Marterra Market Monitor - January 2026

Properties Sold (single and multifamily): 61

Sales Volume: $89,534,087

Cumulative Value of Fund Properties Sold: $6,433,500

Homes/Units Managed: 297

Properties Leased: 96

Gross Collected Rent: $10,435,277.97

If you are reading this, congrats you made it to 2026. On behalf of the Marterra team, we hope you and your family had a very joyous holiday season and wish you a very prosperous 2026.

At least for those of us in the real estate world, it has been pretty tough sledding since early 2022. For awhile, we were telling ourselves, stay above the floor until 2024. Then it was stay alive until 2025. We made it to 2025, and honestly, it was that much better.

To start, real estate is an exceptionally hard line of work with 75% of agents that quit within their first year and 87% quit within the first 5 years.

That is in a normal market. This hasn't been a normal market.

It's not just the transactional business that has been challenging.

So, please excuse me as we take a small victory lap. I am incredibly proud of our team and want to highlight a few big accomplishments (in no particular order).

- Melissa Edelman broke $20M in individual production (this while being a very new mom, which is an incredible feat)

- Kate Market shattered the record for highest home sale price in Mesa del Mar

- Riley Spear had a baby and a breakout year

- Katie Lewallen Selway, who just joined our team (not the industry), is off to the fast start I've ever seen

- Property management business grew by +30%

- Our gut renovations (I don't like the word flip) margins exceeded industry standards

- Michelle and Christine (Machine and Co, the brains/designers behind our fund) broke records in more neighborhoods than I can count.

Christine and I could not be more grateful to work with such incredible people.

So we stayed alive to 2025. Now what? My bold prediction for this year?

Our December was the busiest I remember. Our pipeline for January/February is as robust as I've seen it. I am expecting declining interest rates and lower energy costs to be the main driver of much needed tailwinds.

Lastly, if you are in need of a new CPA, Ashley (our controller, who also handles our taxes) is taking on a few additional clients for 2025 tax season.

I'm leaving my campaign link here in case you feel compelled to contribute. Every dollar helps.

Single-Family Transactional Market: As I mentioned above, we had our busiest December in recent memory. With that being said, as with last month, every transaction came with it's own challenges.

The market is still significantly softer than what we have seen in the past. Typically, our listing strategy is to recommend listing below what we think the home will sell for in order to encourage a bidding war; however, in today's market, buyers seem to be more hesitant to pay much over asking. Our current pricing strategy (for most homes) requires, more finesse, price it at the price it will trade at. Not above, not below - right on the money. To pull that off you need an agent who is very active in the market.

Single-Family Rental Market: The rental market is generally pretty boring, nothing usually changes that quickly, so there are very few interesting headlines. Nationally, we have seen single family (and multifamily rents) cool.

We have also witnessed this in our management portfolio. Last year, we probably had 5 homes for rent in the month of December, this last month, we peaked out at 17 homes for rent. We did see a seasonally odd pick up of leasing velocity towards the end of December, which has given me a little more cautious optimism for the leasing market in Q1.

If you are renting out a property, customer service is incredibly important. You do not want to give your residents a reason to move out.

If you property is currently vacant, drop your rent and fill your building.

Vacancy is the silent profit killer.

Mortgage Market/Interest Rates: The residential mortgage market finally seems to be easing up after years of tight conditions. The major forecasters (Fannie Mae, MBA, NAR, Redfin, Zillow) mostly agree on a modest improvement, with 30-year fixed rates likely averaging in the low to mid-6% range, perhaps around 6.3%, and occasionally dipping lower if inflation stays in check. No big plunge to pandemic lows but enough relief to bring sidelined buyers back into the game.

That should lift home sales, with estimates ranging from a 3-10% gain to a more optimistic 14% from NAR, pushing existing sales toward 4.2-4.5 million. Originations are expected to rise to $2.2-2.4 trillion, led by purchases with refis gaining ground. Price growth will slow to 1-2% nationally, inventory should inch higher, and affordability will improve a bit, though the lock-in effect and regional splits remain.

