Your November 2026 Letter From My Heart, with the Good, Bad n’ Ugly
A Personal Note to My Clients & Friends
Before diving into the numbers this month, a quick civic reminder: go vote. Every election counts, not just the four-year presidential cycle. State and local ballots shape property taxes, municipal bonds, zoning, infrastructure, and school district balance sheets—the very policies that directly determine the value of your real estate and the health of your community. Make your voice heard.
On the financial front, discipline remains our anchor. With close to four decades in lending, real estate, and capital markets, I have watched the same pattern play out—headlines chase friction, while smart capital quietly positions itself around structural realities. As fall transitions into the year-end holidays and overall transaction volumes thin out, the noise tends to get louder. Let’s step past the emotional commentary and examine the hard data driving our markets as we head into November.
1. The Macro Dilemma: Policy, Earnings, and the Flight to Safety
“History doesn’t repeat itself, but it often rhymes.” — Mark Twain
The Federal Reserve concluded its late-October meeting by holding the benchmark Fed Funds Rate steady at 3.75%–4.00%. While the vote was not unanimous—Governors Lisa Cook and Beth Hammack dissented in favor of another 25-basis-point hike—their hawkish posture surprised few who track committee dynamics. They would likely vote for an increase if unemployment hit 6% and still insist the employment market is running hot.
Chairman Kevin Warsh struck a noticeably more measured tone during his press conference. He acknowledged that financial conditions have visibly tightened since September, capital allocators are becoming far more discerning, and elevated borrowing costs are actively weighing on capital expenditure and AI infrastructure financing. This aligns with what we have watched across multiple cycles: rates run up, conditions tighten, demand adjusts, and at some point the cycle turns and interest rates ease. What goes up eventually comes down; it is simply a matter of tracking the underlying trend rather than reacting to daily commentary.
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9 ┤ ╭╮ (Mid-2022 Peak: 9.0%)
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4 ┤ ╭╯ ╰╮ ╭╮ (2026 Rebound: 4.1%)
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3 ┤ ╭╮ ╭─╮ ╭╮ ╭╯ ╰───╭╯ ╰─* 3.4% - 3.6%
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2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Figure 1: U.S. Annual Inflation Rate Since January 2017. Headline inflation bottomed near 2.3% in late 2025 before executing a distinct “W-shaped” second wave in 2026, bouncing above 4.1% before settling into the 3.4%–3.6% range.
The bond market is finding support from an unexpected direction: equity earnings. Disappointing third-quarter earnings across mega-cap technology triggered an immediate flight-to-safety trade into fixed income:
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Amazon missed both top and bottom lines, logging negative free cash flow for the second consecutive quarter.
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Alphabet posted negative free cash flow of -$9.1 billion against Wall Street expectations of a positive $2.7 billion.
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Intel issued weak forward guidance.
Capital allocators are penalizing firms spending aggressively without clean margins. That equity pull has redirected liquidity into Treasuries and Mortgage-Backed Securities (MBS), pulling benchmark yields back down from their 5.17% shock peak and giving rate-sensitive borrowers welcome breathing room.
2. Market Ground Truth: Real Estate Values vs. The “Crash” Narrative
Mainstream financial headlines have spent two years forecasting a real estate collapse. The transaction data continues to prove that structural undersupply protects values, though demand dynamics are shifting into the fourth quarter:
┌─────────────────────────────────┬──────────────┬──────────────┬──────────────┐
│ Price Tranche │ Sep 2025 │ Sep 2026 │ Net Shift │
├─────────────────────────────────┼──────────────┼──────────────┼──────────────┤
│ $300,000 – $400,000 (Entry) │ 23% │ 31% │ +8.0% │
│ $600,000+ (Move-Up / Luxury) │ 22% │ 18% │ -4.0% │
├─────────────────────────────────┴──────────────┴──────────────┴──────────────┤
│ Total Inventory: 476k (-1.0% MoM, -2.3% YoY) | Pace: 676k (vs 650k expected) │
└──────────────────────────────────────────────────────────────────────────────┘
Figure 2: September 2026 New Home Sales Mix Shift & Inventory. Census/HUD data confirms contract volume beat expectations, while product mix shifted heavily toward smaller entry-level footprints.
