By Matthew Neisser, CEO, LendingOne
The housing and real estate investment landscape continues to adjust after several years of extraordinary volatility. What we’re seeing today is not a return to the ultra-liquid, ultra-competitive conditions of 2021–2022, but rather a more balanced environment. One where discipline, local knowledge, and patience matter again.
From mortgage spreads and borrowing costs to inventory dynamics and regional divergence, the market is quietly recalibrating and getting more favorable for investors. For investors willing to lean into fundamentals rather than headlines, this period is beginning to offer real opportunity.
Below are 5 key themes to watch for this spring.
1. Inventory Is Creeping Higher—and Time Is Back on the Investor’s Side
Another notable shift is on the supply side. While new listings aren’t surging dramatically, days on market are rising—which is increasing months of supply—and that alone is enough to change market psychology.
Homes that sit longer tend to attract more flexible sellers. Renovation-heavy properties, estate sales, and homes that missed the 2021–2022 pricing window are increasingly available at discounts relative to peak expectations in Sun Belt markets.
For investors, this matters. Longer days on market often mean: 1. Greater willingness to negotiate, 2. Preference for certainty and speed over top-of-market pricing, and 3. Increased openness to cash or investor-friendly terms.
We’re not seeing distress in a broad sense. We are seeing seller fatigue, and fatigue creates opportunity.
This dynamic is particularly beneficial for local operators who know their submarkets well. Inventory expansion doesn’t automatically translate to deals; it rewards investors who understand pricing, renovation risk, and exit timing.
2. Build-to-Rent Remains a Core Strategy—But the Cycle Is Shifting
On the build-to-rent (BTR) side, activity remains steady, especially when investors partner directly with homebuilders. At LendingOne, we continue to finance both:
- Entire communities sold in bulk
- Partial take-downs within for-sale developments
That model is now firmly established.
What is changing is the delivery pipeline. Many purpose-built BTR projects that began during the 2021 capital surge have now been delivered. New standalone BTR starts have slowed meaningfully, which should help rent growth normalize market conditions for projects delivering in 2026 and 2027.
We’re increasingly seeing BTR supply come from homebuilder pipelines rather than ground-up, investor-led developments. That’s an important distinction. Builders use BTR as a liquidity outlet, especially during periods of slower retail absorption. In turn, investors gain access to new products without taking full development risk.
Looking ahead, as construction costs stabilize, we expect interest in new BTR development to gradually swing up.
3. Where Investors Are Finding Deals Today
Despite the growth of marketplaces and national platforms, the most consistent deal sourcing remains local.
For small and mid-sized investors in particular, local relationships still win. Brokers, wholesalers, builders, and direct-to-seller channels continue to outperform broad listing platforms when inventory is rising, and homes are sitting longer.
What’s different today is that builders themselves are increasingly part of the sourcing equation. Some are actively engaging investor buyers to help manage standing inventory, especially in slower-moving submarkets.
The common thread across all strategies is market knowledge. Investors who understand their local buy boxes best are best positioned to capitalize on this phase of the cycle.
4. Regional Divergence Is Growing—And Fundamentals Matter More Than Ever
One of the clearest takeaways from the past year is that not all growth markets are created equal.
Markets driven primarily by retirees, second-home demand, or speculative inflows have proven far more volatile. Without strong employment growth, price appreciation alone is not a durable investment thesis. This is especially true when insurance, HOA fees, and carrying costs are rising.
Looking ahead, softer markets with higher inventory levels and strong long-term employment and population outlooks are likely to attract increased investor interest.
This is why certain corrected growth markets, such as Austin, are starting to look interesting again. While supply is abundant, long-term employment drivers remain intact. That doesn’t guarantee quick appreciation, but it does support long-term demand.
On the other end of the spectrum, supply-constrained regions in the Northeast and parts of California present a different opportunity set. Aging housing stock, limited new construction, and continued demand for modern layouts are driving interest in infill and spec redevelopment.
Local builders who can acquire small parcels and deliver updated product—four-bedroom homes, townhomes, or modest clusters—are increasingly well-positioned, particularly as national builders pull back in select markets.
5. Mortgage Spreads Are Tightening—And That Matters More Than Many Realize
One of the more constructive developments we’ve seen recently is the tightening of mortgage spreads, driven in part by Fannie Mae and Freddie Mac retaining more mortgage bonds. While the mechanics of the mortgage-backed securities (MBS) market can feel abstract, the implications matter for rates.
When interest rates rise quickly, spreads naturally widen. Investors in mortgage bonds expect faster prepayments when rates eventually fall, so they demand more yield upfront to compensate for that risk. That’s a part of the reason that the average 30-year fixed mortgage rate in 2022 rose faster than the 10-year treasury yield. By spring 2023, the spread between the 30-year fixed mortgage rate and 10-year treasury yield was 300 bps—far above the 177 bps average spread since 1972.
What’s different now is that incremental demand for MBS—particularly from the government-sponsored enterprises (GSEs)—and lower prepayment risk (as rates have dropped from their highs) has helped compress those spreads. This doesn’t mean rates collapse overnight, but it does improve affordability on the margin and lowers borrowing costs relative to where they would otherwise be. Indeed, as of Friday, the spread is closer to 190 bps.
That’s important for two reasons. First, it supports transaction velocity on the consumer side of the market. Second, for investors, it creates a more stable financing backdrop after several years of rapid rate shocks, Fed balance-sheet runoff, and reduced bank participation in mortgage lending.
The net effect is not a return to cheap money, but a move toward more functional, predictable borrowing costs.
Closing Thoughts
We’re no longer in a market where rising prices cover underwriting mistakes. That’s a good thing.
Today’s environment rewards:
- Local expertise
- Patience on entry and exit timing
- A clear understanding of demand drivers
Mortgage spreads are improving, inventory is building gradually, and capital is becoming more selective. For disciplined investors, this combination is beginning to create a healthier opportunity set than we’ve seen in several years.
At LendingOne, we remain focused on supporting investors who approach this market thoughtfully through single-family rentals, build-to-rent partnerships, or localized redevelopment strategies.
The recalibration is still underway. But for those positioned correctly, the next phase of the cycle is starting to take shape.
