them always sees a firefighter.

Now, I would be misleading you if I called the picture spotless, which would be an asthma to this newsletter.

Recent hiring was in fact concentrated in the cyclical corners of the economy. Productivity was not totally booming in the most recent quarter. Oil is still elevated on the world’s anxieties. Nashville is booming, but a few corporate cancelations could change that picture.

A serious person holds both optimism and the skepticism in their mind at once, and lets the numbers, not the mood of the week, settle the argument.

In the end real estate is a business that rewards patience over cleverness and temperament over conviction. Charlie Munger said it more plainly than I can:

“The big money is not in the buying and the selling, but in the waiting.”

The work, then, is not to predict but to underwrite your investment honestly, and to have the composure to wait and strike on a great deal in a city that is slowly building itself into its own future.

Make your decisions wisely.

Until next time. Stay Curious. Stay Skeptical.

Herzliche Grüße,

-The Skeptical Investor

—

P.S. Want to level up your real estate game?

You can consult with me, The Skeptical Investor! Get professional advice from someone who actually owns, operates, and brokers real estate.

Want to Grow? - Get clarity on how to grow your business or scale.

Stuck? - Get answers to your problem, let's hop on the phone and figure it out.

No "guru" trying to sell you an expensive course. No BS. No fluff. Only results.

I'll give you my frank, brutally honest advice. Book a call with me today.

It’s 2026. Be an owner.

Schedule your 1-on-1 call now.

Today’s Read Time: 9 minutes

This week, we’re talkin’ Inflation reaccelerated to a three-year high, Foreclosures hit a six-year high, which sounds alarming until you see what it’s actually measuring, and U.S. active for-sale inventory just turned negative year-over-year for the first time this cycle, could this mean an end the “buyer’s market?”

Then, of course: Nashville, where the local market is loosening just as the national one tightens.

Let’s get into it.

Today’s Interest Rate: 6.56%

(👇 .09% from last week, 30-year fixed)

The Weekly 3 in News:

1. Foreclosures hit a six-year high. This is normal. ATTOM’s Q1 2026 report counted 118,727 U.S. properties with a foreclosure filing, up 6% from the prior quarter and up 26% year-over-year, with foreclosure starts up 20% and bank repossessions up 45%. (ATTOM, April 16; HousingWire)

   1. Skeptical Analysis: But, before you read that as consumer stress, this is really foreclosure activity rising “as the market continues to normalize.” Filings cratered to artificial record lows during the 2020 to 2021 moratoria; they are now climbing back toward, but still sitting below, pre-pandemic norms. A 26% jump off a suppressed base is arithmetic, not a wave. The states leading on volume are the big ones you would expect: Texas, Florida, and California. (ATTOM) File this one under “scary headline, ordinary number.”

2. Inflation reaccelerated to 3.8%, rates keep grinding higher. April headline CPI rose to +3.8% year-over-year, the hottest reading in three years, with core CPI around +2.8%, the firmest since late 2023. (BLS; via CNBC) Much of the April pop traced to an energy spike tied to the Hormuz Straight oil supply problem. This is the supply-side kind of inflation the Fed cannot fix.

3. Our Housing Data Sucks. Redfin’s chief economist, publicly questioned the reliability of the lagging, revision-prone headline data the industry still leans on. (@FairweatherPhD) Her point is important this week, because the National Association of Realtors’ existing-home-sales series is built on closings, which reflect contracts signed 30 to 60 days earlier, and it is benchmarked and revised against a sample of roughly 210 boards and MLSs. (NAR methodology) And she is not alone: Housing economist Logan Mohtashami has made the same case for years, saying the NAR sales reports lag the market by months and have a habit of pointing the wrong way. (@LoganMohtashami; HousingWire) When the two people most associated with reading this market in real time both say the headline data is a rear-view mirror, an investor should listen. This distinction is the plot of this week’s main article (keep reading).

A Few Fun Things Happening in Nashville This Week

• CMA Music Festival, Nissan Stadium and free downtown stages, Thursday through Sunday June 4 to 7. The big one. Four days, hundreds of artists, nightly stadium headliners reported to include Keith Urban, Blake Shelton, Carly Pearce, and Ella Langley, plus free daytime riverfront stages and more honky-tonk spillover than the city can hold. If you own anything short-term-rentable downtown, this is your weekend. (CMA Fest)

• The Wallflowers, Brooklyn Bowl Nashville, Friday June 5, 8 PM. Jakob Dylan and company in the Germantown room, a tidier alternative if CMA Fest’s stadium crowds aren’t your speed. (Brooklyn Bowl)

Builders Pulled Paper. They Didn’t Break Ground.

Rates just keep grinding.

The 30-year fixed stopped its decent near 6.23% in late April and has climbed every week since to 6.56% today. (Freddie Mac PMMS) That’s not a dramatic move but the narrative is negative, given the consensus entering 2026 was that rates would drift lower as the Fed eased.

But then we started the Iran sidequest. Right or wrong.

Instead, energy prices are lifting all inflation numbers. April inflation came in at a three-year high of 3.8% YoY, and interest rates levitate with energy prices.

But contrary to some many analysis and the TV news trying to grab you with a salacious headline or two, the Fed can’t fix this by raising rates. They do not have control over the demand for energy/oil. In fact, raising rates may even make this inflation worse.

So as the Fed watches inflation spike, they will most likely just sit this one out.

When could this end?

If a credible Iran de-escalation holds, crude could enter free-fall (it already fell sharply through May on ceasefire reports), the energy contribution to CPI reverses, the 10-year follows it down, and the 30-year mortgage could be back near 6% within weeks.

But until then….stagnation.

Oh the humanity!

Rates just keep grinding.

The 30-year fixed stopped its decent near 6.23% in late April and has climbed every week since to 6.56% today. (Freddie Mac PMMS) That’s not a dramatic move but the narrative is negative, given the consensus entering 2026 was that rates would drift lower as the Fed eased.

But then we started the Iran sidequest. Right or wrong.

Instead, energy prices are lifting all inflation numbers. April inflation came in at a three-year high of 3.8% YoY, and interest rates levitate with energy prices.

But contrary to some many analysis and the TV news trying to grab you with a salacious headline or two, the Fed can’t fix this by raising rates. They do not have control over the demand for energy/oil. In fact, raising rates may even make this inflation worse.

So as the Fed watches inflation spike, they will most likely just sit this one out.

When could this end?

If a credible Iran de-escalation holds, crude could enter free-fall (it already fell sharply through May on ceasefire reports), the energy contribution to CPI reverses, the 10-year follows it down, and the 30-year mortgage could be back near 6% within weeks.

But until then….stagnation.

Oh the humanity!

Mortgage Demand Bent This Week. It Did Not Break.

If real demand is the engine of inventory, mortgage-application data is where you check the fuel gauge.

The Mortgage Bankers Association’s index fell 8.5% for the week ending May 22, which is the kind of number an internet doomer loves.

But, peel back one layer: purchase applications slipped just 0.4% on the week but were running +5% year-over-year; refinance volume dropped 18% on the week yet sat +19% above last year. (MBA Weekly Applications Survey)

A weekly drop alongside an annual gain has the signature of latent demand.

Buyers who wobble when rates tick up but who are, in aggregate, more active than they were a year ago.

That is consistent with what we have been arguing for months, that the marginal buyer is waiting in the wings rather than gone for good. It is also the micro-level confirmation of the macro inventory story. You do not get inventory falling below last year unless somebody is buying the houses, and the purchase index says somebody is.

Counterpoint, what if this is the top? A fair counter-thought I had, is that a year-on-year gain is a low bar, because last year was awful.

Year-over-year comparisons flatter a market that is still operating at roughly 4 million existing-home sales annualized, near the slowest pace in three decades. (NAR) A +5% purchase reading off a generational-low base is not a boom; it may be noise dressed as a trend, and the 8.5% weekly drop could be the leading edge of a rate-driven rollover if the 30-year pushes toward 7%. Consumer sentiment supports the bear here: the University of Michigan index hit a record-low 44.8 in May, its third straight monthly decline. (University of Michigan) A consumer that frightened does not usually go on to bid up housing.

But then again, poor consumer sentiment is almost always a bullish indicator, and a signal to buy.

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The Buyer’s Market May be Dying

Here is the number that should make every real estate investor sit up.

Inventory just went negative.

For the week ending May 29, 2026 active for-sale inventory just hit 795,921 listings, against 803,479 in the same week of 2025. That is roughly −0.9% year-over-year (calculated from the two counts), the first negative reading of this entire cycle (Housing economist Logan Mohtashami).

Rewind the tape and the move is even starker.

18 months ago, active inventory was growing around +24% year-over-year. The deceleration ran in a straight line: roughly +12%, then +5%, then this month’s sequence of +1.49% (May 9), +1.38% (May 15), +0.89% (May 22), and now negative. (HousingWire tracker) The slope is accelerating, with the largest single-week step coming right before the crossover.

We are still in a national “buyer’s market,” but this narrative could be finally breaking. The for-sale glut narrative the press has run since mid-2024 has finally crossed the line.

