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Good afternoon!
Last week two numbers landed that changed everything for housing. We entered a new military conflict in Iran. Then oil both surged and then dropped in just a matter of days. The biggest pop since 2022. And the economy lost 92,000 jobs in February. Then on Monday, the President tweeted the Iran conflict "could end very soon." Markets rallied. But housing math didn't.
Let's get into it.
Today’s word count: ~1,720 words… a 6.5 min read.
ARE THE ALL CAPS TWEETS HELPING?? Yes and no. Check out the full story below for more.
The Big Idea: the Iran Conflict, Stagflation, Affordability & You.
Last week two numbers landed that changed everything for housing. We entered a new military conflict in Iran. Then oil both surged and then dropped in just a matter of days. The biggest pop since 2022. And the economy lost 92,000 jobs in February. Then on Monday, the President tweeted the Iran conflict "could end very soon." Markets rallied. But housing math didn't.
Let's get into it.
I call this "The Oil Tax." It's the hidden cost that just hit every apartment, every house, and every affordable housing project under construction in this country. And a tweet didn't fix it.
Here's what happened. Oil surged 14% in a single day, pushing toward $120 per barrel. The highest since 2022. There would be subsequent volatility in the days after, pushing oil pricing above 30% over that time.
Gulf producers cut output because of the latest Iran conflict after Iran significantly cut access to the Straight of Hormuz, and the price shock rippled instantly into every supply chain that moves on diesel. By the way, nearly a quarter of the globe accesses petroleum through the Straight of Hormuz, alone.
The same week, the February jobs report came in at negative 92,000. Against expectations of positive 150,000. That's a 250,000-job miss. Year-over-year, job growth fell 88%. We covered this in depth, in last week's newsletter.
Two forces pulling in opposite directions. Rising costs. Falling demand. That combination has a name: stagflation (when prices go up and the economy slows down at the same time). Couple that with recent ups and downs of our Tariff War, and it becomes an interesting situation. It's all the scenario the Fed (the Federal Reserve, which sets interest rates) has been desperately trying to avoid.
Then President Trump signaled the Iran conflict "could end very soon." Markets rallied. The S&P and Nasdaq surged. Crisis averted?
Not for housing.
Why it matters: Oil isn't just gas prices. Massive volatility like this acts like a tax on the whole economy. Steel, concrete, lumber transportation, diesel for equipment. Every material that goes into building a home travels on oil. Even the prices of everyday household goods, mostly made of plastic, with petroleum base ingredients, get affected.
One 14% spike reprices supply chains for months. The Iran conflict may cool. The damage to housing pro formas (the financial projections that determine whether a project gets built) won't. And regardless of what happens in the Strait of Hormuz, 92,000 jobs didn't come back because of a tweet.
Here's the math:
Construction costs are repricing. Every housing project analyzed in the last 18 months assumed oil at $70-80 per barrel. Those assumptions are now exposed. A tweet doesn't un-break a pro forma.
Buyers are frozen. Mortgage rates crossed below 6% for the first time since 2022. But buyers aren't moving. Home prices were set during the 3-4% rate era. Lower rates don't create buying power if prices haven't adjusted. That means more people renting, not buying.
Jobs aren't coming back on a headline. Negative 92,000 against expectations of positive 150,000. That's real. Markets can rally. Paychecks can't.
In addition to buying and building workforce housing, I'm lending on single family, as well. My capital partners have increased loan spreads a total of 80 basis points (or 0.8% for non-finance nerds like me), within the last week alone. That's the type of stuff that can make or break a deal.
What this means for housing:
If you invest in real estate: Rental demand stays strong in stagflation. When you can't buy, you rent. But project costs need to reflect oil at $100+, not $75. Every return assumption needs stress-testing against these new numbers.
If you build housing: Material cost spikes from oil plus labor market uncertainty equals a double squeeze on construction budgets. Locking in supplier contracts now, even at a premium, buys 9-12 months of pricing certainty.
If you care about affordable housing: LIHTC deals (Low-Income Housing Tax Credit, the main federal program that finances affordable apartments) have fixed rents. They can't pass through cost inflation. A deal that penciled six months ago may not pencil today.
If you're a renter or homebuyer: I won't sugarcoat it. The 4 million home deficit gets worse in stagflation, not better. Prices stay elevated. But speculative builders get cleared out, and that creates opportunity for disciplined teams building for the long term.
