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  • Mortgage Rates Hit 7.28%. The Income You Buy Often Won’t Cover the Loan. The Income You Build Might.

    Mortgage Rates Hit 7.28%. The Income You Buy Often Won’t Cover the Loan. The Income You Build Might.

    Graphic reading 7.28%: the 30-year mortgage rate on October 1, 2026, the highest weekly reading since November 2023, with a note that Florida multifamily permits fell 31.2% year to date through July, citing Freddie Mac and NAHB, over a stylized city skyline at dusk.

    Mortgage rates are the highest in nearly three years. Here’s what that changes about buying a Florida rental building — in plain numbers.

    FL Real Estate Insider — Week of October 5, 2026
    By Luis Noronha

    7.28%. That was the average 30-year fixed mortgage rate on October 1, according to Freddie Mac, the government-sponsored company that buys home mortgages from lenders — up from 7.03% a week earlier and 6.34% a year ago. (Freddie Mac — Mortgage Rates Average 7.28%, October 1, 2026) The last week it was higher was November 22, 2023, at 7.29%. (Freddie Mac’s weekly rate history)

    The highest in nearly three years.

    One caveat: that’s a home-loan rate, and loans on apartment buildings are priced differently. I use it because it comes out every week, which makes it the easiest way to track borrowing costs since the Fed’s unanimous rate hike on September 16.

    Why expensive loans change the math

    Here’s the math with made-up numbers, so it’s easy to follow. This is an illustration, not market data.

    Say you buy a small rental building for $2 million. After all expenses except the mortgage, it brings in $120,000 a year. That’s a 6% return on the price.

    You put in $600,000 of your own money and borrow $1.4 million at 7%. To keep it simple, count only the interest: $98,000 a year. What’s left for you is $22,000 — a 3.7% return on your $600,000.

    You’d have earned more paying cash.

    That’s the trap. When a building earns less than its loan costs, borrowing doesn’t boost your return. It shrinks it. At 5%, the same loan would cost $70,000 a year and leave you $50,000 — 8.3% on your cash.

    Opinion, clearly marked: at today’s rates, buying a Florida rental just for the income it already makes usually means the bank earns more from the building than you do. So the better question this fall isn’t “what does this building earn?” It’s “what could it earn?”

    The income you buy vs. the income you build

    CBRE, one of the largest commercial real estate firms, measures a building’s return two ways in its twice-yearly survey. (CBRE — U.S. Cap Rate Survey H1 2026) In plain terms:

    • The income you buy: what the building earns running normally, before any improvements, divided by the price you pay.
    • The income you build: what it earns after you improve it, divided by the price plus what you spent improving it.

    The industry calls the second approach “value-add” — adding value by fixing things.

    Back to the example. Suppose you spend $200,000 fixing the building: rents raised to what similar units get, service contracts like landscaping and trash shopped around, empty units filled. Its income after expenses rises to $170,000. Now the math is $170,000 ÷ $2.2 million = 7.7%, above what the loan costs. Same building, run better. (Again: made-up numbers.)

    That’s the point of this issue. In my view, at today’s rates only the income you build can carry a loan.

    Prices are already moving. CBRE found that in the first half of 2026, the price paid for each dollar of a building’s income went up more for mid- and lower-tier buildings and fixer-uppers than for top-tier, stable ones. (CBRE) That covers all property types, not just apartments, and CBRE says it likely reflects ups and downs (volatility) for buildings with less certain income. Either way, my read is that fixer-uppers cost more per dollar of income than they did.

    Where the fixable buildings are

    Here’s the part I rarely see in the rate headlines: who owns the building.

    A 2024 government survey by HUD, analyzed by the National Multifamily Housing Council (NMHC), shows how ownership changes with building size. Individual investors — people, not companies or funds — own 19.2% of rental homes in properties with 5 to 24 units. In properties with 25 to 49 units, it’s 5.7%. In properties with 50 or more, 4.6%. (NMHC — Who Owns America’s Apartments?, March 24, 2026)

    Professional management shows a similar pattern. HUD’s 2021 survey found that about 22% of the smallest rentals (one to four units) are run by professional managers, compared with 84% of properties with 150 or more units. (HUD — 2021 Rental Housing Finance Survey findings) The survey’s headline numbers don’t cover the sizes in between, so I won’t guess.

