Paying 2025 Prices for a 2026 Market | The Hard Money Edge, Issue 018
Paying 2025 Prices for a 2026 Market
FIRST POSITION
By Chris Anderson
“Ignoring cycles and extrapolating trends is one of the most dangerous things an investor can do.” Howard Marks, “The Most Important Thing,” Oaktree memo, July 1, 2003
Flippers are paying more for houses. They are getting less when they sell them.
The Burns + Kiavi survey says flippers will now pay up to 68% of after-repair value, up from 66% a year ago. In the same survey, 21% sold “mostly below” their ARV, up from 17%. When they missed, 91% said the sale price was the problem, not the budget.
That's extrapolating a trend. Last year's comps went into this year's purchase price.
Massachusetts is showing the same turn. September listings were up 6.3%. Pendings were down 7.9%. Price cuts were up 11.2%. The 30-year mortgage your buyer gets is 7.32%. The 10-year dipped under 5% on Thursday and closed Friday at 5.00%.
My advice: underwrite the ARV off closed sales from the last 90 days, not last spring's. Take a point off your purchase price for every month you think the sale could stall. If the deal only works at last year's ARV, it doesn't work.
We hold every loan we make on our own balance sheet, first position, Massachusetts only. We don't broker the money. We are the money.
BY THE NUMBERS
As of Friday close, Oct 23, 2026
Measure | This week | Prior week |
30-yr fixed (Freddie PMMS) | 7.40% | |
10-yr Treasury | 5.00% (Fri Oct 23 close; live Mon Oct 26, 4:46 AM ET: 4.992%, Tradeweb via CNBC) | 5.09% |
5-yr Treasury (the take-out base) | 4.89% | |
2-yr Treasury | 4.74% | |
Prime (WSJ) | 7.00% (Fed H.15 bank prime; WSJ Prime: [MISSING – source: WSJ Prime Rate page]) | 7.00% |
Oct 28 FOMC hike odds (CME FedWatch) | [MISSING – source: CME FedWatch, Friday close]. Hold widely expected at 3.75%–4.00% | ~16% |
WTI / diesel | $101.41 / $6.33 | |
MA single-family median | $670,000 (MAR, September) — Warren Group: [MISSING – source: Warren Group September MA release] | $665K (Warren Group, May) |
MA listings (MLS PIN) | 15,865 New + Active listings, Single Family + Condo + Multi Family, statewide, Oct 26 4:47 AM ET. Source: MLS PIN (Pinergy search by Boston Trust, Oct 26 2026, 4:47 AM ET; SF+CC+MF, New+Active) | n/a |
Sources: U.S. Treasury daily par yields; Freddie Mac PMMS; Fed H.15; Reuters/CNBC oil; EIA via Blue Book; MAR via Patch; Lamacchia/Warren Group/MLS PIN.
COST OF CAPITAL
The short end is pinned. The Fed sits this week, and the market says December is the move.
The Fed raised in September. Fed funds sit at 3.88% effective. SOFR printed 3.90% on Oct 22, up from 3.62% in mid-September before the hike. Nearly all economists in a Reuters poll expect the Fed to hold Oct 27–28 and hike again in December.
Private credit is flush but nervous. Direct-lending funds raised a record $129.15 billion in the first nine months, but Q3 lending volume fell 28%. Morningstar DBRS says borrowers getting covenant relief or capital support rose to 15% from 10% a year ago. That is corporate credit, not Massachusetts dirt. But money that gets nervous in one place gets tight in others.
Banks: the latest Fed loan officer survey (July) showed banks easing CRE standards, with construction and land development basically unchanged. The October survey is not out yet. [MISSING – source: October 2026 SLOOS]
UNDERWRITING NOTE: 5-yr at 4.82% + 275 bp = 7.57% take-out, down from 7.64% last week. Seven basis points is not a reason to stretch. Size your refi at 7.57% and stress it at 8%.
COST WATCH
Materials are running double-digit. Lumber is the exception that's easing.
