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Marterra Market Monitor

Marterra Market Monitor
Year To Date Activity
Properties Sold (single and multifamily): 54
Sales Volume: $76,410,393
Cumulative Value of Fund Properties Sold: $6,433,500
Homes/Units Managed: 303
Properties Leased: 163 *correction last month was 135, not 335
Gross Collected Rent: $9,361,17
Brevity is a lost art. This month, I’m going to try to bring it back.
I just want to synthesize a few conversations I’ve had recently with friends working in different sectors of real estate.
First, some surprising but positive news: Orange County office inventory is actually getting tight.
There are two major drivers. First, supply is being reduced. A lot of older office product in the airport area is being demolished for housing. Second, we’re seeing the finance, legal, and real estate industries reduce their footprints in Los Angeles and expand in Orange County as younger, high-earning professionals increasingly prefer Orange County over LA. Can’t believe they just figured this out.
Remember that 9K-square-foot College Park lease? The tenants fit that profile exactly.
I think this is also one of the driving forces behind some of the nuance we’re seeing in the housing market. Higher-end single-family rentals and coastal detached homes in the $1.5M to $3.0M range are white hot.
Everything else is dead.
Remember that airport area office that is getting demolished for housing? A lot of it is entitled for townhomes and condos, which aren't selling, which means it's probably not going to get built right away.
You’ve heard of the K-shaped economy? It is very real.
A few other notes: the private/hard-money sector is slowing down considerably. What does that mean? Flippers are getting much less aggressive and taking more of a wait-and-see approach.
I expect national housing data to look pretty grim going forward.
A friend of mine who is on the executive team of one of the largest real estate auction platforms in the country shared a presentation with me that he’s giving at a conference next week. Just so no one has to read between the lines, this is relevant because one of the primary functions of auction platforms is selling foreclosures. He has meaningful visibility into distress in the housing market.
Here are a few of the main takeaways:
The consumer is tapped out. Auto payments, delinquencies, and loan terms are all at historically bad levels, and nearly half of Americans are now using buy-now-pay-later products, many of them to cover groceries and basic expenses.
The Fed can’t win. If it cuts rates, inflation and bond yields could climb anyway, which means mortgage rates may not come down even if the Fed wants them to.
Delinquencies and foreclosures are creeping up, particularly on the FHA and government-backed side. Foreclosure starts were up 18% year over year, concentrated largely in Texas, Florida, and California.
Housing is cooling, but it depends on where you are. Prices are falling once you account for inflation, most major metros have shifted toward buyer’s markets, and the Sun Belt is taking the hardest hit. That said, there is still no flood of inventory.
Owning a home has gotten painfully expensive. Prices are running around seven times income, insurance costs continue to outpace inflation, and people are increasingly pulling from HELOCs and 401(k)s to get by.
Homebuilders are hiding how soft prices really are by buying down mortgage rates. Those buydowns can equate to roughly an 18% discount, and buyers paying full sticker to receive them could ultimately end up underwater.
A few very important caveats:
California is a very large state. The Orange County housing market remains very healthy from a foreclosure standpoint. Rural counties like Shasta and Sutter, and markets like the Inland Empire are a different story.
Most of the foreclosure activity is, not surprisingly, centered around properties purchased with FHA loans between 2023 and 2025.
I’m pretty sure I’ve shared this before, but here is my list of characteristics that make a community susceptible to meaningful price declines:
1. A large concentration of Airbnbs or vacation homes.
2. “Zoom towns.” Work-from-home trends are reversing as the tech labor market softens. Many of the tech workers who helped prop up these markets will migrate back toward major employment centers. The reality is, Austin isn’t really a tech hub.
3. High HOA dues and high Mello-Roos communities.
4. Areas with lots of brand-spankin’-new homes. New-home buyers, by virtue of being new-home buyers, tend to have less built-up equity. Think about parts of the Inland Empire where you can drive for miles and see one new-home community after another.
5. Areas with a high percentage of FHA or other low-down-payment buyers. Ladera Ranch was the poster child for this in Orange County during the last cycle.
One more fun fact: apparently Anduril just leased eight floors of an office building and is rumored to be hiring 300 people per week.
Project Updates: We have several projects going on, and here is an update on one of them.
Bucknell, Costa Mesa: All framed up.

Here is a before and after on the fireplace.

So much cleaner.

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Marterra Real Estate | CA DRE# 02014153

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(949) 910-1042

154 BROADWAY COSTA MESA CA 92627