    My interpretation, not data: the smaller the building, the more likely its owner runs it personally. That doesn’t mean badly. But it’s where you’re most likely to find rents below market, bills nobody has shopped around in years, and repairs that keep getting put off. That’s exactly what a good manager can fix.

    To be fair, the NMHC author, Chris Bruen, is careful here. On whether the type of owner changes rents, he writes that “relatively little empirical research has been conducted on this topic to date” — in other words, it hasn’t been studied much. My read goes further than the evidence, and I’d rather say so.

    Florida is permitting fewer new competitors

    In August I argued that the housing shortage favors new construction, and last week I said I still do. Here’s what the same shortage means for a building that’s already standing.

    First, almost all new homes in multi-unit buildings go into big buildings. Of the 608,000 new homes the U.S. finished in 2024 in buildings with two or more units, 90.1% were in buildings with 20 or more units and 2.7% in buildings with two to four. (NMHC) That leaves 7.2% for everything from five to 19 units — my math, not NMHC’s.

    Second, Florida is pulling back. In the first seven months of 2026, the number of new homes permitted in Florida in buildings with two or more units fell 31.2% from a year earlier, while nationally that number rose 6.3%. (NAHB Eye on Housing, September 15, 2026) And building costs more: prices of residential building materials, not counting energy, were up 5.1% from a year earlier in August. (NAHB Eye on Housing, September 10, 2026)

    My view: fewer new buildings, and higher costs to build them, both help a well-run existing building. Neither guarantees higher rents. A drop in permits today shows up as fewer finished buildings only later, and a weak rental market can outlast a building slowdown.

    Four ways I think a fixer-upper deal goes wrong

    This is not free money.

    You overpay for the upside. If sellers already price in what the building could earn, you’ve paid for the improvement before you’ve done it.

    The sale price can move against you. In CBRE’s survey, its own real estate professionals were gloomiest about lower-quality (class C) buildings: they expect buyers to pay less for each dollar those buildings earn over the next six months. They were also most pessimistic about “infill” apartments, in areas that are already built up. (CBRE) A plan that assumes you’ll sell at today’s prices is assuming that risk away.

    Fixing takes time and money. Every month of renovation is a month of loan payments.

    Some costs aren’t yours to fix. Insurance, property taxes and major repairs don’t care how well you run the building. The income you build has to cover those bills too.

    And, in my view, taxes won’t rescue a bad deal. As I wrote last week, a tax rule called 100% bonus depreciation is now permanent. It lets you write off certain parts of a building right away instead of over many years, and it can apply to existing buildings. My rule hasn’t changed: it makes a good deal better. It doesn’t make a money-losing deal work.

    My five questions before you buy a small Florida rental building

    These are my questions, not investment or tax advice.

    1. Does the building earn more than the loan costs? If not, the loan is shrinking your return until you fix something.
    2. What exactly is broken? Rents, expenses, empty units, unpaid rent, management — list it line by line. “Upside” isn’t an answer.
    3. What will it earn after the fix? Divide that by the price plus what the fix costs — not by the broker’s number.
    4. Does the deal still work without the tax break? If not, you’re buying a tax break, not a building.
    5. What will a buyer pay you when you sell? If you’re assuming today’s price, ask why.

    From the Developer’s Seat

    Opinion from here down: how this looks from where we build.

    At Lana we build homes to sell, and I’ve always started with what a buyer will pay for the finished home, not with the interest rate. That same habit is why we’re now looking at existing apartment buildings of up to 100 units, where the return comes from fixing what’s broken inside. At today’s rates, heavy borrowing works against you, so the gain has to come from running the building better, not from the fee playbook regulators accused the largest Wall Street landlord of running, which I wrote about in May. That suits patient investors who don’t need much debt, like families and family offices (firms that manage the money of one or a few wealthy families). A fix takes months, and a building without a big loan on day one can afford to wait for it. So, on the last rental you looked at: was the return coming from the income you’d buy, or from what you’d fix?

    If you’re weighing a building like this, send me a DM on LinkedIn. I’m always glad to compare notes or answer questions.

    Until next week,
    Luis

    Sources

  • The Fed Raised Rates 12–0. Florida’s Million-Dollar Home Sales Were Already Up 8.8%.