And almost nobody is talking about it, because our housing data sucks.

More on that in a moment.

Why is inventory falling? Two forces, both real.

First, sellers appear to be stepping back. They are not getting the price they want adn they are still employed so they do not need to sell. (we have few forced sellers, as we may during a recession/high unemployment).

When months-on-market climbs and price cuts pile up, would-be sellers pull listings, rent the house instead, or simply stay put. The lock-in effect that defined 2023 and 2024 has not gone anywhere; a homeowner carrying a 3% mortgage still has little reason to sell into a 6.5% market.

In fact, the organic seller pool, the divorces, job moves, and downsizes that have to transact, is small and getting smaller relative to demand.

Second, demand is more durable than the headlines suggest. The same tracker shows weekly pending sales of 79,220 versus 74,212 a year ago, ~ +6.7%, with demand at multiyear highs. (HousingWire) Crucially, that demand is showing up at rates above 6.5%, which tells you it is grounded rather than speculative.

When supply growth collapses and demand grinds higher, the math takes over.

Months of supply compress, days-on-market fall, and the share of listings cutting price stops expanding.

Eventually, prices firm.

That is the cycle turn setting up underneath a market that still believes it is a buyer’s market.

The honest caveat, stated plainly so nobody can ambush you with it. This is the weekly tracker, built on Altos and Realtor.com real-time data. The monthly series most outlets quote, including Realtor.com’s and the NAR-style closings data, still reads positive year-over-year because it lags by design (and recall Fairweather’s point from the Weekly 3 about exactly this kind of lag and revision risk). The two are not in conflict; the monthly series is decelerating hard toward the same crossover, it is just a step behind.

Just as important: Mohtashami himself frames this as a positive, demand returning as rates flirt with the low 6s, not a distress signal, and inventory at 795,921 is still near multiyear highs, nowhere close to the 2021 scarcity lows. This is normalization and a cycle turn, not a supply collapse. The skeptical-but-grounded read, in other words, not the panic one.

What changes if this holds.

Why is this important?

First, the “buyer’s market” headline will start to disappear. And this matters.

The major portals and real-estate desks tend to pivot their language within a couple of months of a turn like this: “buyer’s market” softens to “balanced,” then “competitive.”

Buyer psychology shifts the day the framing does.

Two, price cuts shrink. The elevated share of listings with reductions is a function of a year-long supply build. Reverse the build and sellers slowly regain footing. The fastest-moving number over the next 90 days may be the share-of-listings-with-a-price-cut.

Three, the deep-discount buy gets harder. Investors who have been picking off motivated sellers at a wide margin had leverage because they were often the only serious bid.

If supply tightens and prices steady, that bid widens and the discount narrows.

The deals are still there; they appear to be getting more competitive.

This is the moment the diligence has to get sharper, not looser. When you are the only bidder you can be sloppy on price and still win. When the bid widens, your underwriting is the edge. If you run your numbers yourself (I hope you all are!), as I still do, you need a deal analyzer. And guess what, I just built one, free for you as a reader of the newsletter 🙂 .

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Nashville Market Corner: Inventory Up, But So Are Prices.

Let’s talk Nashville, which is looking like a leading indicator of where the real estate market is nationally.

Single-family inventory in the city proper rose to 5.46 months of supply, up big (33%) from the prior 30-day period. Average active listings increased 9% to 2,090, and total inventory climbed 7% to 2,849. (RealTracs MLS) The build ran counter to the national trend, where active for-sale inventory turned negative year-over-year for the first time this cycle.

This is more about a slowdown in sales than to a wave of new supply.

New listings fell 21% to 825, and closings dropped 19% to 473. Months of supply, a measure of inventory relative to the pace of sales, widened largely because transactions cooled faster than listings did.

And despite all of this, prices rose and homes sold fast.

The median sale price rose 7% to $650,000, and homes that sold moved more quickly, with average days on market for closed listings falling to 27 from 34. (RealTracs)

For investors, the numbers point to a narrow window of buyer leverage in Nashville even as that leverage shifts back toward sellers across the country. The opening appears concentrated at the upper end of the market: the average active list price stood at $1,095,775, well above the $650,000 median sale.

This pattern is instructive for those of us operating in the Nashville trenches.

The city proper is not mirroring the broader national tightening; instead, it is offering a brief period of relative balance at the premium segment. Sellers at the high end appear disciplined—new listings contracted sharply, which limits the risk of a sudden flood—but demand has cooled enough to give buyers breathing room on properties listed above the median.

As default skeptics, we view I development with caution rather than celebration. The median price advance of 7% confirms underlying strength, supported by Nashville’s structural advantages: sustained job growth in key sectors, continued in-migration, and constrained developable land in the core. Yet the drop in closings reminds us that higher borrowing costs and selective buyer caution can still slow absorption. Days on market remain historically low at 27, signaling that well-priced, desirable homes continue to move without extended exposure.

In other words, this looks not like weakness in the market, but normalization after years of compressed supply.

Stay tuned.

My Skeptical Take

Our housing data sucks. (as I’ve lamented many times before).

Almost every headline is built on data that looks backward.

“Foreclosures up 26%” sound spooky, until you see it is really just normalization off a low base.

The most-quoted inventory and sales numbers still describe a buyer’s market that the real-time data says is already ending. Even the inflation numbers we get are lagging and particular to a short term energy spike. As Mr Buffett has said:

We, as real estate operators, have an edge and its not access to data; everyone has the data now.

The edge is reading the leading version of it and being willing to act before the crowd.

So, the real-time inventory series flipped negative this week while demand held positive year-over-year and rates ground higher. If that holds, the “wait for the buyer’s market to deepen” plan that so many sidelined buyers are running may turn out to be a plan to miss the turn. I would rather be early and underwritten to today’s rates than late and chasing a narrative that already moved. My ears are perked, with my eyes looking over the horizon at how the bond market reacts over the coming 3-6 weeks.

As always, this is one investor’s read of the data, not advice for your specific situation. Run your own numbers, and if you want the framework I run mine through, it’s all in the book.

Until next time. Stay Curious. Stay Skeptical.

Herzliche Grüße,

-The Skeptical Investor

—

P.S. Want to level up your real estate game?

You can consult with me, The Skeptical Investor! Get professional advice from someone who actually owns, operates, and brokers real estate.

Want to Grow? - Get clarity on how to grow your business or scale.

Stuck? - Get answers to your problem, let's hop on the phone and figure it out.

No "guru" trying to sell you an expensive course. No BS. No fluff. Only results.

I'll give you my frank, brutally honest advice. Book a call with me today.

It’s 2026. Be an owner.

Schedule your 1-on-1 call now.

Today’s Read Time: 9 minutes

This week, we’re talkin’ oil backs down below $100/barrel, home builders pull permits, and the new Fed Chair telegraphs what he has in mind for the future.

Also: Nashville Class A rentals just turned positive, 6+ months ahead of peer Sun Belt cities.

Let’s get into it.

Today’s Interest Rate: 6.65%

(flat from this time last week, 30-yr mortgage)

Same level as last Friday, after a four-day +23 basis point repricing the week before that. The bond market looked at this week’s incoming data and decided to wait.

The Weekly 3 in News:

1. Kevin Warsh, sworn in as Fed Chair on Friday May 22, delivered a first speech promising “inflation lower, growth stronger, real take-home pay higher.” The framing was deliberately bilateral. Hawkish commentators expected an inflation-first message; they did not get one. (CNN, May 22; Invezz, May 22)

2. WTI crude closed Friday around $98 per barrel, down roughly 4% on the week, after Iran de-escalation headlines midweek and a Khamenei statement Friday on enriched uranium. The peak two weeks ago was ~ $108. (Trading Economics WTI; FXDailyReport, May 22)

3. April housing starts came in at 1.465M annual run rate, down 2.8% MoM; new single-family starts collapsed 9.0% MoM. But April permits printed at 1.442M, up 5.8% MoM. Builders pulled paper (ie got approved building permits) at a brisk pace and then didn’t break ground, fearful of higher for longer interest rates. (Census, May 21)

Bonus! Housing Analyst Logan Mohtashami’s weekly inventory tracker is showing lower inventories: +1.38% YoY a week ago to +0.89% YoY for the week ending May 22, the biggest single-week deceleration in months. Active inventory rose 16,373 units this week against 20,037 in the same week of 2025. Pending sales are up 9.8% YoY. In summary: demand is intact; but sellers are pulling back and not putting their home on the market. (HousingWire, May 23)

A Few Fun Things Happening in Nashville This Week

• Full Moon Pickin’ Party, Percy Warner Equestrian Center, Friday May 29 from 6 to 10 PM. First Pickin’ Party of the 2026 season. Bluegrass under the stars: Backroads Grass, Amy Alvey & The Home Team Advantage, The Green Hillsbillies. $25, kids under 12 free. Proceeds benefit Friends of Warner Parks. (Warner Parks)

• Music City Rodeo + headliner trifecta at Bridgestone, Thursday through Saturday May 28 to 30. PRCA ProRodeo every night, then a country headliner. Thursday is Miranda Lambert, Friday is Charley Crockett, Saturday is Jon Pardi. Three nights of rodeo and country royalty in the building that anchors downtown. Tickets at musiccityrodeo.com. The kind of week that reminds you why Nashville is THE live music capital.

