Notes to reader: We need to consider a number of issues when parsing the data on this report. We, as landlords and SFR investors, need to consider what classes of housing stock we concentrate on, as well as how well our properties cash flow.
In this regard, SFR investors normally invest in the portion of housing stock that makes the most sense to our bottom lines (i.e. properties that yield the highest rental income, while taking into consideration the areas and neighborhoods of our properties). This normally entails us to stay within the most affordable sectors, which are always in the highest demand.
The current capitalization rates of the properties I purchased three years ago, based on my purchase prices, are between 8-9%. Based on current market value, these cap rates are about 6-7%. In the NoVA exurbs, these numbers are within the historical average, especially when considering that these rentals are not older than 25 years old and are located in solid class B to B+ neighborhoods.
We as investors, make our money and stay in business through cash flow, not pure speculation. Any price appreciation we derive is gravy. However, when I consider my rental yields with tax benefits, my annual return is about 10%. In addition, my overall portfolio of properties continues to appreciate, albeit at about 3% a year. Even though the study’s numbers are nationwide, there are plenty of areas that are fertile ground for long term investment.
In terms of the investment cycle, I would consider this to be similar to what we experienced in the early 1990’s, just before Congress approved sweeping tax reduction legislation that bolstered housing.
In this regard, I predict that the current bipartisan housing legislation being discussed will eventually pass in some form. The centerpiece of this contemplated legislation revolves around raising the capital gains exclusion to as high as $1 million, from the current $250-$500k levels. This will loosen up supply and help to revert the housing market to a more balanced one.
Keep in mind that the proposed rise in the owner-occupied housing capital gains exclusions will not even fully adjust for inflation when compared to when the current levels were adopted in 1997.
In other words, it’s always a good time to invest, as long as we stay focused on yields.
Introduction:
Preliminary Year-over-Year (YoY) HPA was 1.1% in February 2026 (-1.3% inflation adjusted), down from 1.6% a month ago, 3.1% in February 2025, and 6.3% in February 2020. February 2026 has the lowest rate of YoY HPA since our series start in 2013. A reversion to the mean is underway due to elevated home prices during the pandemic, higher interest rates since 2022, and a diminishing pool of qualified entry-level buyers. A strong reversion is underway in metros in the South and West. Based on an analysis of ICE data, YoY HPA is projected to be 1.3% in March and 0.9% through the first two weeks of April.
Key February Takeaways
- HPA Continues to Decelerate in 2026: Preliminary YoY HPA was 1.1% in February 2026 (-1.3% inflation adjusted). This is the lowest HPA performance of any month since our series start in 2013. Nominal YoY HPA is projected to continue to moderate in 2026 to 1.3% in March and 0.9% through the first two weeks of April.
- With wages now generally growing faster than HPA, housing affordability is slowly improving.
- Regional Divergence Remains Wide: The metro-level YoY HPA range spans 17.0 ppts, from -9.6% in Cape Coral, FL to +8.6% in Kansas City, MO. Every major metro in California, Texas, and Florida posted price growth below the national average.
- Months’ remaining supply stayed roughly flat across all price tiers: National months’ supply held constant at 4.9 months, the same as January.
- Market Softening in Many Metros: 43 of the 53 largest metros remained in seller’s market territory (<7 months of supply), but more than half (28) already show negative YoY HPA. Metros with the highest supply (Cape Coral, North Port, Miami) all posted negative YoY HPA.
Home Price Appreciation
National YoY HPA for February 2026 was 1.1%, down from 1.6% a month ago, and down from 3.1% a year ago and 6.3% in February 2020. Based on our analysis of ICE data, YoY HPA is expected to be 1.3% in March and 0.9% through the first two weeks of April. Our base case projection is for YoY HPA to be 0 to +1.0% by year-end 2026.
Research paper continues;
Evidently, JD Vance struck out after a 21 hour negotiation session. No dice on Iran discontinuing their nuclear program. He’s returning to Washington.
And, away we go! The current situation is untenable, so the first stages of WW3 will resume shortly. The great reset is on the horizon!
I’m again reminded of my favorite poem by a favor poet: first paragraph.
Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
End to Ukraine war may be close, say Moscow and Kyiv
Moscow and Kyiv have both signalled the end of the war in Ukraine may be in sight, as chilling footage shows a Ukrainian drone brigade killing 8,000 Russian troops in a single month.
The video shows stricken Russian soldiers desperately trying to fend off approaching drones, throwing sticks and swatting at them in a futile bid to survive.
The grim scenes emerged as both sides begin a tense 32-hour truce to mark Easter in the Orthodox calendar.
Russia’s hardline foreign minister issued a surprise statement that ‘the prospect of a political and diplomatic settlement is on the horizon.’
Vladimir Putin’s 76-year-old top diplomat laced this with his usual invective against the West – in particular the EU – but appeared to concede that an end to the bloody four year conflict could be in sight.
At the same time, Ukraine’s top negotiator Lt-Gen Kyrylo Budanov, 40, made clear Russia is shifting its stance.
‘They all understand the war needs to end. That’s why they are negotiating,’ he told Bloomberg.
‘I don’t think it will be long.’
https://www.dailymail.co.uk/news/article-15724343/amp/End-Ukraine-war-close-Moscow-Kyiv-agree-chilling-video-shows-Ukrainian-drone.html
Palantir has this technology down pat. In other words, lets get this Ukrainian war finished up so we all can focus on Iran!
This should be Greg’s cue!