    The Fed Raised Rates 12–0. Florida’s Million-Dollar Home Sales Were Already Up 8.8%.

    Graphic reading +8.8%: Florida's $1 million-and-up existing single-family home sales in August 2026, year over year, against a 1.4% decline in all closings statewide, over a stylized city skyline at dusk.

    Statewide closings fell in August for the first time in a year, and Florida Realtors’ own economist blames rates. Above $1 million, they grew. And the Lennar region that includes Florida took the company’s steepest drop in new orders.

    FL Real Estate Insider — Week of September 21, 2026
    By Luis Noronha

    12–0. That was the vote on Wednesday, September 16, when the Federal Open Market Committee raised the federal funds rate by a quarter point, to a range of 3.75% to 4.00%. (Federal Reserve — FOMC statement, September 16, 2026)

    In July, three members wanted this hike and lost. In September, nobody dissented. (FOMC statement, July 29, 2026)

    In August I wrote that the July statement was “not a committee looking for a reason to cut”. Seven weeks after that July meeting, it raised.

    The same day, Florida Realtors published its August numbers and Lennar reported its quarter, with the earnings call the next morning. Read together — my assessment, not theirs — the three releases test what this newsletter has argued since August. Not all of it held.

    The Fed’s own projections took a 2026 cut off the table

    The decision was a quarter point. The projections are the bigger news.

    The Fed’s Summary of Economic Projections asks each of the 18 participants where the policy rate should sit at year-end. The median answer for 2026 was 3.4% in March, 3.8% in June, and 4.1% on September 16. For 2027 it jumped from 3.6% to 4.1%. (Federal Reserve — SEP, September 16, 2026; June 17; March 18)

    The arithmetic worth doing yourself: the new range has a midpoint of 3.875%. One more quarter point, to 4.00%–4.25%, has a midpoint of 4.125%. A 4.1% median is one more hike across the two meetings left this year, October 27–28 and December 8–9. And the lowest of the 2026 projections is 3.9% — the rate where it now sits.

    Not one participant projects a lower rate by December.

    Chairman Kevin Warsh, at the press conference:

    “I would be hard-pressed to describe broad financial conditions as restrictive. This view was widely shared by the Committee. So we removed a dose of accommodation.” (Federal Reserve — press conference transcript, preliminary, September 16, 2026)

    The same projections put PCE inflation at 3.7% for 2026 and do not reach 2.0% until 2029.

    The mortgage market got there first

    Freddie Mac’s 30-year fixed averaged 6.95% in the week ending September 17 — up from 6.76% the week before and 6.26% a year ago. (Freddie Mac PMMS) In Freddie’s own history file, that is the highest weekly reading since January 2025.

    A scope note, because it changes what the number means: the survey covers Thursday through Wednesday, and six of those seven days closed before the 2:00 p.m. announcement. My read is that the 6.95% mostly reflects the market pricing the hike in advance, not reacting to it.

    Florida’s August: the statewide number went the wrong way

    I’d rather put this first than have you find it.

    Closed sales of existing single-family homes in Florida totaled 21,497 in August, down 1.4% from a year earlier. That ended a run of 11 consecutive months of year-over-year gains. The median held up — $415,000, up 1.2% — on 4.3 months of supply. (Florida Realtors, September 16, 2026)

    Dr. Brad O’Connor, Florida Realtors’ chief economist, was direct about the cause:

    “…on the margin, the recent rise in rates has been enough to slow home sales growth, and the affordability constraints induced by elevated mortgage rates are likely going to be with us for the foreseeable future.”

    And the detail that hurts my own recent argument most: statewide single-family cash sales fell 2.1% — faster than sales overall — to 5,782, and the cash share slipped from 27.1% to 26.9%. (Florida Realtors — August 2026 single-family data detail (PDF))

    Two weeks ago I wrote about Florida’s 41.3% all-cash share and argued that for the cash-heavy end buyer, the Fed is a second-tier variable. That was Realtor.com’s deed data for the first four months of the year; this is Florida Realtors’ MLS data for one month, and the two are not one series. But if the argument were that Florida’s cash buyers carry the whole state through rising rates, August doesn’t support it.

    Here’s the split the statewide headline hides

    The statewide release doesn’t show it. Page 8 of the same PDF does.