The latest full read on materials is still the September PPI, released Oct 15. The October PPI isn't out yet, so most of these are the same data Issue 017 used. Newer this week: lumber futures, diesel, and the union wage settlement report.
Ready-mix concrete | Asphalt roofing | Plastics pipe (PVC/PEX) | Diesel (EIA retail) | Construction wages |
Lumber futures: Nov contract settled $518.50 per thousand board feet Friday, down from $532.50 the Friday before and well off the 52-week high of $680.50 (Jan 20). Year-ago futures: [MISSING – source: CME lumber settlement, Oct 2025].
Why metals are up: AGC says tariffs of up to 50% imposed a year ago pushed steel up 28% and copper/brass up 30%. Diesel PPI is up 115% year over year.
Labor: first-year union settlements in the Northeast averaged 5.8% this year, the highest of any region, and carpenters got the biggest raise of any craft at 6.3%. Construction unemployment is 3.5%. The Boston Fed's Beige Book contacts said construction "slowed somewhat".
Not found this week: windows [MISSING – source: BLS PPI millwork/windows], appliances [MISSING – source: BLS PPI household appliances], HRC steel spot price [MISSING – source: CME HRC futures], rebar spot price [MISSING – source: ___].
The fix-and-flip lens: a $150K gut-rehab materials budget. (Boston Trust illustration. The line-item split is our assumption for a typical Greater Boston triple-decker gut, not survey data. Each % change is the September YoY PPI for the closest category.)
Line item | Year-ago budget | YoY change | Same scope today | Added cost |
Framing lumber & sheathing | $20,000 | +14.2% (Softwood lumber PPI) | $22,840 | +$2,840 |
Electrical rough (wire, cable) | $12,000 | +30.8% (Copper wire & cable PPI) | $15,696 | +$3,696 |
Plumbing rough (copper, fittings) | $10,000 | +30.0% (Copper & brass mill shapes PPI) | $13,000 | +$3,000 |
Drywall & plaster | $10,000 | +1.4% (Gypsum products PPI) | $10,140 | +$140 |
Roofing (asphalt shingles) | $12,000 | +2.7% (Asphalt roofing products PPI) | $12,324 | +$324 |
Concrete / foundation repair | $8,000 | +2.3% (Ready-mix concrete PPI) | $8,184 | +$184 |
Structural steel (beams, lally columns) | $5,000 | +27.6% (Steel mill products PPI) | $6,380 | +$1,380 |
Windows & exterior doors | $20,000 | [MISSING – source: BLS PPI millwork] | — | — |
Appliances | $10,000 | [MISSING – source: BLS PPI appliances] | — | — |
Cabinets, tile, fixtures, finishes | $43,000 | [MISSING – source: ___] | — | — |
Priced lines subtotal | $77,000 | +15.0% | $88,564 | +$11,564 |
That's about $11.6K more on $77K of priced lines. Almost all of it comes from three things: copper in the walls, steel in the basement, and lumber in the frame. The unpriced $73,000 isn't counted here, so the real number is higher, not lower.
What flippers are saying (Burns + Kiavi Fix and Flip Survey). The latest public release is Q2 2026, published in August. It's two months old, and Q3 isn't public yet. The full report is gated to JBREC subscribers, so these numbers come from Kiavi's write-up and press coverage. - The Fix and Flip Market Index fell to 59 from 63. Anything above 50 is still expansion. A year ago it was 57. - Average renovation spend fell to $69K per flip. Flippers are cutting scope while materials go up. - 59% of flippers reported longer days on market. In the Northeast it was 55%. - 21% sold "mostly below" their after-repair value, up from 17%. Among those misses, 91% blamed an optimistic sale price, not the renovation budget. - Flippers will now pay up to 68% of ARV on average, up from 66% a year ago. - 59% of flippers secured new loans in the quarter, the highest share in two years. - Boston/metro figures: [MISSING – source: JBREC subscriber report, Northeast metro detail]
That last pair is the tension. Flippers are paying more of ARV and getting financed more easily. Meanwhile exits are getting slower and softer. When the exit misses, it's the sale price that was wrong, not the budget. So underwrite the sale price you can prove with closed comps from the last 90 days.