Bonus - Local Rodeo

Nearby Cheatham County had it’s rodeo this past weekend, which I attended. It was a full-on mud bowl, and it was fantastic.

Was at a party before hand, and I even got up on the bull.

Obligatory picture below.

Didn’t do too bad. But wow, it’s not as easy as it looks (this was not my first Rodeo.)

Ok, enough of that, now back to business…

Builders Pulled Paper. They Didn’t Break Ground.

Fresh April housing data dropped Wednesday, and the headline was easy to misread.

Total housing starts were at a annual run rate (SAAR) of 1.465 million, down 2.8% month-over-month, but up 4.6% year-over-year. Single-family starts were at 930,000, down 9.0% MoM, a meaningful drop. Multifamily 5+ starts rebounded modestly to 529,000 after a soft March. (U.S. Census, May 21)

But building permits came in at 1.442 million, up 5.8% MoM, down only 0.2% year-over-year. (Census, May 21)

This is a bearish signal on new deliveries.

Key Takeaway: permits lead starts; starts lead deliveries; deliveries determine the supply that competes with the asset we as investors own. Thus, lower numbers like this are bullish/inflationary for rents.

So what happened in April?

Mortgage rates spiked: the 30-year per rose from a low around 6.31% in mid-April to 6.56% by early May, while the MND daily index touched 6.66% on May 13. (Freddie Mac PMMS; MBA Weekly Survey)

Builders who had been planning to break ground in April looked at their rate-locked cost-of-capital, looked at their pipeline, and chose to wait.

Maybe a few weeks, maybe a few months.

The paperwork still got pulled because permits run with longer lead times, but the shovels didn’t hit the dirt.

This pattern is consistent with what builders historically do in a volatile interest rate environment.

They preserve optionality. They keep the land entitled, the paper filed, and the capital deployed on existing in-progress projects.

When rates settle, they start. When rates rise further, they don’t.

For our purposes, the most important takeaway from a 9.0% MoM single-family starts drop is not “the homebuilding industry is collapsing.” It is “the supply that would otherwise hit the market in 2027 may now be smaller than the consensus expected.”

Permits at 1.44M SAAR is consistent with roughly 1.3 to 1.4M annual deliveries in the 12 to 18 months ahead. That is meaningfully below the 1.5 to 1.6M needed to maintain a balanced national market, given household formation that the Joint Center for Housing Studies estimates at roughly 1.0 to 1.2M new households per year plus the replacement demand of an aging stock.

Plus, the permits print is not the only data point. April NAHB Housing Market Index improved (see below), inventory is collapsing (see below), and purchase mortgage applications, while down 4% WoW, are not down on a YoY basis.

Builder Sentiment Up. Just Not Above 50.

The NAHB Housing Market Index for May printed at 37, up 3 points month-over-month, beating consensus of 35. (NAHB, May 18) Current sales conditions rose 3, future sales rose 3, traffic of prospective buyers rose 3.

That sounds like a good print, and on the margins it is.

But it is also the 25th consecutive month with a reading below the 50 break-even line that separates “more builders optimistic than pessimistic” from its opposite. The last time the HMI printed above 50 was in mid-2023. (NAHB historical data)

Fewer Price Cuts?

The underbelly of the May report is even more interesting.

The share of builders cutting prices fell from 36% in April to 32% in May, the lowest in seven months. But the average price cut grew from 5% to 6%. Translation: fewer builders are discounting, but the ones who are have to discount harder. (NAHB, May 18) Sales incentives ran at 61%, the 14th consecutive month at or above 60%. The structural mismatch between asking price and what the consumer can afford is still the dominant feature of the new-build market.

My Take: This is the picture you would expect at the trough of a building cycle. Builders are not happy. But they are also no longer panicking, and the marginal builder is no longer accepting heavily discounted offer prices. That second piece is a leading indicator for a pricing power come back, which is bullish for existing rental stock because the squeeze on the build side translates into less competition for renters in 2027.

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Is the Bond Market Finally Admitting it Was Wrong?

Two weeks ago, in my article Forget Inflation. Watch the Labor Market., my argument was that the bond market had repriced the rate-cut trade on the back of an inflation print that was really an energy volatility story.

Whew, say that 3 times fast.

April CPI inflation was running at at 3.8%, April PPI at 6.0%, and the bond market priced “zero cuts in 2026” at roughly 70% likelihood. (BLS CPI release, May 12; BLS PPI release, May 13; Polymarket)

This week, we got three pieces of evidence that support my theory: the bond market may be offsides (and thus interest rates will come down).

1)) Oil receded back below $100.

WTI peaked at roughly $108 the week of May 8, then drifted lower into Friday May 22 as Iran de-escalation headlines hit the tape and Saudi Arabia’s production posture eased. Friday’s close was approximately $98, down 4% on the week. (Trading Economics WTI)

That matters because the entire bond-market case for “no cuts in 2026” was built on the assumption that energy stays elevated through summer and that the headline CPI prints continue to run hot. If oil sits at $98 through June, the May and June CPI prints will be cooler than April’s, perhaps materially so.

The risk premium embedded in oil right now is best framed against the Scary Movie 7 thesis from March: the Strait of Hormuz tax on world oil prices has been a structural anti-feature since at least the 2010s. The energy spike of the last six weeks was that tax compounding with a tighter inventory backdrop, not a fundamental shift in inflation or prices.

As the headline risk eases, the tax declines. As the tax declines, the inflation prints should cool.

2)) Warsh’s first speech as Fed Chair.

Sworn in at the White House on Friday May 22, Kevin Warsh delivered remarks that were striking for one reason: what they did not say.

He did not promise inflation as job one and he did not commit to keeping policy restrictive until inflation hit 2%.

He framed his Fed as growth-friendly: “inflation can be lower, growth stronger, real take-home pay higher.” (Invezz, May 22; CNN, May 22) He also explicitly framed his future Fed reign as “reform-oriented,” which is the language a Chair uses when he intends to depart from his predecessor’s framework.

The bilateral framing matters because Warsh inherits an FOMC with four members who have been openly against cutting rates (and potentially politically opposed to the current Administration).

A committee with that internal structure does not produce bold moves. It produces small, hesitant ones, and Warsh’s bilateral rhetoric appears to be an attempt to thread that needle and keep the dovish wing engaged, while the hawkish wing manages downside inflation risk.

The bond-market implication, which I wrote about two weeks ago, is that Warsh may move on the balance sheet before he moves on the funds rate. Accelerating quantitative tightening would tighten financial conditions without forcing a politically expensive rate hike. Two-sided risk language plus QT acceleration is a reasonable read of the June 17 setup, in my humble opinion.

3)) Inventory growth is collapsing.

Contrary to popular belief, weekly active-inventory housing numbers are still showing inventory dropping.

Last week it stepped down from +1.49% the week of May 8, to +1.38% the week of May 15, to +0.89% the week of May 22. This single-week deceleration of 0.49 percentage points is roughly five times the prior pace. (HousingWire, May 23)

Why does this matter for rate-cuts?

Because the bond market’s inflation worry is largely a shelter cost worry. Shelter is nearly 33% of the CPI inflation number, and shelter inflation lags both actual rents and home prices by roughly 12 months. If active for-sale inventory growth flips negative this summer, the cooling shelter print that the Fed has been waiting for would arrive later, not sooner, and at a higher base than the consensus had built into models.

That is hawkish for shelter inflation, which sounds bad for future interest rate cuts.

But here is the second-order effect:

If shelter inflation stays sticky for structural reasons (low inventory) rather than cyclical reasons (overheated demand), the Fed has to weigh the cost of holding restrictive policy against an inflation print it cannot fix with restrictive policy.

This is the moment the Fed historically pivots toward growth, and lowers rates.

My Thought Process: Why Rate Cuts are in Order.

First, the front end of the bond market may be mispricing 2026.

Polymarket is telling us that folks see a 70% chance of “zero cuts,” true. But I think this looks like a momentum trade by traders who have not yet reset to the new inflation information. If oil sits at $98 through June, the CPI prints cool, and Warsh signals balance-sheet acceleration at the June 17 meeting, the cut-count contract should drift back toward “one or two cuts in 2026.” All this within the next four to six weeks.

Second, mortgage rates have probably topped for this cycle.

The 30-year mortgage at 6.65% is consistent with a 10-year Treasury yield near 4.55%, and the 10-year peak this month was approximately 4.62%. If the long-run inflation expectation does not get repeated in June, the 10-year sinks lower from here, and the 30-year sinks with it. That does not mean rates “crash”; that means the asymmetric risk on rates increasing from this level is way down and overall rates are modestly down, as opposed to the consensus now which is modestly up.

Third, the operator’s window has shifted from “wait for clarity” to “buy first, ask questions later.”