    • $1 million and up: 2,087 closings, up 8.8%.
    • $1.5 million to $2 million: up 25.3%. $2 million to $3 million: up 22.9%.
    • $300,000 to $399,999 — the state’s largest single band: 5,443 closings, down 6.1%.

    Everything under $1 million, taken together, fell about 2.4%. That is my arithmetic, not Florida Realtors’: 21,497 total minus 2,087 at $1 million-plus leaves 19,410, against roughly 19,880 a year earlier (21,798 total, less about 1,918 at $1 million-plus, backed out of the 8.8% growth rate).

    Three limits, and each one matters. This is one month. It is existing homes only — it says nothing directly about new construction. And Florida Realtors does not publish a cash share by price tier, so I cannot tell you how many of those 2,087 buyers skipped the lender. I won’t imply it.

    So the Florida market did not weaken evenly in August. My interpretation of why: it weakened where buyers finance and grew where they have the most balance sheet — the pattern the June issue on the Florida luxury buyer described, now visible in a statewide table. Whether that top-tier strength was cash-funded, this data can’t tell me — which is why I’m not scoring the September 9 argument on it.

    What one of the nation’s leading homebuilders said about the middle

    Lennar’s quarter ended August 31. Earnings were $1.19 a share, against $2.29 a year earlier. The average delivered home sold for $372,000, “reflecting approximately 12.0% in incentives, along with base price adjustments.” Gross margin on home sales fell to 15.8% from 17.5%. New orders fell 9%, and the company cut its full-year delivery target to 80,000–81,000 homes from 82,000–83,000. (Lennar — Q3 2026 results, September 16, 2026)

    Lennar reports Florida inside an “East” segment that also includes New Jersey and Pennsylvania, so Florida can’t be isolated. But East new orders were 4,831 against 5,792 a year earlier — down 16.6%, the steepest decline of Lennar’s four regions.

    In my reading, Stuart Miller made my August argument more bluntly than I did:

    “The Federal Reserve’s assistance is clearly off the table for practical purposes and not a near-term source of relief… Rate cuts when they eventually come, will be a meaningful tailwind for our business, but we are not holding our breath… we are not building our business plan around those rate cuts.” (Lennar Q3 2026 earnings call, via The Motley Fool transcript, September 17, 2026)

    He named the competitor, too: resale sellers, with listings “particularly high” in Texas and Florida, “especially at our price range.” On cost, labor “has started to become more of an issue,” citing immigration enforcement — a pressure I wrote about in June’s issue on Florida construction labor enforcement — and competition from data-center construction.

    Lennar’s $372,000 national average falls in Florida’s largest price band, where closings fell 6.1%. My read, marked as opinion: the pressure from rising rates is concentrated where a builder paying about 12% in incentives and a resale seller cutting price are fighting over the same qualified, financed buyer — a fight the top of the market isn’t in.

    From the Developer’s Seat

    From here on I’m arguing, not reporting — the conclusions are mine, drawn from the evidence above.

    The Fed’s own projections show no cut this year, and Lennar’s CEO says the company isn’t building its plan around one; my conclusion, unchanged since August, is that nobody should underwrite a Florida project on the promise of rate relief. Where I’d sharpen my September argument: August’s strength came from the top of the price range, not from cash carrying the state — and in my experience the buyer there is often weighing an older resale house against a code-current new build, the choice I build for. That’s where patient, low-leverage capital has its edge: it doesn’t need the Fed to carry the project, and it builds for a buyer with the balance sheet to close whatever the Fed does. So, a question for anyone allocating here: roughly what share of your Florida exposure depends on a buyer who needs a 7% mortgage to close?

    If you want to see how I stress-test rate and end-buyer assumptions in live underwriting, that’s what the Lana Investor Memo is for.

    → Request access at coastal-living-collection.com (accredited investors only).

    Until next week,
    Luis

    Sources

  • Cash Buyers Are Pulling Back Nationally. In Miami They’re Still 43.2% of the Market.

    Cash Buyers Are Pulling Back Nationally. In Miami They’re Still 43.2% of the Market.

    Graphic reading 43.2% of Miami home sales closed all-cash, the highest share of any major U.S. metro in the first four months of 2026, over a stylized city skyline at dusk.

