May 12, 2025
If you’re a developer or investor managing leverage, watching inflation, or planning your next raise—yesterday brought news that could ripple across every balance sheet in the real estate world.
In under 24 hours, the U.S. moved toward de-escalating its trade tensions with China. The “Buy America” rhetoric softened, recession odds ticked lower, and pressure on the Fed to cut rates lost momentum. It was one of those rare days when macro volatility actually worked for capital markets—at least for now.
Jay Powell’s Patience Just Paid Off
For all the criticism Powell has taken—called a “fool” by the president, second-guessed by Wall Street—the Fed chair may finally be having his “I told you so” moment.
Futures traders have now priced in just two rate cuts for 2025, down from five in early April. The bond market is back in sync with the Fed’s original forecast from March, and economists are starting to trim even those expectations, citing renewed signs of inflation.
This shift gives Powell breathing room. He doesn’t have to cut just to calm markets or hedge against a recession that keeps not arriving. And for developers eyeing construction loans or refinancing windows, the signal is clear: don’t bank on cheap capital returning anytime soon.
Inflation Is Calming, But Not Gone
April’s CPI came in a notch below expectations—up 0.2% month-over-month, but trending in the right direction. That’s helpful, though hardly conclusive. Retail sales data due later this week could reveal whether consumer demand is front-loaded by tariff fear or resilient enough to sustain growth.
Still, this pause on tariffs is meaningful. It reduces the urgency for emergency rate cuts and shows a path where inflation and trade anxiety can ease without the Fed having to step in.
Why It Matters for Real Estate
If you’re underwriting deals right now, here’s what to keep in mind:
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Rate volatility is stabilizing. That doesn’t mean rates are coming down—it means the floor is likely firmer than you’d hoped. Structure accordingly.
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Material pricing may get a reprieve. If the tariff truce holds, developers importing key materials could avoid a cost shock. But that runway is short. Manufacturers are already scrambling to front-load shipments before any new duties kick in.
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Capital flows may shift. With crypto markets back in the headlines and the Trump family’s ventures drawing attention (and scrutiny), traditional asset classes like real estate could see renewed interest from allocators looking for tangible, yield-driven plays with regulatory clarity.
Meanwhile, the Crypto Theater Rolls On
While Powell was getting his flowers, the Trump family was busy moving into new lanes of financial engineering. From Bitcoin mining SPACs to memecoins tied to dinner invitations, the Trump orbit continues to blur the lines between influence and investment.
Whether you’re amused or alarmed, here’s the practical takeaway: money is still chasing narratives. In real estate, we need to anchor our capital strategies in fundamentals—because unlike memecoins, our LPs don’t buy hype.
And on the Hill… a Tax Bill to Watch
As of this morning, GOP leaders are pushing a broad new tax package aimed at delivering on Trump’s campaign promises. Key proposals include:
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Rolling back EV tax credits
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Adding work requirements to Medicaid
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Raising the SALT deduction cap (possibly to $30,000)
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Leaving out a proposed wealth tax (for now)
If passed, these measures would have implications for multifamily developers (especially in blue states), infrastructure players, and healthcare-focused real estate funds. But infighting has already started, and passage is far from guaranteed.
Final Thought:
In a market that keeps rewriting its own narrative, our edge isn’t in calling tops or bottoms. It’s in adapting faster than the next operator.
I’m watching capital markets, trade flows, and fiscal policy not because they’re headlines—but because they shape how we underwrite, raise, and build.
Let’s keep building with clarity.
Daniel Kaufman
Kaufman Development | Mission10K | Monarch Fund