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Contract Pace Holds Firm: September New Home Sales came in at an annualized pace of 676,000, beating the 650,000 estimate and dipping only 0.6% month-over-month against forecasts of a 3.5% drop.
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The Product Mix Paradox ($400,000): Outlets reported that the national median new home price fell 3.9% year-over-year. As the data proves, values did not drop—builders simply adjusted what they build. Entry-level spec builds between $300,000 and $400,000 increased by 8 full percentage points, while $600,000+ builds declined. The median tracks the middle unit sold, not the depreciation of existing inventory.
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The Household Formation Inversion: The latest third-quarter data revealed an important shift: owner-occupied household formations fell to 780,000, while single-unit housing completions reached 840,000. For the first time in this cycle, demand fell below new completion supply, introducing modest seasonal pricing flexibility into select regional pockets.
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Multifamily Rent Stabilization: Apartment List’s October National Rent Report showed new rents eased 0.3% month-over-month—a slower seasonal cooling than historical averages. Year-over-year rents turned positive (+0.1%) for the first time since mid-2023, while national vacancy stabilized at 7.0%.
My Favorite Buy Signal: When the crowd gets spooked by headline volatility and casual foot traffic leaves the room, negotiations tilt heavily in your favor. When a builder or resale seller sits on standing inventory with an empty showroom on a Sunday afternoon, they stop being stubborn. That is when you step in to extract massive permanent rate buydowns, seller credits, and clean pricing. That is the conversation I am built for—and the one most borrowers never think to have until it is too late.
3. The Good, The Bad, n’ The Ugly
THE GOOD: Economic Output, Wage Moderation, and Safer Streets
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Q3 GDP Expansion: Third-quarter GDP posted a solid 3.4% annualized increase, beating the 3.2% consensus and accelerating from Q2’s 2.2%. Growth was anchored by sustained business investment in AI data centers and healthcare services.
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Employment Cost Deceleration: The Employment Cost Index (ECI) decelerated from 0.9% to 0.8% in Q3, with straight wage growth easing from 0.9% to 0.7%. Slower wage-pressure growth removes a primary source of policy friction for the Fed and supports bond market stability.
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Urban Ground Truth: The preliminary Justice Department NCVS survey showed violent crime across the United States dropped by roughly 25% in 2025—the largest single-year decline in victimization rates in over five decades. Lower crime rates improve urban quality of life and provide long-term support for downtown infill revitalization.
$/Gal
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$6.00 ┤ ╭─╮ ╭─╯╰─► DIESEL ($6.00+)
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Figure 3: A Decade of Gas & Diesel Prices at U.S. Pumps. Diesel remains pinned above $6.00/gal while gasoline trades near $4.20/gal, creating a historic commercial fuel spread that feeds directly into transportation and material costs.
THE BAD: The Energy Freight Squeeze and Cash-Flow Drawdowns
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The Distillate Reality: Commercial diesel remains elevated above $6.00 per gallon nationwide (touching a September peak above $6.50/gal). With refinery utilization near 98% and distillate stockpiles below 100 million barrels, high freight and equipment fuel costs continue to feed incrementally into consumer goods.
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Personal Savings Easing Lower: The personal savings rate eased lower from 4.0% to 3.8% in September. In the face of ongoing cumulative price increases across nondiscretionary essentials, households are drawing down reserves to maintain everyday living standards.
Wages vs. Real Essentials (BLS & MBS Highway: 2019 - 2026)
Pound of Coffee ────────────────────────────────────────────── +124%
Fuel Oil ─────────────────────────────────── +84%
Ground Beef ────────────────────────────── +76%
Gasoline / Eggs ──────────────────────── +64%
Home Prices ────────────────────── +60%
Electricity ───────────────── +44%
Cumulative Wage Gain ─────────────── +37.7% ($23.68 ➔ $32.60/hr)
Cumulative CPI Basket ──────────── +31.2%
Figure 4: 7-Year Cumulative Inflation vs. Wage Growth. Nominal wages beat the blended CPI basket (+4.9% real gain), but essential non-discretionary categories outpaced wage growth by double digits.