The clearest tell of a market bottom is when the macro picture is contradictory and the consensus is wrong. Right now the macro picture appears contradictory: we have 8 straight weeks of S&P gains (Motley Fool, May 22) against a 74-year-low consumer sentiment, a hawkish FOMC dissent count against a growth-friendly new Chair, inflation that’s hot, but driven by an energy shock that may already be unwinding.

Markets do not give you certainty; they give you contradiction, and they reward people who position correctly during contradiction.

I think this is where we are.

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Nashville Corner: Super Bowl LXIV Coming to Nashville in 2030!

The Titans will have a new stadium next year and that usually brings one big new thing: a super bowl hosting opportunity.

And Nashville just clinched it.

Yes, Nashville has been selected to host the Super Bowl 2030, and Legendary CBS broadcaster Jim Nantz is fired up!

On the city hosting the game, Nantz espoused the magic of the music city, saying,

“I tell people, Nashville is a special place like no other.”

Nantz predicts the game will be "the greatest event" ever hosted, with massive pregame show live from downtown Broadway, similar to the 2025 celebration in New Orleans’ French Quarter. (Tennessean)

Fun fact, Nantz is a Tennessean, as of 2021. He, of course, has a little something different in his country home outside the city.

Pretty slick.

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My Skeptical Take

After last week’s inflation numbers, I am - let’s call it - 20% more positive than I was the week previous.

The bond market priced the inflation panic of two weeks ago, and this week three quiet data points appeared that may begin to unwind that stance.

At the same time, housing inventory growth is collapsing toward zero on a YoY basis, with the latest week showing the biggest deceleration in months.

Case in point: here in Nashville, Class A rent just turned positive, six to twelve months ahead of peer Sun Belt metros.

None of these is a single-data-point case for the rate-cut trade reawakening.

But all of them, in combination, may be.

The macro picture this week was genuinely contradictory: equity markets at record highs, consumer sentiment at a 74-year low, builder sentiment 25 months below 50, mortgage rates near a yearly high, oil cracking lower into the Memorial Day weekend, a new Fed Chair signaling reform. Contradiction is the bottom-formation pattern. Clarity is the top-formation pattern.

Earl Nightingale, the motivational broadcaster who put the line on tape in 1956, defined success this way:

“Success is the progressive realization of a worthy goal or ideal.”

The word in that sentence that earns its keep is progressive.

Not the moment of arrival.

The realization. The continuous, compounding work of moving in the right direction.

We real estate operators feel that in their bones.

The thesis this week is not that rates will get slashed at the new Fed’s first meeting June 17. The thesis is that the deals you underwrite this month, the financing relationships you stack now, the amazing broker you contact today, the buy-list you build into Q3, the rent-roll discipline you enforce at every renewal, the underwriting standards you refuse to abandon when other operators do…. those are the progressive realization.

The interest rate cut, when it comes, and it will come, is the moment the rest of the market notices what you have already been building toward.

That is the definition of success that survives a contradictory macro environment.

So the disciplined operator prepares for the reawakening of the cut trade without betting the portfolio on its timing.

Until next time. Stay Curious. Stay Skeptical.

Herzliche Grüße,

-The Skeptical Investor

—

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Today’s Read Time: 11 minutes

This week, we’re talkin’ April inflation report ran hot at 3.8%, the bond market freaked out, mortgage rates whipsawed back to 6.65%, and the Fed-cut path got priced out.

I’m taking the other side.

Plus — the details on Nashville’s largest development project ever, The Oracle Development.

Let’s get into it.

Today’s Interest Rate: 6.65%

(☝️ .23%!! from this time last week, 30-yr mortgage)

Bond market sold off hard after the April CPI/PPI prints. Three weeks ago we were at 6.40%. Last Friday at 6.42%. This Friday at 6.65%.

The Weekly 3 in News:

1. Both April inflation reports were hot. CPI was 3.8% and PPI (aka wholesale producer prices) was 6.0%, YoY — the hottest reading since May 2023 and March 2022, respectively. But, importantly, energy is doing 40%+ of the move as core inflation, taking out volatile food and energy prices, held at 2.8% YoY. Nevertheless, the market saw the headline and panicked. (BLS, May 12)

2. Homes Are Selling. US pending home sales rose 9.6% year-over-year in the four weeks ending May 10, reaching their highest level since 2022 — declining mortgage rates in Jan-April may have pulled buyers off the sidelines, but mortgage rates already climbing back to 6.65%. Yet, a tighter supply, with new listings down for a third straight week should help keep inventory relatively suppressed (see below for more). (Inman/Redfin)

3. Businesses are Building. March core capital goods orders jumped 3.3%, the biggest gain since 2020 and far above the 0.5% consensus. Capital goods orders are a leading indicator of business investment, a strong signal that companies are committing capital driving GDP growth (this is likely also from pull-forward orders ahead of expected price hikes from the Iran conflict (Reuters).

A Few Fun Things Happening in Nashville This Week

• Trace Adkins at the Ryman — Fri May 22 & Sat May 23, 8 PM. Two nights of late-spring country at the mother church. Carolyn Dawn Johnson opens Saturday. The kind of Ryman weekend that reminds you why people moved here in the first place. (Ryman)

• The Agency Nashville’s “Executive Landing” launches. Announced May 12. A concierge relocation service targeted at HNW corporate transferees and execs moving to Middle Tennessee. Very COOL! The capital is moving in, and so are the people. (Morningstar PR Wire)

Producer Prices Are On The Rise

The market freaked this past week. Inflation is on the rise once again.

If CPI was the data point that grabbed the headlines this week, PPI was the data point that should have, IMO.

April producer prices rose 1.4% in a single month — the largest monthly jump since March 2022, the deep tail of the original inflation wave. On a year-over-year basis, the index rose 6.0%, the largest annual move since December 2022. Roughly 60% of the increase came from services. The core measure — excluding food, energy, and trade services — was +0.6%. (BLS, May 13)

This is the problem: What rolls into PPI today rolls into CPI tomorrow. Core inflation (ex food, energy, trade) ran +0.6% in a single month, which says the producer-side stickiness is not just an energy passthrough. Services prices could be accelerating into a softening labor backdrop.

For us in real estate, the PPI matters in two specific ways.

First, the materials and labor cost stack for anyone who builds, renovates, or maintains.

Second, the PPI is what insurance companies look at to price next year’s homeowners and commercial insurance premiums. Replacement cost to rebuild your home is a PPI-driven number. Florida, California, Texas operators saw their premiums double in 2024-2025 and are still recovering.

Watch those insurance premiums.

And yet… the inflation PPI surprise is largely an energy story, which is a Strait of Hormuz story.

Strip energy and the picture is relatively muted — core PPI is +0.6% on the month, which is hot but not catastrophic. Services prices in PPI have historically been a noisy series, and you can find single-month jumps of this size every couple of years that don’t roll into anything durable. The hottest single piece of services PPI in April was wholesale margins — not wages, not productivity. Margins are mean-reverting. So this inflation report is probably an energy-plus-margin spike, not a structural reacceleration.

Counter-counter point: that’s true if WTI cooperates from here. If WTI sits above $100 through summer, May and June PPI will be uglier than April.

Counter-Counter-Counter point: keep reading…(I’m more worried about the labor market).

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The Bond Market May Be Offsides.

In my humble opinion, the next move by the newly refreshed Federal Reserve will be a cut in interest rates based on the labor market’s status, not inflation.

This is not consensus, which right now is:

Inflation reaccelerated. The Fed is on hold. Warsh is incoming and he’s a hawk. Rates higher for longer. No cuts in 2026. Could even be a hike.

• Polymarket has 0 Fed cuts in 2026 at ~70% implied probability.

• CME FedWatch shows similar: the June meeting at >98% no-interest rate change, and September cut odds at ~48%, down from ~70% two weeks ago. (CME FedWatch).

That collapse happened in 4 days, almost entirely on the CPI and PPI reports.

The market repriced from “the cut path is alive” to “the cut path is dead” on two data points that both have a single shared driver, energy and its passthroughs.

I think the market is offsides.

A re-read of Ben Graham’s classic book The Intelligent Investor may be in order.

The Labor Market May Be Quietly Weakening

Headline unemployment held at 4.3% in April. The headline payroll print was +115,000 — a “beat” against +55K consensus. The market read those two numbers, said “labor’s fine,” and went home. (BLS, May 8)

The market may be is wrong. Look at the second derivatives.

Labor force participation fell to 61.8% in April, the lowest reading since October 2021, and the fifth straight monthly decline. (BLS) The household survey lost 226,000 workers in a single month. The Fed and the bond market love to point at the aging-demographics explanation for participation declines, and that’s part of the story, structurally. But a 5-straight-month decline of this slope is not demographics. It is people who used to be in the labor force, looking for work, no longer looking. That’s not a tight labor market. That’s a labor market where searches are getting more discouraging.

Now look at the part-time number.

The number of people working part-time for economic reasons — meaning they want full-time work but cannot find it, or their hours got cut — jumped +445,000 in a single month to 4.9 million in April. (BLS, Table A-8) That is the largest single-month spike in this series since the 2020 pandemic shock. Outside of pandemic data, you have to go back to the 2009 recovery period to find moves of that size. This is what late-cycle labor stress looks like — before the headline unemployment rate moves. Hours get cut. Full-time gets converted to part-time. Then the layoffs come, and only then does the U-3 unemployment rate spike.