    Realtor.com’s new report has the U.S. cash share falling and cash transactions falling faster than sales overall. Florida ranks fifth in the country, Miami leads every major metro, and more than 40% of homes sold above $1 million nationally closed without a lender.

    FL Real Estate Insider — Week of September 8, 2026
    By Luis Noronha

    43.2%. That is the share of home sales in the Miami–Fort Lauderdale–West Palm Beach metro that closed all-cash in the first four months of 2026 — the highest of any major U.S. metro in Realtor.com’s cash-sales report released August 18, and down all of 0.3 percentage points from a year earlier. (Realtor.com, August 18, 2026)

    Nationally, cash buying is in retreat. In Miami it barely moved.

    The national retreat is real, and it’s faster than the market

    Start with the part I read as bad news for the cash buyer’s leverage — my read, not the report’s.

    Cash purchases were 31.4% of U.S. home sales in the first four months of 2026, down from 32.3% in the same window a year earlier: a decline of 0.9 percentage points. And the drop in the number of cash transactions outran the drop in the market itself. Total home sales fell 8.5% year over year. Cash sales fell 11.2% — a gap of 2.7 points. Meanwhile the national median sale price rose 0.2%, against 1.8% growth in 2025 and a 15.4% peak in 2021.

    Hannah Jones, senior economist at Realtor.com, put it this way:

    “Cash buyers aren’t disappearing; they’re simply becoming less dominant as the housing market finds its footing. More inventory and moderating prices are giving financed buyers more opportunities to compete.”

    That is the framing I saw picked up in most of the coverage I read, and on the national numbers I think it holds.

    Here’s the table I haven’t seen anyone quote

    Underneath the national number is a state table, and Florida is near the top of it.

    The highest cash shares were Mississippi (47.2%), Montana (45.9%), New Mexico (43.8%), Missouri (42.0%) and Florida (41.3%) — Florida fifth in the country, and 9.9 points above the 31.4% national share.

    The Florida metros:

    • Miami–Fort Lauderdale–West Palm Beach — 43.2%, down 0.3 points, first among all major metros
    • Tampa–St. Petersburg–Clearwater — 35.1%, down 0.5 points
    • Orlando–Kissimmee–Sanford — 32.7%, up 0.2 points
    • Jacksonville — 31.7%, down 1.5 points

    All four sit above the national share.

    Orlando’s went up, against the national direction — and it is not alone. The report has a whole section on markets moving the other way, naming Pittsburgh (up 6.8 points, the largest increase among major metros), Austin, and San Francisco, where cash purchases rose 7.7% year over year. At the other end sit the “high-cost job centers… where mortgage-reliant buyers make up a larger share of purchasers”: Seattle 16.4%, Washington D.C. 18.2%, Denver 18.8%, San Jose 20.2%.

    My read: what matters here isn’t Miami’s level, it’s Miami’s slope. The country gave back 0.9 points of cash share. Miami gave back 0.3 — a third as much, off the highest metro base in the country. To me that reads as a cohort not being replaced by financed buyers at anything like the national rate, though a share movement on its own can’t establish that.

    The tier this newsletter is written for

    Cash is concentrated at both ends of the market — what the report calls a U-shaped pattern. More than two-thirds of homes below $100,000 were cash. And at the top, nationally:

    “More than 40% of homes sold for more than $1 million and a majority of homes sold for $2 million or more were purchased without financing.”

    Realtor.com’s explanation runs one sentence: “At the luxury end, affluent households are more likely to have the resources to purchase homes outright.” In my view that one sentence is the whole thesis of this issue.

    I weight this dataset more heavily than a survey, and it’s worth saying why. The analysis uses recorded deeds back to 2001, and a sale counts as all-cash “when the recorded transaction shows no evidence of a mortgage lien at closing.” It counts what was recorded at the closing table, not what a buyer told a survey panel. One caveat I’d own: no recorded lien is a proxy for cash, not a direct observation of it.

    I read that instrument difference as the main reason 31.4% sits well above the roughly 25% national cash share I quoted in June’s issue on the Florida luxury buyer. That figure was NAR survey data for a single month — MIAMI REALTORS® carried it at about 25% in its June-data release and about 26% in its July-data release — against a four-month deed count here. Different instruments, different windows, measuring the same thing. I should have said so in June.

