Marterra Market Monitor

Year To Date Activity

Properties Sold (single and multifamily): 7

Sales Volume: $15,958,000

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

Homes/Units Managed: 308

Properties Leased: 15

Gross Collected Rent: $2,105,595

Brokerage Listings

Property Management Rental Listings

Each month, this newsletter gets harder and harder to write. Everything seems to change so rapidly that if I start drafting a section early, by the time I hit send it needs to be completely rewritten because the news cycle has already shifted. I literally wrote the previous sentence the day before the Ayatollah was killed. I’m going to largely avoid that topic (because unlike most people on the internet, I don't fancy myself a geopolitical expert), other than to say our family’s prayers are with the people of Iran.

Right now there’s an extraordinary amount of noise.

Markets, geopolitics, policy shifts, headlines designed to trigger emotion.

It’s getting harder to separate signal from noise.

But over the last two weeks, I think we got a very real signal.

AI is accelerating.

Some of the applications are abstract. Others are immediately tangible. There’s an AI agent called CrossBeam that can generate plan check comments for cities and help respond to corrections. If you’ve been following our development updates, you understand why that matters. I’ve never been more excited about a single piece of technology in our industry.

Here’s a short video showing what it can do.

If tools like this scale, the implications for housing delivery, entitlement timelines, and broader economic productivity are enormous.

That’s signal.

Some of the changes AI brings may prove beneficial for society over the long run. Productivity gains, lower costs, faster execution. But in the short to near term, the transition could be painful for a meaningful number of workers.

Block, the parent company of Cash App and Square, recently announced plans to reduce its workforce by roughly 40 percent, or about 4,000 roles, citing efficiency gains tied to AI adoption. Markets responded positively. The stock moved higher on the expectation of improved margins and leaner operations.

That reaction matters. When public markets reward cost reductions so decisively, it sends a signal to other executive teams. The risk is not just one company restructuring, but a broader wave of firms accelerating workforce reductions to meet shareholder expectations.

Again, on the idea of separating noise from signal, I want to share a thought my brother, who works in tech, mentioned during the last round of so-called “AI-driven layoffs.” His view was that most of the cuts were more about trimming excess than unlocking massive efficiency gains. The AI narrative plays better in public markets. “We over-hired” doesn’t move a stock the same way as “we’ve achieved exponential efficiency through new technology” does.

I’d bet a significant share of Block’s layoffs had more to do with trimming excess from the COVID hiring spree than with AI-driven efficiencies. X cut 80% of its staff and barely missed a beat. And if that is the case, the Block headlines are largely noise.

That said, eventually the AI efficiencies will be real and material. When they arrive at scale, they will change cost structures across industries. Every employee, business owner, and investor should at least be thinking about how to future-proof their financial position.

How do you do that? I’m not entirely sure. If you figure it out, let me know.

And finally, last call for my campaign kickoff event. We’re close to capacity at the venue. If you’d like to attend, send me an email. If we have a few spots left, I’d love to see you there.

If you can't make it, but want to learn more about my campaign, see my website below. If you'd like to volunteer, donate or put a yard sign (when the time is right) in your front yard, you can also let us know

Campaign Website

Residential Transactional Market: The past few months have produced some truly dramatic housing headlines.

Here’s one of my favorites.

The headline suggests housing inventory is at an all-time high. (Noise)

In reality, it’s nowhere close. (Signal)

That said, the market has softened considerably. The magnitude of that softening depends on the specific market and product type.

My preferred metric for tracking inventory is months of supply. Below are the current months-of-supply figures for the surrounding counties. When you drill down further, individual cities, neighborhoods, and product types can vary meaningfully.

Residential Rental Market: Over the last year, our property management division has grown by 40 percent, and that’s with little to no marketing.

My view is that much of this growth has been driven by increased demand for professional property management. That demand, in turn, is being fueled by the steady wave of new regulations affecting rental property owners over the past several years.

These laws include limits on security deposits, a highly burdensome and mandatory process for documenting deposit deductions, and expanded requirements around the provision and maintenance of certain appliances.

And that list continues to grow.