THE UGLY: The Purchasing Power Divide and Payment Strain
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The 7-Year Wedge: On paper, production workers gained ground with a 37.7% cumulative wage increase against a 31.2% headline CPI basket (+4.9% real gain). But everyday life is not lived in a blended basket. As Figure 4 illustrates, non-discretionary survival categories—coffee (+124%), beef (+76%), gasoline (+64%), utilities (+62%), and home prices (+60%)—vastly outpaced wages.
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Debt Payment Inflection & The Vintage Reality: The Federal Reserve Survey of Consumer Finances confirms that the share of families reporting late debt payments increased to 19.6%. When interest rates change direction and head higher, this type of payment friction is natural and expected—higher starting notes mean larger monthly obligations from day one, while slower appreciation removes the rapid equity cushions buyers enjoyed in 2020–2021. Most delinquency today is concentrated in recent loan vintages where high initial payments met flattening appreciation. For older vintages, there is no foreclosure wave brewing; cumulative price gains (+60% over 7 years) provide a massive equity moat. If an older loan holder faces distress, they sell on the MLS and walk away with their cash intact. Total credit card balances sit at $1.26 trillion, and 90+ day serious delinquencies remain elevated near 12.9%.
20% ──────────────────────────────────────────────────────── 2025: 19.6%
15% ──── 2013: 15% ─────── 2017: 14%
10% └─── 2019: 13% ─── 2023: 13% ───┘
5%
0% ───┴──────────┴──────────┴──────────┴──────────┴──────────┴─────────
2013 2015 2017 2019 2021 2023 2025
Figure 5: Share of Late Debt Payments (Fed Survey of Consumer Finances). Household payment friction spiked to 19.6% in 2025, reversing a decade-long downward trend.
4. Market Dynamics: The 2026 Origination Breakdown
Understanding how capital is flowing requires looking at the financing channels clearing the market today. Based on 2025 HMDA data, lock desk volumes, and institutional forecasts, here is our estimated distribution of total loan counts for 2026:
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Conforming Conventional (~60%): Remains the backbone of residential originations, though tightly restricted by strict debt-to-income (DTI) caps and punitive Fannie/Freddie loan-level price adjustments (LLPAs) on investment purchases.
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Government Loans – FHA/VA/USDA (~25%): Serves as an indispensable affordability buffer, capturing roughly one in four buyers navigating first-time homeownership and tighter cash constraints.
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Non-QM Financing (~10%): Represents 1 in 10 originations and continues to expand rapidly. With 19.6% of households reporting late debt obligations, real estate investors and business owners are bypassing personal W-2 underwriting and turning to DSCR (Debt-Service Coverage Ratio) loans that qualify purely on property cash flow.
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Jumbo Financing (~6.7%): Captures roughly 1 in 15 loans, constrained by conservative bank liquidity, strict reserve requirements, and higher rate hurdles on high-balance debt.
5. Preparation, Planning, and Readiness
Market friction creates clear advantages for well-prepared borrowers who understand the math. Here is your fourth-quarter playbook:
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Leverage the Inverted Formation Window: With owner-occupied formations dipping below single-family completions (780k vs. 840k), seasonal builder competition is heightened. Target finished spec inventory where developers need to clear balance sheets before year-end.
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Execute the Builder Concession Arbitrage: Do not settle for a simple $30,000 price cut that only saves you a modest sum out-of-pocket and marginally reduces debt service. Take that concession as direct builder-paid permanent financing subsidies and closing cost offsets to permanently buy down your note rate. This cuts out at least one future refinance cycle—eliminating thousands in future closing friction, reducing total carrying costs, and resetting the baseline cost of your loan right out of the gate.
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Lock MBS Rallies Driven by Tech Pullbacks: As tech earnings misses shift capital from equities into bonds, watch for short-term spread compressions to lock long-term commercial or residential debt.
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Insulate Investments with DSCR Loans: If personal credit utilization or revolving balances are creating underwriting friction, use DSCR programs to acquire or refinance rental assets based entirely on the property’s gross rental schedule.
Visit michael-ryan.com to schedule a direct strategy session.
Michael Ryan & Associates
Strategic Mortgage Brokerage & Commercial Advisory