    What the same market looks like from the financed side

    Freddie Mac’s 30-year fixed averaged 6.71% for the week ending September 3 — up from 6.66% the prior week, and 21 basis points above the 6.50% of a year ago. (Freddie Mac PMMS)

    My read is that the builders selling to that financed buyer are paying for the privilege. The NAHB/Wells Fargo index came in at 35 in August, the sixteenth consecutive month below 40, with 35% of builders cutting prices at an average reduction of 6% and 63% using sales incentives. (NAHB, August 17, 2026) NAHB Chief Economist Robert Dietz, in the same release:

    “Custom home builders continue to report stronger market conditions than spec builders, reflecting better conditions at the higher end of the market.”

    Here is the picture I put together from those two datasets — a construction of mine, not a finding of either source. The NAHB index is national and monthly; the cash shares are Florida metros over four months. Different instruments, different windows. With that said: one business is buying down a rate to close a financed buyer, and the other is transacting with someone who never opened a rate sheet — the buyer I described in June.

    The tables that argue against me

    Four limits, and one of them is the sharpest number in this issue.

    One: Realtor.com does not credit new construction for Florida’s share, and the dataset has no new-build cut at all. The report says plainly that “Florida’s retiree and second-home buyer base supports elevated cash activity.” Not developers. Not new product. There is no new-construction cash share in it — national, state or metro. I looked for one. It does not exist in this dataset, and I’m not going to manufacture one by inference.

    Two: the window closed in April. First four months of 2026, on recorded deeds. Everything since — including a mortgage rate that has gone up, not down — sits outside it.

    Three: Miami’s cash share fell, and on our own preferred series it fell harder than 0.3 points. MIAMI REALTORS® reported Miami-Dade cash at 38.1% of closed sales in June 2026 and 35.1% in July — down 3.0 points in a single month, with single-family cash falling from 27.6% to 21.2%, a 6.4-point drop, and condo cash easing from 48.5% to 47.5%. (MIAMI REALTORS®, June 2026 data · July 2026 data) That is two months of one county on small counts, not a trend — but it is the number a reader with my June issue open will find, so I’d rather hand it to you myself.

    Four: Jones’s read may simply be the right one. A more diverse buyer pool, she says, “is a positive sign for market activity.” “When more buyers can compete using different paths to purchase, the market has the potential to become healthier and more balanced.” My bet, and I’ll call it a bet rather than a finding: a healthier market with more financed buyers in it does not threaten well-located, code-current product.

    One rule I’d ask you to apply to all of the above: don’t blend these numbers. Realtor.com’s 43.2% is the metro, January–April, from deeds. MIAMI’s 35.1% is Miami-Dade, July, from the MLS — and it is a coincidence, not a relationship, that Tampa’s metro figure is also 35.1%. Neither belongs anywhere near the 82% all-cash figure MIAMI publishes for $1 million-and-up condo sales in 2025. Different tier, different year, different product.

    What the July Miami-Dade data does add is the leg Realtor.com’s April cutoff can’t reach: $1 million-and-up sales rose 15.5% year over year, from 341 to 394. Statewide, closed sales of existing single-family homes reached 23,870 in July, up 5.1%, at a median of $425,000. (Florida Realtors, August 17, 2026) That volume closed with the 30-year fixed printing between 6.43% and 6.66% every week of July, and 6.47%–6.52% through June, when those contracts would have been signed. (Freddie Mac PMMS via FRED, MORTGAGE30US) No rate relief in it.

    From the Developer’s Seat

    Everything below this line is opinion — mine, not statute, not data, and not something any source above said. I want that marked plainly.

    Five weeks ago I argued in this newsletter that nobody should underwrite a Florida project on the assumption of Fed relief, and seven days before the FOMC decides, these tables are why I still hold that position. In a state where 41.3% of closings in the first four months of 2026 never touched a lender, and in a national million-dollar-plus tier where more than four in ten didn’t either, the policy rate is a second-tier variable for this segment rather than the master variable. The Miami-Dade single-family cash share falling to 21.2% in July is the number that argues hardest against me, and I’d still hold the position: two months of one county is not a series, and the four-month deed count underneath it is. That is not an argument for ignoring rates — it is an argument about which buyer you build for, and code-current, ground-up new product is exactly what that cash-heavy end buyer is competing over: no unfunded reserves, no deferred maintenance, no financing contingency to blow up three weeks before closing. I’d rather own a smaller, better-built position sold to someone who never needed a lender than a bigger one that only works if the Fed cooperates. My rule is the boring one: underwrite the end buyer, not the rate.