Mortgage Market/Interest Rates: Mortgage rates dropped below 6 percent for the first time since September 2022, with the 30-year fixed averaging between 5.98 percent and 6.10 percent. It marked the best week for rates in several years and sparked hopes for a thawing housing market heading into spring.

The decline drove a surge in applications, with purchase activity up roughly 2 percent in January, along with a noticeable increase in refinance demand as rates reached four-year lows. Some markets have seen minor upticks that could moderate the trend, but overall momentum has improved.

If you purchased a home in the past four years and haven’t explored refinancing, we should probably talk.

Caveat: news out of the Middle East will add volatility to rates. If you are currently buying or refinancing, stay in close communication with your mortgage advisor about when to lock.

Commercial Real Estate: A reverse 1031 exchange lets an investor buy the replacement property first and sell the old one second. It flips the normal order. You still get the benefit of deferring capital gains and depreciation recapture under Section 1031, but the mechanics are more complex.

Because you can’t technically own both properties at the same time inside the exchange, a third-party entity called an Exchange Accommodation Titleholder “parks” one of them temporarily until the original asset sells. You still have 180 days to complete the sale of the relinquished property.

Miss that window and the tax deferral is gone.

The real advantage here is control. In competitive markets, strong assets don’t sit around waiting for you to sell something else. A reverse exchange allows you to secure the deal you want without making the purchase contingent on timing a sale perfectly. It can also give you leverage in negotiations and prevent you from rushing a disposition just to meet a deadline. For investors trading up or repositioning a portfolio, that flexibility matters.

The trade-offs are mostly financial. You need liquidity or solid financing upfront, and not every lender is comfortable with parked-title structures. We work with lenders who understand how to handle these. Costs are higher, and the 180-day clock still runs in the background. If the original property doesn’t sell in time, the exchange collapses and the tax bill comes due.

Macro Observations: This is usually the last section of the newsletter I write, because I want to have as much up-to-date information as possible when I hit send.

Prior to the events in Iran, I was starting to focus on writing about the tension between current inflation concerns. The Producer Price Index (PPI) for January came in hotter than expected at 0.7 percent month over month for core. At the same time, there are longer-term deflationary concerns, employment remains relatively stable in a “low hire, low fire” market, and we are in a sort of state of flux with the transition to a new Fed Chairman.

All of that seems pretty inconsequential given what’s occurring in the geopolitical realm.

I’ve seen armchair pundits pontificate that oil is going to $150 per barrel, while others argue it will drop to $30. Some are saying this will be a forever war, while others suggest it will be much briefer.

Time will tell.

What's The Good Word: We just closed 1204 E Balboa in Newport for $6.6M. On its own, $6.6M doesn’t sound extraordinary, until you consider it was a teardown on a relatively small lot.

We kept receiving offers around $5.5M with a standard 30-day closing timeline. So what did we do differently? We pulled a page from the homebuilder playbook. We offered the buyer an extended escrow, allowing them to secure permits before closing.

The longer escrow significantly reduced the buyer’s risk and saved them hundreds of thousands of dollars in property taxes, interest expense and other carry costs. In exchange for giving the buyer nine months, we were able to get the seller an additional $1.1M, which works out to roughly a 26% annualized return.

Patience paid off.

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

Bucknell, Costa Mesa: We should have our permits this week, but I've been saying that for two months now. It took six months! And that is with paying for the accelerated plan check program. I'd hate to see what non-accelerated looks like.

Lillian, Costa Mesa: Public works demanded that we build a sidewalk on our project. There are no sidewalks on the street, so we would be building a sidewalk to nowhere. Also, one of the things that makes this street special is the tree canopy adding a sidewalk would destroy. After pressing the City, we were told we could pay an "in lieu fee" or get 66% of the neighbors to sign and notarize a document stating they didn't want sidewalks.

We got the signatures and can now move on.

Pegasus, Newport Beach: We should be pulling permits this week or next

. As a point of reference, we submitted these plans in mid December. Compare that to Bucknell. We did not use any sort of expediter or accelerated program, this is just what a functioning development services department looks like.

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.