UNDERWRITING NOTE: Re-price any materials budget that's more than 90 days old. Carry 15% contingency on electrical, plumbing and structural lines, not 10%. Lock lumber now while futures are soft. And ask your GC whether the fuel and delivery surcharges are fixed in the contract or pass-through.
Sources: BLS PPI via Consight; AGC Data DIGest, Oct 16; ABC, Oct 15; PriceLetter; Investing.com lumber; EIA via Blue Book; AGC/BLS jobs, Oct 2; JBREC + Kiavi Fix and Flip Survey, Q2 2026 (Aug); HousingWire; Scotsman Guide.
MARKET BY ASSET TYPE
Greater Boston, Q3 2026 broker reports unless noted. National CMBS delinquency is Trepp, September.
Office. Greater Boston vacancy hit a record 24.0% (Newmark), with the CBD at a record 23.2%. CBRE's narrower Downtown read is 18.5%, with asking rents at $66.12. Lab is worse: availability is 33.1%, and asking rents fell 8.1% YoY to $77.97 NNN. Distress is trading. FoxRock bought 1100 Crown Colony Dr, Quincy for $5.5M, 78% below its 2013 price. National CMBS office delinquency is 12.16%. Lender take: Price office as land plus a plan. Lend on what it sold for last month, not what it appraised for in 2019.
Retail. Still the tightest asset in town. Vacancy is 3.5% (Marcus & Millichap), against 4.9% nationally. Asking rents are about $29/SF, up 2.5% YoY. National CMBS retail delinquency fell to 6.58%. Lender take: Neighborhood storefronts with service tenants are financeable. Big boxes without a backfill plan are not.
Industrial / warehouse. Vacancy rose to 8.2% (CBRE), with asking rents flat. Small-bay space is running about 6.3% vacant versus 12.5% for big-box. In 128 North/Rt. 3 North, vacancy is 9.25% at $17.65/SF NNN. National CMBS industrial delinquency is 1.14%. Lender take: Small-bay flex is still the best collateral in Massachusetts. Underwrite big-box at today's vacancy.
Multifamily / mixed use. Vacancy is 5.6%, with asking rent of $3,012/unit, +2.2% YoY. Class C is the tightest at 3.2%. Other trackers show softer numbers, with concessions at 2.1% of asking rent. National CMBS multifamily delinquency rose to 8.04%. Mixed-use specific figures: [MISSING – source: Greater Boston mixed-use vacancy/cap rate report]. Lender take: Rents hold up in the 2-4 family and Class C stock we lend on. The risk is in expenses, not occupancy.
Condos. Statewide condo sales fell 6.4% in September, with the median flat at $525,000 (MAR). In Greater Boston, closed sales were down 9.8%, the median was $675,000 (+0.9%), and supply was 4.3 months, against 2.7 months for single-families. Lender take: Condo exits take longer. Build in 60 more days of carry on condo conversions and underwrite unit-by-unit sellouts.
PRE-FORECLOSURE
This week's count: 134 new auction notices and 57 Land Court petitions to foreclose. Last week: 147 notices and 77 petitions. That's 13 fewer notices and 20 fewer petitions.
The vintage barbell. Of the 134 notices, 46 (34%) are on mortgages dated 2021 or later. Last week it was 32%. The rest of the book splits two ways: 37 on mortgages from 2008 or earlier, and 51 from 2009–2020. The old paper is still working through, and the rate-peak loans are catching up to it.
Private plaintiffs. 14 of 134 notices (10%) were brought by private lenders, funds or individuals rather than banks, servicers, agencies or securitization trusts. Last week: 18%, 26 of 146. (My classification from the plaintiff field; check it matches last week's method before running.) CCG Fund 1 LLC shows up twice this week, in Fall River and Middleton. Same originator as the South Boston files below.