    So — a question I’d genuinely like answered: does the last Florida deal you underwrote assume a financed exit? I read every reply.

    If you want to see how that assumption shows up in live underwriting — the actual end-buyer profile, the actual capital stack — that’s the conversation the Lana Investor Memo exists for.

    → Request access at coastal-living-collection.com (accredited investors only).

    Until next week,
    Luis

    Sources

  • The Fed Held Rates Last Week — and Three Officials Voted to Raise Them. Not One Voted to Cut.

    In March, the median FOMC participant projected a lower policy rate by year-end. By June, the median projected a higher one. Last Wednesday three of them formally dissented in favor of hiking. Mortgage rates are higher now than when they voted. If your Florida decision is parked waiting for rate relief, that is your answer.

    FL Real Estate Insider — August 3, 2026
    By Luis Noronha

    On July 29 the FOMC held its target range at 3.50%–3.75%. The vote was 9–3, and all three dissenters — Beth M. Hammack, Neel Kashkari and Lorie K. Logan — “preferred to raise the target range for the federal funds rate by 1/4 percentage point at this meeting.” (Federal Reserve — FOMC statement, July 29, 2026)

    Read that again. Not one official dissented for a cut. Three dissented for a hike.

    None of it should have been a surprise. The document that said so came out on June 17, and I’ve seen almost no coverage of it in this industry.

    Start with the scoreboard, not the forecast

    Here is what Freddie Mac’s 30-year fixed average did across 2026:

    → January 15: 6.06%
    → February 26: 5.98% — the low of the year
    → July 30: 6.66% — the high of the year, and the most recent print

    (Freddie Mac — PMMS; historical archive)

    Seven months into a year I expected to bring relief, the 30-year sits 68 basis points above its February low. Not lower. Higher. And rates are higher now than when the Fed met: Mortgage News Daily’s daily index closed at 6.82% on August 3, up from 6.78% on decision day and within three basis points of its 52-week high. (Mortgage News Daily)

    The number that cuts against me, before you find it yourself: rates are still below where they were a year ago, when the 30-year averaged 6.72%. (Freddie Mac) Rates didn’t explode. The 2026 rally reversed, and the direction of travel for five straight months has been up.

    The Fed’s own projections flipped from a cut to a hike

    Four times a year, FOMC participants publish where they think the federal funds rate should be. Compare two rounds three months apart: the median projection for the end of 2026 was 3.4% in March and 3.8% in June. (Federal Reserve — Summary of Economic Projections, June 17, 2026)

    The midpoint of the current range is roughly 3.6%. So in March, the median participant wanted a cut by year-end. By June, the median wanted a hike. Across the eighteen participants, year-end estimates ran from 3.4% all the way to 4.4%.

    The minutes put the split in the Committee’s own words: “Many participants indicated that the appropriate level of the federal funds rate would be within or slightly below the current target range at the end of this year. Many other participants, however, assessed that the appropriate level of the federal funds rate would be above the current target range at the end of this year.” (June 2026 FOMC minutes)

    What moved them sits in the same document: the median 2026 PCE inflation projection was revised from 2.7% in March to 3.6% in June. (June 2026 SEP) The statement still describes inflation as “elevated relative to the Committee’s 2 percent goal,” against an economy “expanding at a solid pace.” (FOMC statement)

    That is not a committee looking for a reason to cut. The next meeting carrying fresh projections is September 15–16 — and in my experience that lands after most of a Florida year’s contracts are already signed.

    Meanwhile, Florida kept transacting

    In June the state closed 26,036 single-family sales, up 9.3% year over year, at a median of $432,000, up 4.9% — the tenth consecutive month of growth, on 4.5 months of supply. (Florida Realtors, July 17, 2026) Those sales closed into a market where Freddie Mac’s 30-year ran between 6.47% and 6.52% every week of the month. Not 5.5%. Not after a cut.

