Welcome to the Skeptical Investor Newsletter. A frank, hopefully insightful, dive into real estate and financial markets. From one real estate investor to another.

(☝️ .12% 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.

This week, we’re talkin’ the Fed is divided on interest rates, its first 4-dissenter vote since 1992. Housing supply continues down, single-family builder permits are plummeting, and a $100 million corporate bet on Nashville. The Sun Belt is in the early innings of building.

Let’s get into it.

Last issue I wrote that national rents had finally turned in the Yardi Matrix Q1 report — average advertised rent up $5 to $1,750, the first monthly gain since last summer.

This week the April Apartment List report came out and confirmed it:

Two independent shops, two different methodologies, same conclusion. National rent growth is restarting.

The Sun Belt tells the same story but the massive homebuilding there is making the turn slower.

For example, rent growth in Austin is still -5.7% year-over-year. That’s the worst major market — and the one that built the most. If you own there and your underwriting is tight, this is likely the year you stop rent concessions and start nudging rents back up. If your underwriting isn’t tight, this is the year someone like the buyer who just paid $230,508 a door for the Braxton Music City property in Nashville knocks on your door at 70 cents on the dollar of replacement cost.

A tight market separates the great investors from the chaff.

So with rents bottoming and demand resilient — what’s the supply side doing?

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Census released the rescheduled February and March housing data on April 29. The headline number that everyone covered: housing starts at 1.502 million SAAR in March, +10.8% month-over-month. (Census, Apr 29)

That looks like more supply not less.

But, look one column to the right.

Single-family permits: 1,372,000 SAAR — down 10.8% month-over-month, down 7.4% year-over-year. (Census)

Here’s why this matters: permits lead starts by 2-3 months. Starts lead deliveries by 6-9 months. So the +10.8% starts number is the cohort that got greenlit when builders were still optimistic about the rate path. The -10.8% permits number is what’s getting greenlit now, with rates above 6.4% and the NAHB Housing Market Index sitting at 34.

The 2027 single-family delivery cohort is shrinking in real time.

Pair this with the multifamily story: Yardi projects 415,000 to 441,000 apartment deliveries in 2026, down from roughly 600,000 in 2024. Jay Parsons (one of my favorite housing analysts) thinks 2026 will end up under 300,000 once the dust settles. Either way: the supply wave that compressed rents for two years is cresting, and the wave that follows it is meaningfully smaller.

Every time a builder pulls a permit application off the table, its is likley that person remains/becoems a renter.

And it is that is the supply-side mechanic that will drive rent growth in 2027 and 2028.

So, tight supply pipeline, rents turning, demand resilient. Where does it show up first? In the cities where corporate demand is layering in on top of a contracting pipeline.

Cities like the one I happen to live in: Nashville.

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On April 21st, Starbucks announced a $100 million investment in a new Nashville corporate hub. They’re building toward approximately 2,000 employees — 1,200 of them in IT roles — with an average salary of $125,000 a year. They’re opening a temporary office in The Gulch in May and moving into a permanent home at the Peabody Union complex in 2027.

The announcement reportedly “brews bitterness in Seattle.” I’ll take that as a sign we’re doing something right down here.

But Starbucks is not alone, they are the latest chapter in a story that’s been building for years.

Oracle has committed up to $4.5 billion to its East Bank Nashville campus, with 8,500 jobs required by the incentive agreement. Amazon has a 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.

In fact, Nashville just ranked #2 among the 100 largest US metros for job growth and per capita income, per Capital Analytics — right behind Raleigh.

This is what sustained corporate migration looks like from the inside. It doesn’t happen all at once. It compounds. One headquarters becomes a talent magnet. That talent magnet attracts another headquarters. That headquarters brings its vendors and contractors. The vendors and contractors bring their employees. And every one of those people needs a place to live.

Here’s the investor math on just the Starbucks announcement:

2,000 tech workers at $125,000 average salary is a cohort that can comfortably afford $2,200/month in rent — more if they want space in the right neighborhoods. These are not marginal renters; these are the people who underpin rent growth in Germantown, the Gulch, East Nashville, and the Wedgewood-Houston corridor. And because the Gulch office opens in May and the permanent space isn’t until 2027, the actual demand impact from these hires won’t show up in rent data for another 6-12 months. Meaning: if you look at Nashville’s current numbers — average rent around $1,643/month, flat on a trailing 3-month basis, occupancy at 94.3% — and use that as your forward-looking underwrite, you’re potentially buying ahead of a demand pulse that hasn’t fully materialized yet.

I live and own rentals here. I’ve watched this city absorb a delivery wave of roughly 24,000 new apartment units delivered between 2023 and 2024 (~11,800 each year per Northmarq’s Nashville reports), and I won’t sugarcoat it — that has been a LOT of supply to work through, and it has kept rents soft.

But Nashville’s investment market logged $5.1 billion in total real estate volume in 2025 — a 40% jump year-over-year, per The Real Deal. Multifamily captured $1.4 billion of that.

The institutional money is not running away from this city — it’s leaning in.

The development pipeline, meanwhile, is contracting.

The same pattern playing out nationally is playing out here: the cranes that went up in 2022-2023 are wrapping up. 2025 deliveries fell 41% to roughly 7,569 units. New permits are down. The next wave of supply is meaningfully smaller. And into that tightening supply environment, we’re about to layer in 2,000 Starbucks employees, the continued buildout of Oracle’s campus, and whatever corporate announcements are already in the pipeline that we don’t know about yet.

The cresting supply wave hangover from COVID era interest rates = reaccelerating rent growth.

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Ok, back to business.

There is a bullish through-line for us real estate investors:

The Fed split 8-4 — its first 4-dissenter vote in 34 years.

Q1 GDP printed soft on the headline but with structures contracting and productive investment expanding.

Rates ticked up because bond markets are confused too. And mortgage demand still printed +21% YoY despite the rate back-up.

Because rents have stopped falling.

And builders just told you what 2027 supply is going to look like by yanking single-family permits 10.8% in a single month.

Then $100 million walked into a Nashville zip code that’s already #2 in the country for job growth.

You don’t have to squint to see what this lines up to. It’s bullish.

Yes yes, the macro economic outlook will keep being loud through May, when new Fed Chair Warsh takes the chair. Iran will keep doing whatever Iran does. Oil will swing and remain volitile. Some consumer sentiment print will collapse, some will rebound.

But this doesn’t change the structural setup: contracting supply, durable demand, real wage growth, and a for-sale market locked tight enough that scared consumers are renters.

The investors who keep their numbers tight and stay disciplined through this period are about to have the best 18 months of their career. The ones who stretched on rate assumptions and DSCR are going to give back the basis.

That’s the cycle.

In my humble opinion, Nashville (and the Sun Belt in general) is one of the best long-term multifamily stories in the country. You’re not going to get it at a steal right now — smart money has been watching the same data. But you’re also not buying the top. You’re buying a city in growth mode, with a demand runway that most markets would envy.

In the words of Warren Buffett, what we want as investors is to find value:

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” - Warren Buffett

The same is true of real estate.

I’m bulled up.

Until next time. Stay Curious. Stay Skeptical.

Herzliche Grüße,

-The Skeptical Investor

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