JOLTS, the most lagging of the lagging indicators, showed hiring jumping to 5.6 million in March (+655,000). (BLS JOLTS, May 5) Initial claims are still running 190–220K weekly, with continuing claims at 1.766M, a two-year low. (DOL ETA Weekly Claims) Those data points are real. They are also stale, they describe the March-April labor market, before the latest gas price spike, before the May 12-13 CPI/PPI repricing, before the financial conditions tightening that’s about to happen as mortgage rates rip back up.

My read: the labor market is following the typical late-cycle slowdown pattern. The order of operations is: participation falls → hours fall → part-time-for-economic-reasons spikes → claims rise → headline unemployment moves.

We’re already three steps in.

The bond market will likley soon acknowledge this labor weakness, and then the Fed will cut.

Nashville Corner: The Massive Oracle Development is Materializing

While you I have been arguing about inflation prints and labor participation rates, the single largest commercial-real-estate story in Nashville quietly moved forward this week.

On May 13, Oracle unveiled the renderings of its planned pedestrian bridge across the Cumberland River. Designed by London firm Foster + Partners, the people who built Apple Park and the Hong Kong airport.

It will be a steel cable-stayed structure, 863 feet long, 16 feet wide, with a cast-in-place concrete deck. It connects Taylor Street in Germantown to Cowan Street and River North Boulevard on the East Bank. (Foster + Partners renderings)

Construction begins August 2026. Two-year build. (WSMV, May 14)

What the Bridge Actually Is

The pedestrian bridge is not a vanity infrastructure project. It is a publicly mandated obligation that Oracle agreed to as part of the 2021 $175 million deal.

Under that deal, Oracle gets a 50% property tax rebate for up to 25 years on the East Bank campus, capped at $175M.

In exchange, Oracle commits to:

• $1.2 billion in capital investment (Nashville.gov, 2021)

• 8,500 jobs at an average salary of $110,000 — by 2031

• $175 million in public infrastructure: the pedestrian bridge, brownfield remediation, a sewer pump station, and a riverfront public park

Tennessee also kicked in $65 million in state grants. Total subsidy package: ~$240M public dollars against a then-projected $1.2B private investment.

The bridge is the most visible piece of the public-infrastructure obligation. When Oracle files for the bridge permit and starts construction in August, they are putting steel on the ground that they cannot easily walk away from.

That’s the signal.

What’s Actually Built (and Not Built)

It's also important to take an accounting of what has and has not happened in the deal.

Here’s the Oracle Nashville scorecard as of mid-May 2026:

Done:

• 70-acre site assembled along the East Bank. (Granthammond Real Estate)

• Demolition permits filed for 500,000+ sq ft of existing industrial buildings.

• Active site clearing underway. (The Real Deal, January 2026)

• Metro Council approved updated zoning in April 2026. (Fox 17)

• Oracle signed a 116,000 sq ft interim lease at the Neuhoff District (1320 Adams St) in March 2026, putting employees right across the river from the future campus.

• Foster + Partners pedestrian bridge renderings unveiled (May 13).

In progress:

• Phase 1 buildings under design — first opening targeted for 2028 to 2030 (sources disagree on the exact year). (HereNashville)

• Bridge construction starts August 2026; targeted completion 2028.

• Nobu-branded luxury hotel planned for the campus.

Not yet:

• The 8,500 jobs! (More on this below).

• Full 2.7 million sq ft of office, retail, and hospitality. (Master plan timeline: 2031.)

The Project May be Lagging Behind

In April 2026, the Tennessee Star reported — based on filings with the Tennessee Department of Economic and Community Development — that Oracle has created a net total of 7 jobs in Nashville since the 2021 headquarters relocation announcement. (Tennessee Star, April 22, 2026)

Seven jobs.

Against a commitment of 8,500.

Now — the picture is more nuanced than that headline.

Oracle reported approximately 901 Nashville-based jobs before its March 31, 2026 global layoff round (which cut ~30,000 Oracle employees worldwide — the largest workforce reduction in the company’s 49-year history). (Axios Nashville, April 13) So Oracle clearly has more than 7 people in Nashville. But the net gain of jobs attributable specifically to the relocation commitment — the number the state tracks for deal compliance — is 7.

So the gap between the commitment and the delivery is large. Larger than the boosters acknowledge.

What This Means for Real Estate Investors

Three takeaways for those of us actually deploying capital:

One — the long-term East Bank / Germantown thesis is intact, but the timeline has slipped. Germantown median home prices are sitting around $666,750, essentially flat YoY (−0.25%). (Houzeo) That is not a market pricing in 8,500 Oracle jobs landing nearby in 2026 or 2027. The market is pricing in eventual Oracle delivery on a 2029-2031 horizon. If you bought Germantown in 2022 expecting a 2024-2025 Oracle-driven price pop, you’ve been underwater on your thesis for two years.

Two — the bridge starting construction in August 2026 is the inflection point. Steel in the ground is harder to walk away from than a press release. Once that bridge breaks ground, the East Bank development thesis has a physical anchor. The Phase 1 buildings opening 2028-2030 are still the main event, but the bridge is the visible signal between now and then that the deal is real.

Three — the “tax incentives buy guaranteed jobs” model is on trial here.Nashville bet $175M of foregone tax revenue plus $65M of state grants on Oracle hitting 8,500 jobs. Five years in, the delivered count (net) is 7. Even if Oracle hits 4,000 jobs by 2031 — half their pledge — Nashville will have made a defensible deal because of the $1.2B capital investment that materially raises East Bank land values. But Nashville taxpayers should not pretend the 8,500 number is a base case. It is a ceiling.

Counterpoint: Oracle’s CEO

Oracle’s CEO Safra Catz has said repeatedly through 2025 and 2026 that the company is doing a strategic AI pivot and that the Nashville campus is positioned as the operational hub of Oracle’s healthcare-AI and cloud-AI businesses.

The Oracle March 26, 2026 press release on scaling Nashville offices specifically called out cloud engineering, software development, and AI product roles as the growth areas. The March 31 layoffs hit Cerner consulting and ERP sectors of the company, not the AI buildout teams.

If you read the layoffs and the campus expansion together, the implication is: Oracle is shedding legacy headcount in Austin and other locations while building net-new in Nashville for AI-specific roles. Under that read, the next 12-24 months could see Nashville hiring accelerate dramatically, not stall further.

The bridge is also a 24-month build that requires Oracle to keep paying contractors, designers, and Foster + Partners regardless of macro conditions. You don’t engage one of the most expensive architecture firms in the world to design a pedestrian bridge if you’re hedging your bets on whether to follow through.

So the optimistic case is real: AI pivot + capital commitment + bridge construction = an Oracle that delivers 5,000-7,000 of the 8,500 jobs by 2031, even if not all of them.

The Verdict: I think 3,000-5,000 jobs by 2031 is the realistic range. 8,500 is a stretch.

But 3,000-5,000 well-paid tech jobs in the East Bank corridor, combined with $1.2B of capital investment, will be explosive for Nashville real estate values. The bridge announcement this week is the data point that converts the Oracle story from “deal on paper” to “deal under construction.” The campus itself opens 2028-2030.

The project is looking very positive for the Music City.

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My Skeptical Take

This week’s through-line is both optimistic and contrarian.

The bond market is already pricing in no Fed cuts in 2026 on the back of an inflation worry that is fundamentally an energy story, which is almost by definition temporary. But the market is offsides, folks read the inflation print and ignored the labor print sitting right next to it.

Perhaps the market is merely testing the new Fed Chair Warsh, as it has pretty much every Fed Chair in history? Today could be his first day on the job.

Either way, labor should be our and the Fed’s primary focus.

Labor force participation fell to 61.8% — the lowest since October 2021. The fifth straight monthly decline. Workers forced into part-time jobs spiked +445,000 in a single month to 4.9 million. Real wages fell.

A cut into high inflation is not historically unprecedented.

In 2008, when I was working on Capitol Hill as a younger man, Ben Bernanke cut rates into inflation that was running 5.6% YoY in July, because the labor market was breaking.

In 2001, Greenspan cut into a CPI running 3.4% because the economy was rolling over. The Fed cuts when labor cracks, not when inflation behaves.

The lesson of every recent cycle is that the rate-cut catalyst is labor, not inflation.

The bond market just front-ran the wrong catalyst.

Until next time. Stay Curious. Stay Skeptical.

Herzliche Grüße,

-The Skeptical Investor

—

P.S. Want to level up your real estate game?

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Today’s Read Time: 11 minutes

This week, we’re talkin’ the end of the Powell era at the Federal Reserve, April jobs report looked great on the surface yet problems brew, purchase mortgages are the highest since 1990, and the advertised rent is often fiction.

Plus, Nashville’s suburbs are booming! — Rutherford, Williamson, Sumner, Wilson counties are all catching their stride.

Let’s get into it.