The bottom line: Markets can rally on a tweet. The housing math doesn't. The builders who win in this environment are the ones who locked in costs, extended their timelines, and picked geographies with structural shortages. Southeast markets with population inflows and housing deficits. That's exactly where we're building.
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Signal vs. Noise.
✅ SIGNAL: 30 Affordable Apartments for Every 100 Families Who Need One
The NLIHC (National Low Income Housing Coalition) just released their annual GAP Report. No state in America has enough affordable housing.
Why it matters: For every 100 extremely low-income households, only 30 affordable apartments exist. A family of three in Alabama earning $16,000 per year needs a $400/month two-bedroom. Median rent is $1,150. To close even 10% of this gap, the country needs 170,000 LIHTC-financed units (tax credit-funded affordable apartments) annually. We're producing about 110,000.
❌ COULD GO EITHER WAY: Some Impact Capital Is Rotating Away From Housing
HighBrook Capital closed $266MM for data centers. Galvanize raised $370MM for decarbonization. Sound Point closed $1.5B in private credit.
Why it matters: Some investment dollars in the impact space are chasing data centers and private credit instead of apartment buildings. The pitch for housing now has to answer: "Why invest here instead of a data center fund?" The answer is structural demand. A housing shortage that compounds every single year. The investors who see that are the ones building the future.
Go deeper: Axios Pro Rata, Weekly Capital Flows
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The Numbers: 180,000.
That's how many insurance policies Citizens Property Insurance Corporation, Florida's insurer of last resort, shed last year. They now hold less than 10% of the market.
Here's what's happening. Private insurers have been in and out of Florida for awhile. Hurricane risk and claim costs have made the state unprofitable for carriers. Fewer carriers means less competition. Less competition means pricing spikes.
The chain reaction is simple: carrier exits lead to less competition, which leads to pricing spikes, which leads to higher operating expenses, which compresses the net income (called NOI, or net operating income) on every apartment building in the state.
Every Florida apartment deal analyzed before 2024 without a locked insurance quote is sitting on real financial risk.
Projects that penciled at one insurance rate may not pencil at today's rates. That gap is the difference between a project that gets built and one that doesn't.
Smart builders are locking committed rates from carriers before breaking ground. Not estimates. Committed rates.
The bottom line: If insurance costs keep climbing, some Florida housing projects simply won't get built. And every project that doesn't get built is apartments families won't live in. Insurance isn't a footnote in the deal. It's load-bearing.
Built in Public. I'm Speaking at IMN Middle-Market Multifamily in Coral Gables in Two Weeks!
Let’s meet up in Coral Gables the week after next!
On Monday, March 23rd and Tuesday, March 24th, I'll be at the IMN's Middle-Market Multifamily Forum in Coral Gables, FL, for my second year in a row. I'd love to meet you there.
I'm blessed to be speaking on two different panels:
Florida's affordability challenge: workforce housing solutions for mid-market multifamily
Beyond Miami: Are secondary and tertiary markets the next big multifamily hotspots?
Want to come? Reply "IMN" to this email and I'll send you a special 20% discount code off your registration. Also, if you'll be in the area those days, hit me up too. Come say hello.
Indelible Impact: Women’s History Month!
Shirley Chisholm (1924-2005)
Unbought. Unbossed. And the first to fight for working people's right to housing in Congress.
Chisholm became the first Black woman elected to Congress in 1968. She spent 14 years building the legal infrastructure for fair housing enforcement.
Pushing federal agencies to prosecute discrimination. Expanding food stamps and nutrition programs. Fighting for early childhood education. The systems that keep working families housed don't start at the front door. They start with the policies that let people earn, eat, and educate their kids.
Her connection to housing: Housing is downstream of employment, education, healthcare, and credit access. Chisholm fought for the infrastructure that lets working people stay housed. That infrastructure is the operating environment for every deal we build.
The bottom line: One woman with conviction and relentless advocacy reshaped an entire industry. That's built different.
Final Thought.
Stagflation is brutal for speculation. But it's opportunity for clarity.
If this landed, share it with someone who cares about housing. And if you're seeing stagflation hit home in your market, hit reply. I read every one.
See you next week.
- Evan
Founder & CEO, Built Different & Shieldstone