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Nick Gerli

@nickgerli1

Jan 13

Florida condo crash happening in real-time.

Seller cut price to $256k.

Back in 2022, it was valued at over $1 million.

75% haircut in 3 years. And 50% over the last 10 years.

This condo building was built in the 1970s, and apparently has huge deferred maintenance and repairs. So existing condo owners / new buyers are getting stuck with the bill.

($326k special assessment on this unit, also needs renovation. So the buyer's all-in cost is probably closer to $700k).

In this ZIP code, condo values have dropped about 10% in aggregate the last 3 years. But clearly some units, in older buildings with huge assessments, are getting hit much worse than market average.

1) condos are an interesting asset class, because if you are in the wrong building, at the wrong time, the declines in value can be immense.

This condo would have likely sold for close to $900k-1 million in 2021/22.

Now its listed for $256k.

2) This is because in its building in Downtown St. Pete they found $45 million in needed repairs.

The building was built in 1975. And post-Surfside collapse, many of these older properties are being caught up on deferred repairs from the last couple of decades.

Read 6 tweets

Nick Gerli

@nickgerli1

Jan 9

Multifamily vacancy rates are skyrocketing in Sun Belt Markets.

Apartmentlist is reporting we're now at the highest multifamily vacancy since 2017. And rent cuts are getting deep.

Austin is #1, at -21%.
Fort Myers, CoSprings, Phoenix, North Port, Raleigh, San Antonio, Atlanta, Denver, Lakeland, and Orlando are all at -10% or bigger.

Now - many of these markets had big rental rate run-ups after the pandemic, so rents can still appear expensive to some renters.

But they're officially getting more affordable, and rents will likely drop further in 2026 given the big surge in vacancies over the last couple of years.

1) A different way to view this data is by comparison today's rents to pre-pandemic.

San Francisco rents are up YoY, but basically flat from pre-pandemic, due to how much they dropped in 2020-21.

Austin rents are now also basically flat with pre-pandemic, up only 2.2%, due to how much they have dropped.

A host of other markets - San Antonio, Denver, San Jose, New Orleans, Minneapolis, CoSprings, and Houston - has rents up 10% from pre-pandemic.

2) If rent growth is only 10-15% over 6 years, that is not so good, as underlying inflation has been much higher than that.

Wages are up 25% or so in the same span.

Property taxes and insurance are up by much more.

So in many markets, rents are failing to keep up with wage growth and inflation.

Read 4 tweets

Nick Gerli

@nickgerli1

Jan 4

Something big just happened in the U.S. Housing Market.

As of the end of 2025, there are now more 6%+ rate mortgage holders than sub-3%.

Meaning that the dreaded Mortgage Rate "Lock-In" Effect is fading.

Since more existing owners have a higher rate, that means more have a payment and rate closer to "market", which means there will be more incentive to sell - which is actually good news.

The 6%+ mortgage share is now 21.2%, the highest level since 2015, and nearly triple the pandemic low.

This is happening because even in today's depressed sales and refinance environment, each year about 5-6 million Americans take out a new mortgage, now at 6%+ rates.

Expect more upward pressure on new listings and inventory in future years as a result.

1) The one thing keeping inventory constrained, even in the midst of its rebound from the pandemic, has been sellers delisting homes.

And other sellers electing not to list, because they want to keep their low rate.

Now that this mortgage lock-in effect is gradually fading away, it will structurally unlock more supply, and should push inventory up further in 2026 and beyond.

2) Now the already good news is that inventory has grown sigificantly in the last 3 years.

We're now up to 1.1 million listings on the market, as of November 2025, according to Realtor.com, nearly back to pre-pandemic.

Much of this inventory growth is in the South, where prices are now dropping.

But could we see this inventory figure get to say 1.3 or 1.4 million next year, which would be the highest national inventory in over a decade?

Read 15 tweets

Nick Gerli

@nickgerli1

Jan 1

Austin TX is now back to pre-pandemic apartment rents.

Down 21% from peak in summer of 2022.

$1,636/month --> $1,288/month

(I'm now even seeing 2BRs in some apartments at sub-$1,000)

This rental correction is due to a sharp drop in migration/demand, combined with a surge of new apartment development.

At this point, Austin has its cheapest rents on record relative to income.

1) Here's an example of what's out there now.

2BRs going for $950.

This is a complex which is off I-35. A 9-minute drive to the Domain according to Google Maps.

$470 per bedroom.

2) The miraculous thing about this is that Austin, despite the slowdown in migration, is still a demographic beast when it comes to growth.

It's 5-year population growth rate from 2019-2024 is 14.3%.

Which is easily #1 among other large metros.

(Note: it's interesting how every high population growth market during pandemic is now seeing declining values. The boom/bust cycle is real).

Read 10 tweets

Nick Gerli

@nickgerli1

Jan 1

U.S. homebuyer demand is near the lowest level on record.

And there's one reason why: horrendous affordability.

Right now, U.S. homebuyers need to pay 39% of their gross income in order to afford to buy a house entering 2026.

And obviously, no one wants to do that. As a result, sales demand has plummeted to the lowest level in 40 years (only 4.7% of occupied homes sold in 2025 - the lowest since 1982).

Historically, you can see these trends are negatively correlated. Mortgage costs go up, sales velocity down, and vice versa.

Note: the single-biggest determinant of Mortgage Costs is actually not Mortgage Rates. It's prices. Prices going up 50% crushes affordability more than rates going from 4 to 6%.

Lower prices will bring down the Mortgage Cost burden, and allow for more home sales.

1) if we want to re-stimulate the housing market, and make the American dream accessible again, it all comes down bringing down Mortgage Costs and making the housing market more affordable again.

This is what will bring buyers back.

2) But once again, it's not about mortgage rates.

As you can see - a 50% increase in mortgage rates only causes mortgage costs to go up 19%.

While a 50% increase in prices causes mortgage costs to go up 50%.

It's about prices. Always has, always will.

Read 10 tweets

Nick Gerli

@nickgerli1

Dec 11, 2025

For all the people who think Reserve Management Purchases are "QE" - look at this graph.

In an ample reserves system, Fed needs a certain amount of excess reserve assets as a % of bank deposits.

If they don't, a banking crisis could happen. And we're now at the point where reserves could be crossing the threshold from "ample" to "scarce".

Through November, excess reserves fell to 15% of bank deposits, now well below the 15-year average, indicating a tightening of conditions.

Which is why they are now ushering in incremental T-Bill purchases to keep bank reserve growth aligned with bank deposit growth.

In its current form, this it not QE.

However - if they were to expand the amount purchased, and/or buy longer dated securities, it would be QE.

1) There are several metrics you can use to gauge how much reserve liquidity the Fed needs in the system for their "ample reserves" regime - one is GDP, another is M2, but my personal favorite to gauge this is bank deposits.

During the pandemic, Excess Reserves (Bank Reserve + Reverse Repos) surged to 32% of all commercial bank deposits.

This was the "free money" era with massive QE that created the 2021-22 inflation.

Since then, with operation of QT, and general growth in the economy, the excess reserve ratio deleveraged down from 32% to 15%, indicating a tightening of conditions.

2) Of course - current conditions aren't noticeably "tight" - banks are still lending, the economy is still growing.

But there were some hiccups in overnight lending markets in recent months which suggested reserves were running low.

The Fed's Standing Repo Facility, after lying dormant for four years, had usage in November and December.

Indicating some funding stress in the market, that reserves were starting to run below "ample", at least for some market players.

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