County counts (notices / petitions): Worcester 29 / 9 · Plymouth 21 / 4 · Bristol 20 / 7 · Hampden 16 / 7 · Essex 12 / 10 · Middlesex 11 / 8 · Norfolk 8 / 4 · Barnstable 6 / 0 · Hampshire 5 / 2 · Suffolk 4 / 5 · Franklin 2 / 0 · Dukes 0 / 1.
Context: Massachusetts foreclosure filings in July were up 11.85% year over year, from a very low base.
FORECLOSURE DESK
AUCTION BLOCK
Sixty-five mortgage foreclosure auctions are on the Massachusetts calendar this week, Oct 26 to Nov 1. Another 294 future foreclosure sales are active, with 25 postponed and 20 cancelled. Middlesex leads the week with 13, then Suffolk with 9. Plymouth and Worcester have 8 each.
Condo lien sales: 12 are active statewide. Suffolk has 5, Middlesex 3, and Bristol, Franklin, Norfolk and Plymouth have 1 each. None fall this week. These are a different animal. A condo association's lien gets priority over a first mortgage for six months of common charges plus its legal costs. A properly run association sale can wipe out even the first mortgage. Real estate taxes and municipal liens still come ahead. Before you bid on one, have counsel confirm whether the first mortgage survives the sale.
Read these as minimums. One auctioneer, Harkins, isn't in the count yet. This is our first run, so there's no week-over-week change yet.
County | Foreclosures this week (10/26–11/1) | Foreclosures active | Postponed | Cancelled | Condo lien active |
Middlesex | 13 | 39 | 2 | 3 | 3 |
Suffolk | 9 | 37 | 4 | 4 | 5 |
Worcester | 8 | 44 | 3 | 3 | 0 |
Plymouth | 8 | 25 | 3 | 3 | 1 |
Hampden | 6 | 29 | 5 | 1 | 0 |
Bristol | 5 | 34 | 1 | 4 | 1 |
Norfolk | 5 | 27 | 1 | 0 | 1 |
Essex | 4 | 34 | 5 | 0 | 0 |
Barnstable | 3 | 10 | 0 | 1 | 0 |
Hampshire | 2 | 3 | 1 | 1 | 0 |
Dukes | 1 | 4 | 0 | 0 | 0 |
Berkshire | 1 | 3 | 0 | 0 | 0 |
Franklin | 0 | 3 | 0 | 0 | 1 |
Nantucket | 0 | 2 | 0 | 0 | 0 |
Statewide | 65 | 294 | 25 | 20 | 12 |
Source: Boston Trust Auction Tracker compilation of Massachusetts auctioneer listings, as of Oct 25, 2026.
The deposit stack (134 notices). 68 at $5,000 · 43 at $10,000 · 12 at $15,000 · 3 at $20,000 · 5 at $25,000 · 1 at $50,000 · 1 at $250,000 · 1 at $400,000. Ninety-three percent of deposits are $15K or less. That's one-to-four family residential. The big one still ahead is commercial: 36 Essex St, Wenham ($400K, Mon Oct 26).
Top law firms (notices): Brock & Scott 39 · Korde & Associates 26 · Harmon Law Offices 18 · Orlans Law Group 9 · Doonan Graves & Longoria 5.
Sale dates in this week's feed run from Oct 14 through Nov 30. Opening bids are not in the feed (the price field is blank on all 134). [MISSING – source: auctioneer property pages / foreclosing counsel for opening bids]
Also on the public re-auctions.com schedule this week: 314 K St, South Boston (Tue 11:00 AM); 23 Woodlawn Ave, Everett (Tue 1:00 PM); 409 Hancock St, Quincy (Thu 11:00 AM); 66 Landseer St, West Roxbury (Fri 11:00 AM). The Milford sales on Oct 28 are listed as cancelled.
