The Signal

Permits Fall To 1403K While Build Costs Climb

Building permits printed 1,403K in August, down 2.09 percent from 1,433K. Housing starts fell to 1,275K from 1,309K. Construction spending slipped to $2.158 trillion from $2.168 trillion, and Bisnow reported September 27 that rising costs are stifling US construction projects. Read that as a supply signal, not a demand signal. A 20 foot clear building with 14x14 doors is steel, concrete and site work, the same inputs squeezing every other developer. Fewer starts means existing garage condo stock carries pricing power into 2027.

Industrial production sat at 103.07, flat month over month, so the small business user base is stable rather than expanding. The adjacent self storage print this week was governance, not fundamentals. Prime Group Holdings agreed to pay $20.5 million in SEC penalties tied to an acquisition fund. Inside Self Storage also published on manager compensation, a reminder that self storage carries a payroll line a deeded garage suite does not. No public price per square foot index exists for garage condominiums. Anyone quoting one is estimating.

Elkhart Ships 2027 Iron Into A 51.7 Sentiment Print

Thousands of 2027 model year units are on display at the Elkhart RV Open House this week, with Thor Motor Coach showing updated Class A motorhomes through September 30. Dealers place orders there. Those coaches get delivered in 2027 and need somewhere to sit that is not a suburban driveway. Total vehicle sales ran 17.19 million annualized in August, up 2.58 percent. Real disposable income reached $18.12 trillion. Unemployment held flat at 4.1 percent.

The offset is real. Consumer sentiment dropped to 51.7 from 55.2, down 6.34 percent. Durable goods spending slipped to $2,380.1 billion from $2,404.7 billion. The Outdoor Hospitality Pricing Index eased to 102.0 in September, a third straight decline, with the national nightly rate at $102.22. Owners still own the toys but are spending less to travel with them. Zoning friction helps you. Fort Mill neighbors are fighting a proposed warehouse over traffic and noise, and a divided board backed Lake Norman townhomes near a future CATS station. No collector car value index appeared in today's feed.

10Y At 5.18 Pushes Every Underwriting Assumption Higher

The 10 year Treasury printed 5.18 on September 24 versus 5.11 prior. The 30 year mortgage moved to 7.03 from 6.95. SOFR ticked to 3.90. The 10Y minus 2Y spread widened to 0.36 from 0.31, a 16 percent move, so the curve is steepening from the long end. Floating rate construction debt is not getting cheaper and the permanent takeout is repricing at the same time.

Credit is still open. High yield spreads sit at 2.93, wider by 13 basis points but historically tight. CRE loan delinquency fell to 1.53 percent from 1.56 percent. JPMorgan is weighing a $3.8 billion loan on Extell's condo tower and JLL launched a nontraded REIT for real estate debt, so debt capital is being raised, not withdrawn. Bisnow reported August volume lifted by M&A while single asset sales slumped. Portfolio trades clear. One off deals sit. That pattern argues for presold suites and end user buyers rather than a bet on an institutional exit bid.

Opportunity Zone Reporting Tightens While Cost Segregation Still Works

The Federal Register published a correction on September 28 covering information reporting for Qualified Opportunity Zones plus updated QOF certification and decertification procedures. Plain version: the paperwork around opportunity zone funds is being formalized and tightened. If you hold a garage condo project inside a QOF, filing hygiene now carries more weight than it did.

Separate from that, the everyday mechanic for a suite owner is cost segregation. Say you buy a 1,080 square foot unit. The entire price does not have to sit in a 39 year commercial bucket. A study can carve out the overhead door operator, interior lighting, dedicated power, floor coatings and your share of site improvements such as paving, striping and fencing into 5, 7 and 15 year lives. If you use the suite in a trade or business, Section 179 may reach certain equipment. Today's signals do not state a current bonus depreciation percentage, so confirm the rate for your placed in service year. General information, not tax advice.

We map capital sources across private lenders, family offices and funds, and run cost segregation studies for owners of qualifying commercial property.