    Here’s the number I’d put in front of anyone who builds. While demand posted its tenth straight month of growth, new supply was being permitted more slowly: Florida authorized 9,943 single-family units by building permit in June against 10,442 a year earlier — down 4.8% — and 56,060 through the first half against 59,631. (U.S. Census Bureau, series FLBP1FH via FRED)

    Rising absorption into contracting new supply. That happened without a single rate cut.

    The honest counterweight: somebody is paying for that

    Builder sentiment is genuinely weak. The NAHB/Wells Fargo index registered 34 in July, its fifteenth straight month below 40 — and 63% of builders used sales incentives while 37% cut prices outright, averaging 6%. (NAHB, July 2026)

    The incentive I’d watch is the permanent rate buydown, and it is not free. Lennar reported Q1 2026 sales incentives at roughly 14% of sales price, against a historical average of 4% to 6% — and grew new orders 1% year over year anyway, to 18,515 homes. (Lennar — Form 10-Q, quarter ended February 28, 2026)

    Marking this as my view rather than a finding: it works, and it’s a subsidy with a limit, and the limit is whoever’s margin is funding it. The question isn’t who’s offering a buydown — it’s who can fund one for another eighteen months without taking it out of the house. That describes builders selling to financed buyers. It is not a claim that the dynamic has reached the cash tier.

    The buyers who never opened a rate sheet

    This is the part that matters most to the capital this newsletter serves, and I’ll stay on one reference for all of it — sales above $1 million.

    82% of Miami-Dade $1 million-and-up condo sales closed all-cash in 2025, against a national all-price share of roughly 25%. (MIAMI REALTORS®, July 2026) Four in five transactions in that tier of the Miami-Dade condo market never touch a lender. That figure is the condo slice — no matching cash share is published for million-dollar single-family, which was about three-quarters of last quarter’s volume.

    And the tier grew while rates climbed. In the second quarter, $1 million-plus transactions across Miami-Dade, Broward, Palm Beach, the Treasure Coast and Southwest Florida rose 20.1% to 8,013 single-family sales and 23.5% to 2,590 condos. Miami-Dade is not the center of gravity: Southwest Florida leads on volume — 2,880 single-family, 869 condos — and among individual counties Palm Beach leads at 2,534, against Miami-Dade’s 1,000. (Keyes/Illustrated Luxury Market Report, Q2 2026, via RISMedia) In June, Miami-Dade’s million-dollar sales rose 29.14%, from 374 to 483. (MIAMI REALTORS®)

    Two things cut against the easy read of that. The Treasure Coast went the other way — million-dollar single-family sales down 6.5%, condos down 16.9%. And the average luxury condo price rose just 0.3% on that 23.5% volume gain: the same shape the statewide condo tape showed in June — sales up 14% on a median price up 1.7% — now visible at the top of the market too. (Keyes/Illustrated via RISMedia)

    So: consistent with the case I made in June’s Florida Luxury Buyer issue, not proof of it. The 82% is a 2025 reading, and one quarter of volume growth in one region is a data point, not a trend.

    From the Developer’s Seat

    What follows is my opinion, not statute and not data — I want to mark that clearly.

    Waiting has stopped being free: “when rates come down” is not a plan, it’s a leveraged bet on one macro variable that three of the people who set it just voted to move the other way. In the financed tier, the surviving edge is a margin thick enough to fund a buydown for another eighteen months without taking it out of the build; in the tier this newsletter is written for, the edge is an end buyer who never needed the financing at all. Disciplined, developer-led, ground-up Florida new construction sold to that second buyer doesn’t need the Fed to cooperate — it needs the basis to be right, the house to be right, and the sponsor still standing in month nineteen. Rising absorption into contracting new supply is the condition that rewards exactly that, and it showed up this year without a single rate cut. That is why Lana’s underwriting was never a rate-cut bet, and why a split Fed is, for us, a non-event.

    So I’ll put the question to you: are you underwriting your next Florida decision on a rate assumption, or on a basis that works at 6.5% and at 7.5%? I read every reply.

    If you want to see how that shows up in live underwriting — the actual rate assumptions, the actual incentive budget, the actual end-buyer profile — that’s exactly the conversation the Lana Investor Memo is built for.

    → Request access at coastal-living-collection.com (accredited investors only).

    And if you know someone who’s been sitting on a Florida decision waiting for a cut, forward this to them. That’s the person this issue was written for.

    Until next week,
    Luis

    Sources