WATCHLIST
Deposit | Address | Sale | Auctioneer | Lender (plaintiff) | Mortgage date | Months to gavel |
$400,000 | 36 Essex St, Wenham (borrower: Penguin Hall Inc) | Mon Oct 26, 11:00 AM | [MISSING – source: ___] | Origen Wenham LLC | Sep 16, 2016 | 121 |
$10,000 | 5 Butlers Cove Rd, Wareham (LLC borrower) | Mon Oct 26, 11:00 AM | [MISSING – source: ___] | Belvidere Capital LLC | Apr 25, 2024 | 30 |
$15,000 | 92 Winthrop St, Framingham (borrower: Siqueira Campos LLC) | Tue Oct 27, 11:00 AM | [MISSING – source: ___] | Private individual lender | Feb 28, 2024 | 32 |
$25,000 | 227 Eagle St, Fall River (LLC borrower) | Fri Nov 6, 1:00 PM | [MISSING – source: ___] | CCG Fund 1 LLC | Jun 16, 2025 | 17 |
$20,000 | 212 Central Ave, Needham (borrower: Project212 Central Ave LLC) | Tue Nov 10, 11:00 AM | [MISSING – source: ___] | CL-LM Resi Purchaser | Jun 2, 2025 | 17 |
Source: Warren Group / VFP pre-foreclosure feed, process week 202642 (delivered Thu Oct 22, 2026). Homeowner names omitted. Months to gavel = mortgage date to scheduled sale.
THE PAPER TRAIL
Following up on last week's South Boston files.
869 East Fourth St, South Boston. Public notice confirms a mortgagee's sale at 1:00 PM Tuesday, Oct 27, on site. Original lender CCG Fund 1, LLC (March 2025), assigned to MERS/One IM RTL LTD (January 2026), then to Athene Annuity and Life Company (July 2026). Deposit $10,000, balance in 30 days to Braucher & Associates. Worth noting: the three-family is also on the MLS at $2,245,000, cut from $2,295,000 on Oct 12. A listing running alongside a noticed sale usually means someone is racing the auction.
119 M St, South Boston. Still on. Public notice sets the sale for 12:00 PM Tuesday, Oct 27, on site, one hour before East Fourth. Same borrower, same originator: CCG Fund 1, LLC, dated March 28, 2025. But the assignment path is different: MERS/Churchill Funding I LLC (April 2025), then Athene (July 2026). Deposit $10,000. It's also listed: a two-family at $1,235,000, cut from $1,275,000 on Oct 12.
The lesson in that chain: a loan that changes hands that many times in 16 months is a loan nobody was holding. Know who owns your paper.
ALSO ON THE RADAR
869 E Fourth St — auction result Tue Oct 27; whether the MLS listing goes under agreement first.
119 M St — auction Tue Oct 27, 12:00 PM; result and any under-agreement.
314 K St, South Boston — on the Oct 27 schedule.
FOMC decision Wed Oct 28.
WHAT IT MEANS FOR INVESTORS AND BORROWERS
Underwrite ARV off the last 90 days of closings. Last year's comps are this year's purchase price.
Re-bid every budget and carry a 15% contingency. Materials alone ran +15.0% on our $150K gut-rehab.
Size the take-out at 7.57% and stress it at 8%. At the auction block, line up your financing first and have counsel confirm what survives a condo lien sale.
BEFORE YOU BID
Read the notice. Pull the chain of assignments. Check for a listing. Walk the building. Know your all-in before you raise your hand, because the balance is due in 30 days and the auctioneer doesn't care where it comes from.
If you're bidding this week, call us for a same-day term sheet. We fund the bridge in seven days. 617.752.7000 · www.bostontrustcorp.com
WORTH READING
CNBC: 10-year Treasury yield drops back to 5% as investors seek cover from AI worries
Reuters: CoreWeave's debt stress tests private credit's AI financing boom
Bisnow: FoxRock buys Quincy office at 78% discount after luring tenant away
Boston Globe: Motor Mart, once the world's largest parking garage, sells at massive discount
I have funded through four of these cycles. The discipline never changes. — Chris Anderson, Boston Trust Corp
This newsletter is for informational purposes only and is not an offer to lend or a commitment to make any loan. Auction dates and terms change constantly; verify every sale with foreclosing counsel before you bid.
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