Today’s Interest Rate: 6.42%

(👇 .02% from this time last week, 30-yr mortgage)

Bond markets repriced the rate-cut path this week spiking mortgage rates up last week. But the longer term story is more interesting — more on that below.

The Weekly 3 in News:

1. Powell hands the gavel to Kevin Warsh on Friday, May 15. Senate Banking Comittee advanced his nomination 13–11 on April 29 — the first fully partisan Fed-chair committee vote in history. What a sad state of affairs, especilly since I left Capitol Hill…The final Senate vote is expected this week. (CNBC, Apr 29)

2. April Jobs come in up double! (+115K vs. consensus of +55K) — a “beat” on the headline number. But labor force participation fell to 61.8%, the 5th straight monthly decline, and part-time jumped +445K in a single month to 4.9M. Could be a nothing burger but something to watch. (BLS, May 8)

3. Consumer Sentiment is still in the pitts. May came in at 48.2 — the lowest reading in the survey’s 74-year history. Same week the stock market closed at a record high. Consumers feel as bad as they ever have. But folks with assets (~70% of Americans) are doing just fine. (UMich; CNBC, May 8)

Bonus! — Yardi Matrix this week revised its 2026 multifamily completion forecast up to 458,731 units, +2% from the prior 415–441K range. (Yardi, May 6) I wrote last week that the supply wave was cresting. Yardi just complicated that — a bit. More on what this actually means below.

A Few Fun Things Happening in Nashville This Week

• Nashville Rosé Festival — Saturday May 16, East Park. Six-plus hours of unlimited pours from 50+ rosés, with food trucks, music, and a portion of proceeds going to the Tennessee Breast Cancer Coalition. The kind of Saturday afternoon that reminds you why people keep moving here. (Visit Music City)

• Nashville SC vs. LAFC — Sunday May 17, 7:00 PM, GEODIS Park. The biggest MLS home draw of the month. GEODIS Park has been quietly anchoring the Wedgewood-Houston development pipeline since the day it opened. (Nashville SC)

The Warsh Era Starts Friday

Friday, May 15, Powell’s term as Federal Reserve Chair ends.

Frankly, good.

He and his predecessor Janet Yellen dismissed the obvious inflation signals for ~a year in 2021-2022 and I will never forgive them for that (even though his tenure since has been measured and well done, but that’s just too late).

You shouldn’t either.

So now we turn to a new Fed leader, Kevin Warsh.

If the Senate floor vote lands where Senate Banking did — 13–11, fully partisan, the first such Fed-chair committee vote in history — Kevin Warsh takes the chair Friday.

And this handover matters more for real estate investors than the bond market is pricing in.

A Change In the Fed Chair Will Bring Lower Rates

The Fed funds rate (aka “interest rates”) is what most headlines go after. But this only deals with assets priced 2 years or less. Leaving out 30-yr mortgage rates.

Thus, the long end of the curve (aka the bond market) is what actually sets mortgage rates, and the value of every cash-flowing asset in this country. Warsh has spent the last two years telegraphing that he intends on turning the Fed’s eye to the bond market.

In his April 21 confirmation testimony, Warsh laid out three commitments that should be on every landlord’s whiteboard:

1. “Regime change” in how monetary policy is conducted. He wants a smaller Fed footprint, a clearer rules-based framework, and an end to what he’s called “Fed creep” into industrial policy.

2. Preference for the rate tool over the balance sheet. He’s said directly that the balance sheet “disproportionately helps those with financial assets” (Motley Fool, May 2). Translation: he wants to shrink the Fed’s $7T-plus balance sheet.

3. Gradually unwinding the balance sheet — quantitative tightening (QT), continued and accelerated.

Powell’s Fed paused QT in early 2024 and ran it at a trickle for two years. A Warsh Fed appears willing to push QT harder.

Just look at how the Fed’s balance sheet has ballooned in recent years.

$9 Trillion in 2022?!….This is why Inflation.

Here is the part that doesn’t show up on CNBC.

More QT (aka selling bonds off the balance sheet) means fewer Treasuries the Fed is holding, which means more Treasuries the private market has to absorb. More private-market supply at the long end = higher long-term yields, even if the funds rate stays put or eventually drifts lower.

The 10-year Treasury sits around 4.4% as I write this.

The historical mortgage-to-10-year spread is 160–180 basis points (aka 1.6%-1.8%). We’re currently running closer to 200 basis points today.

A Warsh-led acceleration of QT can keep the spread wide and the 10-year sticky — meaning mortgage rates in the low-to-mid 6s could be the floor, not the ceiling, for the next 12 months.

For commercial multifamily, the implication is uglier. Cap rates don’t move with the funds rate — they move with the 10-year and the credit spread. If the 10-year holds 4.3–4.6% through year-end while the credit spread for multifamily widens (we’re seeing some of this in Sun Belt distressed paper already), 5.75% cap rates do not become 5.25% cap rates next year. They become 5.85%.

This is the opposite of what every “buy now, refi later” operator in 2024 was assuming.

And is bullish for the future of multifamily operators.

But Warsh is entering a Fed where the FOMC committee (who votes on interest rates) is sharply divided.

And because of this, it would be a sage decision from Warsh to focus on the bond market/balance sheet in order to lower mortgage rates, and not wade through the swap of short term interest rate cuts.

Steelman — the bull case for Warsh-as-RE-tailwind:

But, what if this is wrong?

The strongest opposing argument to my point, is politics: Warsh is Trump’s chair.

Trump has been openly hostile to high rates and has publicly criticized Powell for not cutting fast enough. A Warsh Fed that meaningfully tightens financial conditions — by accelerating QT and keeping long rates elevated — would be picking a fight with the White House.

So the steelman is: Warsh’s public hawkish framing is a confirmation strategy. Once confirmed, the actual policy path will be much more dovish than he’s signaling, and the long end could rally hard if QT pauses again.

I think there’s something to this — Warsh is too smart to fight the President he serves under in his first six months. But the bond market is not pricing in this scenario one bit.

Polymarket has June FOMC at 97.4% no change in rates, and the year-end 2026 path implies just a single cut at best. If the dovish steelman is right, every long-duration asset is mispriced — and that’s an unusually large asymmetric upside. It’s the trade I’d take if I were running a hedge fund…But I’m not.

As an operator in real estate underwriting deals this week, I’m planning around what Warsh has said.

Not what he maybe, could, might do.

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Asking Rent Is a Lie

Here’s a thought that should be keeping multifamily owners awake, especially in the booming Sun Belt.

Yardi Matrix said the national average advertised asking rent hit $1,758 in April (Yardi). That’s the headline most operators are pricing off — the number that your broker quotes when pitching you a deal.

But the advertised rent and the effective rent are two very different numbers right now.

The gap is concessions.

The continuing offer of free months of rent, parking credits, gift cards, “look-and-lease” specials, and waived application fees that landlords are throwing at prospects to fill units. Concessions don’t show up in the asking rent. They show up in the effective rent the tenant actually pays over a 12-month lease.

And in 2026, concessions across the Sun Belt are still absolutely enormous.

CRE Daily and ALN data for early 2026:

• Denver: ~58% of properties offering at least one month free. National leader.

• Phoenix: Over 50% concession rate. Some Class-A luxury buildings are advertising 3.5 months free on multi-bedroom units.

• Jacksonville: Over 50%.

• Raleigh: Over 50%.

• Austin: Over 50%.

For comparison, gateway markets like NYC, San Francisco, Boston, and Chicago — markets that didn’t overbuild and have been ripping for rent growth — are running concession rates in the 10–20% range.

Concessions are normal, but many locations are still quite elevated.

This is the most bifurcated rent market we’ve seen in two decades.

The math is unforgiving.

Let’s look at an example: A unit advertised at $1,758/month with 1.5 months free over a 12-month lease ($2,637 in concessions, divided across 12 months) is actually $1,758 × 12 = $21,096 minus $2,637 = $18,459 in annual rent revenue. Divided by 12 = $1,539/month effective rent.

That’s a 12.5% discount to the asking number.

In Phoenix, a $2,200 luxury unit offering 3.5 months free is collecting roughly $18,700 over 12 months — $1,558 effective rent. A 29% discount on the asking number. (CALCULATED: $2,200 × (12 − 3.5) ÷ 12 = $1,558.33, derived from CRE Daily concession reporting.)

The Yardi headline asking rent of $1,758 — flat YoY at -0.2% (Yardi) — implies a market that has stabilized. The effective rent paints a very different picture: in five Sun Belt metros, rents have collapsed 10–20% below what the headline says.

Why does this matter to investors who don’t own in those metros?

Three reasons:

1. Comparable sales math is broken in many deals right now. Cap rates calculated off asking rent overstate NOI. Brokers — including the decent ones — generally price off a trailing 12-month effective rent roll, but pro forma renewals are often calculated off the asking number. If your underwriting assumes the trailing concessions burn off at renewal and you collect asking rent in year two, you’re betting on a market shift that hasn’t happened yet and may not happen until 2027 at the earliest. (So always hire a great broker ;).