Overall, 2026 feels like the start of a more normal market: steadier, not explosive, but a solid step forward. If you're planning a move, now is a great time to talk it through. I live for these discussions, so reach out anytime.

Macro Observations: The broader economy continues to show solid resilience despite some softening signals. Third-quarter GDP posted a strong 4.3% annualized gain, driven by consumer spending and exports, with Q4 likely around 3%. The job market is cooling, with unemployment at 4.6% and slower hiring, while inflation eased to 2.7%, which for those tracking the mortgage market/interest rates is a pretty nice set up going into next year.

The Fed cut rates again by 25 basis points to 3.50%-3.75%, which is great for those of us with HELOCs or construction loans.

In Orange County, the housing market has stayed surprisingly active through December, even as the holiday slowdown hits much of the country. Inventory sits higher than last year (up around 7% in recent weeks), giving buyers a bit more selection and breathing room, while new listings and closed sales picked up sharply in early December. Median prices hover right around $1.2 million for single-family homes, with some modest year-over-year softening in spots but overall stability thanks to our strong local demand. Days on market have crept up to about 50-60 on average, which means motivated buyers can negotiate a little more than they could a year ago. The job market remains solid, which should support a return of buyer demand should rates continue to moderate.

What's The Good Word: Your period reminder of why I am running for City Council.

A good friend of mine is doing an addition to his home in our neighborhood. He's been delayed 'for this' and he's been delayed 'for that', usually pretty petty things. The order of magnitude? He thought he would be done by now and has faced thousands of unnecessary costs directly related to City related issues.

Here he is on Christmas Eve, re-tarping his roof, because when he called for his nail inspection for his roof on December 18th, the City said the earliest inspection date available was January 6th, 19 days later...

What are we doing here?

The nail inspection is required before they can paper (waterproof) the roof, and because the City could not do it in a timely manner, water leaked into his existing home and he will be responsible for absorbing the cost of the water remediation.

Not cool. There has got to be a better solution. Vote Daniel Morgan for City Council 2026.

Project Updates: We have several active projects; here is a quick update on a few of them.

Lucero, Tustin: Sold at our list price. Overall pretty solid single or double. Given how challenging the flipping market has been, I'm very pleased with our outcome.

Lillian & Bucknell, Costa Mesa: Do you want to know what the secret is to being a successful real estate investor/developer?

It is being willing to sit at City Hall and be very nice (but firm) with people who are costing you a lot of money. On average, our projects cost us about $10K per month in carry costs.

I spent about 4 hours at City Hall just before Christmas and was able to work through a bunch of issues that probably saved us a collective 5-6 weeks.

Our permit tech of Lillian sat on our plans for 3 weeks prior to going on vacation for 2 weeks. We were able to get reassigned to a new permit tech.

Bucknell is being held up because the City is now demanding remodels get a water improvement plan approved by Mesa Water prior to pulling your permit. They used to just require you to get the plan approved prior to signing off on your permit. You used to be able to do it concurrently during construction. This one small change adds at least 4 weeks to your permitting schedule.

Pegasus, Newport: We submitted this to the City mid December, and I bet we have permits mid January. Newport is a very well run City.

The only other change we made to the elevation below is we changed the window on the right to another French door where the right window is. (We're here for the symmetry.) This project will be completed and sold well before Lillian and Bucknell.

Thanks again for reading, and I would like to thank our agents and property managers who provide valuable insights from their day-to-day in the field. Without them, this email wouldn't be very useful or interesting.

If there is anything you need: vendors, lenders, or others, please let me know. We have an extensive network of the best and brightest in the industry.

I geek off this stuff; if you want to grab a coffee or chat about anything related to real estate, the market, or investing, please do not hesitate to reach out.

If you don't want to receive these updates in the future, please smash the unsubscribe button below. No hard feelings; I do it ruthlessly. Lastly, if you found the above informative, please share it with a friend or drop me a line.