In the meantime, Netanyahu (not his real name) had this to say, Israel under my leadership will continue to fight Iran’s terror regime and its proxies, unlike Erdogan who accommodates them and massacred his own Kurdish citizens.
So now he’s picking on Turkey also!
Thank Steve, i’m done talking about Iran/Ukraine. I feel it’s entirely fake and we are being lied to. The fakeness isn’t just what bothers me, it’s that all the local authority figures which include religious leaders go along with it. I assume if I had a job title or elected position, I would have to keep my mouth shut as well. There has to be a control factor besides losing one’s position. However most of these people, if they did lose their high salary jobs, know they would be making sandwiches somewhere, so maybe money/pensions/prestige are the controlling factors. Top down agendas, with legal loopholes to move thru, that the commoners cannot counter.
I tried renting a billboard in a high traffic area, with a basic truth message and was denied. I was told it went against the common good of our community. What a crock of crap! Maybe one day a group can find a way to break thru the concrete and expose the frauds, so that something is done about it. Presently we just have internet forums.
That was a commendable effort on the Billboard! It does seem the best way to spread Truth is on the web. We have to believe the people who are supposed to find it will!
Very interesting Greg,
What you said is an example of “Free Speech” being an empty promise. There really is no such thing as free speech especially in the blue states. I used to live in Massachusetts and never will live there again. Those who had the guts to speak out against corruption, mismanagement, or any opposing viewpoint against the powerful interests would suddenly get threatening phone calls, the police would harass them at their house or pull them over on traffic stops. Any attempt to speak out in media channels would get blocked. The tax authorities in MA would flag those peoples tax returns for audits. This happens all over the country. Free speech and individual rights are an empty promise especially if it goes against the powerful interests.
I can understand why you are cynical sometimes. This Iran war really pisses me off the way it has been handled so far especially the way Trump pulled a TACO last Tuesday especially on the false promise of a settlement that has never happened and never will if there was not a real war in the first place. If this was a real war, Iran would have been smashed by now and Russia and China would also have gotten involved. This is not a real war unless the power plants, oil refineries, the oil ports and the government buildings were smashed . There is an unusual restraint in this “war”. This is not a war . The Ukraine “war” was not a real war as Russia did nothing when so many “red lines ” have been crossed. This end time stuff and wars are a joke as I am coming to believe that the cavalry is NOT coming. We humans who see the light have to be the cavalry against a very formidable enemy that owns this planet.
The powers that be do not want the end times as promised in Revelations because they would lose control, however, they are playing the end times game to control us and demoralize us. The powers that be obviously want permanent control . The only reassuring thing here is that nothing is permanent and things will change. How and when they will change we do not know. The world could come to an end tomorrow or things could drastically improve for us. The only certain thing is that we do not know.
There’s an upshot to the libtard Democrats taking control of the levers of government again. I can’t think of a better way to raise the potential rental pool than buy overwhelming borders with bottom-feeding forever-renters.
I think wages are only slightly going up as the minimum wage requirements by the States raised it. Looking at the rents in my area, people must be spending most of the income on rent. After utilities, it’s even higher, although some places have water or electric included. I wouldn’t offer that as an owner, as a tenant could leave the faucets on, how would one protect against that?
Make sure all the utilities are in their name. All the tax jurisdictions I invested allow for turnover of the water into the tenant’s name. If they don’t pay, the water gets shut off. Then you can deduct any existing municipal water balance from their security deposit.
Investing in SFR’s is not for everybody. It’s actually not for most people. The savvy landlord investors I know make good money. They see this as an opportunity. I don’t invest in New York City, I haven’t recommended Florida or Texas for a few years now and have stated this a number of times in the past. I don’t invest in the deep blue States anymore. I never would even contemplate California, regardless of the location.
But then again, I don’t recommend living in any of those States, save Texas. Here’s what people don’t talk about. In Florida and Texas, the housing and building regulations are much more loose and allow for a great expansion in the housing supply. These two states are not overburdened with regulations and this is normal for a freer housing market. In the deep blue States, there are tight restrictions. Understand the markets. That’s half the work.
Again, it comes down to risk preference and understanding. The typical investors I know can do a lot of the work themselves or know exactly what needs to be done. For those who don’t understand housing and don’t know how to do the work of maintenance and such, I don’t recommend it. You have to want to be interested in it.
Here’s an example. I hired a couple experienced workers to gut and rehab a kitchen on one of my houses last year. It was a complete demo and reconfiguration with plumbing supply and electric circuits installed. The entire job cost me about $14,500, which included new appliances.
I hired a guy for $3,500 to do all of the work, including running the plumbing and running a circuit from the breaker panel for a new microwave. I knew exactly what needed to be done, told him what needed to be done, and I sourced and bought all the materials myself. This included all new kitchen cabinets and flooring. If I hired a contractor to do all this work it probably would have touched $30,000. My cost savings is the difference between making that house a good investment and bankruptcy. My fellow investors know exactly what I’m talking about.
I’ve been doing this for 25 years and to be honest with you, I’m hoping for some sort of downturn, because I’ve de-leveraged a balance sheet and continue to pay down debt with existing cash flow.
That’s a wonderful answer, and I agree there is obvious stress factors involved. I’m interested to try it out for just one property, and learn by doing it. However affordable places get bought up quick, right now not much left in my area. And as you noted this is a long term investment approach to get one’s money back. Paying people’s late taxes is a way to attain a house, but there is a waiting period, and I feel it’s kinda sleazy to do that. Yet in my area, it’s probably the only way I would be able to get started.