2. The “rent trough has been confirmed” narrative needs an asterisk. I wrote last week that two independent reads (Yardi and Apartment List) confirmed rents had bottomed. That’s still true on the asking side and on average nationally. On the effective side, in the metros that built hard in 2021, rents are still falling — they’re just falling via the concession line item instead of the asking number. Yardi’s own forecast revision up for 2026 supply (458,731 units, +2% from prior — Yardi, May 6) means more supply has to be filled with more concessions. Effective rents in Phoenix and Denver may not bottom until late 2026 or early 2027.

3. The opportunity set for buyers is different than it looks. A 1980s Phoenix C+ asset listed at a 5.5% cap on asking rent is likely a 4.5% cap on effective rent — meaningfully overpriced. The same asset two zip codes over, in a submarket with less new supply (think established 1990s product, not lease-up Class A), might be a 6.0% cap on effective rent with real upside as concessions burn off. The institutional money has figured this out. The small investor is missing this story if they are only looking at current NOI / CAP rates.

** Side note, I’d watch NYC. The developing political situation could smash down cap rats/rents in the next 12 months.

Steelman — the bull case on Sun Belt asking rents:

Again, lets do a little devil’s advocate and make the argument for the opposite case.

The strongest opposing argument is the one institutional buyers are using to justify writing checks into Phoenix, Denver, and Austin right now: concessions are temporary. They are a tool deployed during lease-up and tight rental cycles.

Emphasis on cycles.

As deliveries slow into 2027 and absorption catches up (CBRE just reported Q1 absorption finally beat completions for the first time in three quarters — CBRE), concessions in these metros will fall back toward the 10–15% range. At which point the asking rent becomes the effective rent, and an underwriting that anticipated that transition will look brilliant.

This is a legitimate and defensible argument. Concessions historically are cyclical, not structural.

And I agree with it.

But, the question is just timing. Which is extremely difficult even for us experienced operators.

Here’s where one needs to be careful with the steelman: the supply wave in the Sun Belt is not done. It’s slowing fast, especially in areas like my home market of Nashville, but it’s not over.

2026 completions are slightly up. And housing analyst Jay Parsons sees Orlando, Austin, Miami, Nashville, and Phoenix at 4–5% stock additions through 2027. The 2027 delivery cohort that everyone is hoping shrinks is still being permitted right now. Phoenix multifamily permits are up year-over-year in 2025. The concession burn-off may not start in earnest until 2028.

Counter point to the counter point: these places are booming!

Case in point, the Nashville Chamber of Commerce sees 70+ people per day moving to the area. And its not stopping.

So, how to guard yourself against a still too much supply problem?

Act institutional.

An institutional real estate buyer, with a 10-year hold, underwriting short term 2027–2028 concessions is taking a reasonable bet. A retail or syndicator buyer with a 3–5 year hold needs to assume effective rent is the rent. Mixed-up timeframes is how deals lose money.

And lastly,,,lets look at some of that Nashville growth.

A Quick Nashville Insight: Nashville’s Suburbs Catching Their Stride

For a decade, when anyone said “Nashville is growing,” they meant Nashville proper — the urban core. The Gulch, East Nashville, Germantown, the SoBro stadium district. That’s where the cranes went up. That’s where the corporate relocations are landing. That’s where the price-per-square-foot kept setting records.

That story is still very much true. But it’s no longer the interesting story.

The Suburbs are booming! Middle Tennessee suburbs — Rutherford, Williamson, Sumner, Wilson — are finally getting their moment.

Davidson County added approximately 9,300 residents in 2025, the #1 raw growth number in Tennessee. Real headline, real growth. But on a rate basis, Davidson grew about 1.3% — solidly in the middle of the Middle Tennessee pack.

Rutherford County (Murfreesboro, Smyrna, La Vergne) grew more than 13% from April 2020 to mid-2025 — roughly 3% per year, more than double the Davidson rate (Fox Moving 2026 Migration Report).

Williamson County (Franklin, Brentwood) has been one of the fastest-growing U.S. counties for a decade and added another estimated 12,000-plus residents in 2025. Sumner (Hendersonville, Gallatin) and Wilson (Mt. Juliet, Lebanon) are growing at similar or higher rates as well.

What’s driving it isn’t a single corporate announcement. It’s the compounding of three structural forces:

One — corporate relocations are landing in the suburbs as often as the core now.In-N-Out is building a 100,000-square-foot, $125.5 million Eastern Territory office in Franklin, opening late this year. Mars Petcare’s expanded headquarters is in Franklin. Williamson County’s tax base is broadening every quarter.

Two — remote work has redrawn the catchment. Twenty-six percent of recent Nashville-area movers are remote workers for non-Tennessee companies (Fox Moving). A remote worker doesn’t need a 15-minute commute to The Gulch. She needs a good school district, a quiet street, and a backyard. Murfreesboro and Hendersonville have all three at $200/sq ft. Davidson costs roughly twice that.

Three — Tennessee’s unemployment edge is widening. The state print stayed at 3.6% in February (TN.gov, Apr 16), well below the national 4.3%. The Nashville MSA is around 3.0%. That’s a job-creation story strong enough to pull workers from neighboring states, and most of those new hires can’t or won’t pay Williamson County prices on day one. They go to Rutherford or Wilson and bid for inventory.

For investors, here’s what changed this week and why it matters.

The April Greater Nashville Realtors report (released May 7) printed: Davidson single-family median $503,340, up just 0.7% YoY (Nashville Post, May 7). Months of supply in the core is now around 6 — the textbook line between buyer’s and seller’s market.

The suburbs are running a different race. Rutherford and Wilson are seeing rent growth and price appreciation in the 3–5% YoY range, with absorption tight, days-on-market in the 40s, and much less new multifamily competition than Davidson. Translation: better cap rates, healthier rent growth, less concession pressure, and demographic tailwinds that compound for the next decade.

I’m not telling you to abandon Davidson. I own here and I’ll keep owning here. The core has its own story — Oracle’s East Bank campus, Starbucks’s $100M corporate hub, the long-term institutional appeal of a downtown that’s still in its early innings.

I’m telling you the suburbs are no longer the “second-best” Middle Tennessee trade. They’re the operator’s window — the place where a disciplined buyer with a solid relationship, a renovation crew, and a 5–10 year hold can still buy at numbers that make actual sense.

That’s the kind of opportunity that doesn’t stay open forever. The institutional money has been mostly buying Davidson and Williamson because those are the markets the screens cover. Rutherford and Wilson aren’t in most institutional buyboxes — they’re just under the screening minimum. That’s the gap.

For a Nashville-area investor who actually knows the streets, the schools, the developments, the path of growth, and knows which renovation will pay back fastest in a Murfreesboro single-family vs. a Madison fourplex — this is your window. Find a great broker to work with. (Like us!)

My Skeptical Take

There is a bullish through-line for us real estate investors this week — but it’s a more disciplined one than last week’s.

Powell hands the gavel to Warsh on Friday. The long end of the curve is going to stay sticky.

The labor market is frozen, not falling. That’s bad for would-be buyers and good for landlords with stabilized assets.

The average mortgage check just hit an all-time high since 1990. The transaction count is still weak, but the quality of buyer demand is concentrated at the top.

Rental rates are far more complicated than the headlines — and the operators who recognize that, and underwrite to effective rent, are the ones who don’t give back the basis they earned in 2024–2025.

And Nashville’s suburbs are finally getting their stride. Rutherford, Williamson, Sumner, Wilson — these are not the screens institutional money runs. That’s the gap an operator can exploit.

The cycle has changed shape since 2022. The easy money — bid up basis, ride the rate-cut narrative, refi in 18 months, sell to the next syndicator — that trade is gone.

It’s been gone for two years.

The investors who pretend it’s coming back are the ones writing 70-cents-on-the-dollar of replacement cost checks to the next buyer.

The trade that is here is more boring and more durable: discipline, basis, submarket selection, renovation eye, tenant quality, real cash flow at the wire, no rate-cut assumptions, no asking-rent assumptions…

Stop it with the “Phoenix bounces back in 18 months” story you are telling yourself.

In the words of Howard Marks:

“Being too far ahead of your time is indistinguishable from being wrong.”

The investors who were too early to the post-supply Sun Belt trade in 2024 are still grinding through their concessions. The ones who waited and bought right basis in late 2025 and 2026 are looking smart. The ones who hold tight, find the operator’s window in the right submarkets, and underwrite to effective rent — they’re the ones who will look smart 18 months from now.

I’m not bulled up on the whole market this week. I’m bulled up on the operators who know the difference between asking and effective, between core and suburbs, between cycle hope and basis discipline.

Famed investor Ken McElroy said as much this week. And I agreed.

That’s a more selective bull case than last week’s. But it’s also a more honest one.

I’m (still) bulled up.

Until next time. Stay Curious. Stay Skeptical.

Herzliche Grüße,

-The Skeptical Investor

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This week, we’re talkin’ a lot!

A job market that looks strong-ish, a consumer that feels miserable but keeps spending, a multifamily rent picture that just turned positive, and the $875 billion commercial real estate maturity wall, that’s actually shrinking.

Also, Nashville keeps doing its whole growing and attracting new businesses thing.

The whole issue has one thread: the headlines scream crisis, the data says calm.

Let’s get into it.

Today’s Interest Rate: 6.29%

(👇 .10% from this time last week, 30-yr mortgage. Fannie Mae now projects ~6.3% for Q2.)

The Weekly 3 in News:

1. March jobs report beats expectations, but not for the reasons you think. Nonfarm payrolls were UP big +178k (vs. 59k consensus), unemployment improved marginally to 4.3% — but mostly because people left the labor force entirely. Wage growth +3.5% is OK, but still outpacing inflation (BLS).

2. Bank CEOs flat-out disagree with the consumer sentiment polls. KeyCorp’s Chris Gorman called the consumer “in good shape” on CNBC Friday. JPM’s Dimon said the same. BofA’s Moynihan said spending is “solid” and credit quality is “stable” (CNBC).

3. Yardi Matrix: multifamily rents posted a monthly gain in March, a change in momentum— But Q1 growth was just 0.2%, the weakest March YoY since 2012, and the 2026 supply forecast just got revised up. Nevertheless with new supply continuing its fall, future rents are expected to start reaccelerating this year (Yardi).

Quickly: An Interest Rate Status Update

Rates are… well, almost back to where we started 2026. Down slightly. Volatile as hell in between.

The year started off right with the 30-yr mortgage rates continuing their decent to ~6.28% in early January to a low of around 6.00% in mid-February. Then the Iran war kicked off.

On Feb. 28, oil spiked, the March inflation CPI print came in at 3.3%, and rates ran right back up — peaking near 6.58% at end of March.

We’ve since pulled back to 6.29% as the ceasefire took hold and markets repriced lower inflation expectations.

Fannie Mae’s official forecast still calls for 6.3% by Q2 and 5.7% by year-end. But watch out. Directionally yes, I think rates drift lower into 2027, but anyone who lived through the last 60 days knows how quickly that can reverse.

The takeaway for investors: don’t wait for the “perfect rate window” that keeps moving. Just run your numbers and make sure you’re cash flowing. A hot take: rates at 6.29% today with a ceasefire holding is a better environment than crazy low interest rates and prices and inflation, well, inflating.

The Sentiment-vs-Data Disconnect

Before we get into our main topic, let’s set the table. Because this is the story of 2026 so far, and every topic this week flows through it.

Consumer sentiment just hit a 74-year record low.

The preliminary April reading from the Univ. Michigan Surveys of Consumers came in at 47.6 — down 10.7% from March’s 53.3, and the lowest reading since the survey began in 1952.

Lower than the Great Recession.

Lower than COVID.

Lower than the 2022 inflation peak.

And look at the trajectory. Sentiment was actually climbing from November through February — 51.0 → 52.9 → 56.4 → 56.6. Then the Iran war began on February 28, and the floor dropped out.

And yet.

Bank CEOs — the guys sitting on live transaction data for millions of American consumers, in real time — just told us this week that none of that pessimism is showing up in actual spending or credit behavior.

One of these data sources is a phone survey asking people how they feel about the economy. The other is what those same people actually did with their credit cards and deposit accounts last quarter. I know which one I trust.

The other, politics.

People just feel pessimistic (and like to express this to phone surveyors) when decisions are being made in politics / policy that they don't agree with or are controversial.

Also, a big caveat in the survey data, U. Michigan’s own survey director Joanne Hsu flagged that 98% of the April interviews were completed before the April 7 ceasefire announcement. Which means that 47.6 reading captured the peak of war-driven panic — not where consumers are today.

The way the conflict settles will likely drive sentiment.

But then again, does that even matter?

I'm labeling this negative sentiment more noise than signal.

Let’s look at some hard labor market data next.

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Jobs: Strong on the Surface, Soft Underneath

March nonfarm payrolls came in at +178,000, blowing past the 59k consensus. The unemployment rate “edged lower” to 4.3%.

Sounds great.

Count me skeptical.

Here’s what the headlines aren’t telling you:

Look at that chart. Three things jump out:

• February was a -133k decline (revised from -92k). March didn’t grow the labor market — it dug out of a hole.

• The unemployment “improvement” came from a shrinking labor force, not a hiring surge.

• Average hourly earnings grew just 0.2% MoM and +3.5% YoY — the lowest annual print since May 2021.

And what I couldn’t fit on the chart:

• Long-term unemployed up 322k over the year to 1.8 million.

• Discouraged workers up 144k in March alone to 510k.

• U-6 underemployment edged up to 8%.

• Gains were concentrated in health care (+76k). Federal government employment keeps declining.

Narrow leadership. Thinning participation. Cooling wages.

Consumer: Feels Terrible, Spends Anyway

And yet — and this is the whole point — the actual consumer data is just fine.

Again, from the bank Q1 earnings calls this week:

• JPMorgan (Dimon): Consumer spending growth in Q1 was faster than the same period a year ago, fueled by employment and wages. JPM reduced its loan loss reserves. Dimon’s shareholder letter: “The US economy remained resilient… consumers still earning and spending and businesses still healthy.”

• Bank of America (Moynihan): EPS of $1.11, highest in nearly two decades. Consumer banking net income up 21%. Consumer loan balances up 4%. Quote: “Consumer spending remained solid and credit quality stayed stable.”

• KeyCorp (Gorman) on CNBC this Friday: Consumer is in “good shape.”EPS up 33% YoY. Record investment banking fees.

Three different banks. Same message.

True, JPM also reported steady increases in revolving credit card balances — so yes, some of that spending is going on credit. And Dimon, as he always does, warned about an “increasingly complex set of risks.” (Jamie Dimon warning about complex risks is like the sun rising in the east, he likes to cry wolf.)

But the direction of the data from the people who watch consumer money move is clear.

Credit quality is holding.

Spending is up.

Loans are getting paid back.

The U. Michigan sentiment survey says we’re living through the worst economy in 74 years. The banks say we’re spending more than last year.

Why this matters

Hang onto this idea, because it comes through in the state of multifamily real estate.

Which happends to be our next topic de jour.

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Ok, back to business.

The Housing Supply Cliff Meets the Maturity Wall

Is the consumer healthy enough to keep paying rent, filling apartments, and absorbing the supply wave?

The answer, based on what the banks just told us, is yes.

But the “but” is big. And that’s where we’re headed next.

This is the story that matters most for 2026 and into 2027. And almost nobody is connecting the two dots.

#1: The Multifamily Supply Cliff is Here.

Yardi Matrix (a leading commercial real estate market intelligence and data platform) just dropped its Q1 report on April 8th, and the results are seem to confirm what we’ve been saying for months…

The supply wave of new apartments has crested, and is falling.

But, Yardi’s April 8 report has two competing narratives I found interesting:

The bullish headline: Multifamily rents rose in March — the first monthly gain since last summer. Broadly distributed across markets.

My skeptical reading:

• Q1 rent growth totaled just $4 per month, or 0.2%.

• That’s “less than normal for a year’s first quarter.”

• It’s the weakest March YoY growth since 2012.

• Average advertised rent: $1,741.

Here’s where the market is actually breaking down — and this is the critical chart for understanding 2026:

The low-supply coastal/Midwest markets are carrying the entire national number. Every market on the “winners” list built almost nothing during the 2020-2023 ZERP-era boom. Every market on the “losers” list built way too much.

If you build lots of housing, rents don’t inflate.

If you don’t build, rents go up.

It’s not complicated. And it’s exactly what I’ve been saying for the last six months.

But Here’s The Twist

Yardi just revised its completions forecast UP for 2026, 2027, and 2028:

More than 1.3 million units coming over the next three years. The supply wave peaked in 2024 at 685k completions. We’re coming off that peak, but we’re coming off it slowly.

The context matters: market-rate new supply in 2028 is still expected to be 31% lower than 2025’s peak. So supply IS moderating. Just not as fast as everyone hoped.

What that means for your rental income:

• Sun Belt operators: Another 12-18 months of pain before absorption catches up.

• Coastal/Midwest operators: Rent growth is already happening and will accelerate.

• Nashville (my home market): Sun Belt — but benefiting from the HQ migration story (more on that in a minute), which should clear the additional supply faster than Austin or Phoenix.

#2: The Debt Maturity Wall Is Cresting

$875 billion in commercial real estate debt matures in 2026 per the Mortgage Bankers Association — a 9% decrease from 2025’s peak of $957 billion.

The maturity wall is actually shrinking.

Almost nobody is reporting it that way.

Now the part that doesn’t get talked about enough — because most folks get this story wrong.

You’ve probably seen the spoooooky headlines:

“$1.5 trillion CRE debt wall!”

“Trillions in maturities coming due!” etc.

The numbers vary because they combine multiple years, but the implication is always the same: the sky is about to fall.

It’s not.

The Mortgage Bankers Association just released its 2025 Commercial Real Estate Survey of Loan Maturity Volumes (February 2026), and the data tells a completely different story:

What the MBA data actually shows:

• 2024: $929 billion matured.

• 2025: $957 billion matured — the peak.

• 2026: $875 billion scheduled to mature — a 9% decrease from 2025.

• 2027 (projected): $652 billion — another 25% drop.