The 89-300 Split — What Two-Speed Really Looks Like Today

The Three Flips

Atlanta. Nashville. Charlotte.

Three weeks ago all three were printing positive year-over-year home-price growth — that's the price today vs the same month a year ago. The April data hit, and all three crossed into negative territory. They join eighty-six other metros. Total: 89 of America's 300 largest markets, now in the red.

The headline number for the country is +0.8% YoY. Boring. Almost flat. But the country isn't a country here. It's two countries.

The data behind today's episode came out April 18 — Lance Lambert at ResiClub Analytics, tracking the bifurcation. If you're actively underwriting a deal in any Sun Belt metro right now, the next six minutes change your math.

What "Crossing Zero" Means

Atlanta, Nashville, and Charlotte were three of the strongest Sun Belt narratives of the last cycle. Institutional money said these were the safe bets — the ones with diverse employment, the ones that wouldn't crack the way Phoenix and Austin already had.

The latest monthly metro-level home value data — published April 18 — says they cracked. Atlanta down 3.8% YoY. Nashville down 3.0%. Charlotte down 1.3%. None of those are crash numbers. They're crossing-zero numbers. And the crossing-zero set is the one that matters.

Here's why. When a metro flips from positive to negative on year-over-year price growth, the demand-supply equation has inverted. Whatever propped up the market — in-migration, builder restraint, employment expansion — is no longer enough to clear the inventory. The market doesn't crash; it softens. And the softening typically compounds for two-to-four quarters before stabilizing.

So if you're underwriting a deal in Atlanta or Nashville or Charlotte this week, the question isn't "is the deal good against last year's comps?" The question is "is the deal good against the comps it'll have in October?" Different math.

If you closed in Phoenix or Tampa in 2024: This isn't bad news for you — it's the math of why you bought there. The exit window just got longer; the cash flow is unchanged. Hold position.

The change in the math applies to new acquisitions in those metros: bake in a depreciation tailwind for the next few quarters.

The 89 — and the Trajectory That Changes the Story

Back in EP 120 — the first week of April — we called this the Two-Speed Market. The data then showed Midwest and Northeast metros appreciating, Sun Belt growth corridors cooling. Some readers pushed back: was the split overstated?

Six weeks later, the data is sharper. ResiClub's running count of 300 large metros: in January, 106 were YoY-negative. February, 99. March, 89.

Read that again. Falling. Not crashing — finding the floor. Lambert's read is that the bifurcation is structural, not panic. The Sun Belt softening is finding its bottom; the negative-metro count is narrowing, not widening. That's the part the doom headlines are missing.

Here's the cleanest single fact for the bifurcation. Hartford, Connecticut: median days from listing to pending offer — 11. Austin, Texas: 82. Same week. Same country. Hartford homes go pending in a week and a half. Austin homes sit for nearly three months. Austin is 27.8% below its 2022 peak. Hartford is 22.5% above its 2022 peak. That's not a single national market. That's two markets, pretending to be one because the press release writes the headline that way.

If you read this week that "the housing market is finding balance" — the Florida Realtors piece, the National Mortgage Professional piece, the Zillow press release — you read it wrong. There's no housing market singular. There are at least two. Plausibly three when you add the Pacific Northwest. The 89-300 Split is the cleanest way to talk about it.

Call it what it is: The Disappearing National Market. The version of US housing where one number — one mortgage rate, one HPI print, one days-on-market average — meant something for an investor in 2019? That version is gone. There are regional housing markets now. Read regional data, or you're reading static.

Why the Split Persists

Two structural drivers. Oversupply on one side. Underbuilding on the other.

Sun Belt oversupply is the dominant driver. Lennar reported in their last quarterly that builder incentives are running at 13.3% of sale price — highest level since 2009. New single-family inventory: 499,000 homes. Months of supply stuck above 9 — that's a buyer's market by any standard. Builder unsold completed inventory just hit the highest level since 2009. 11 states are above their pre-pandemic 2019 active-inventory level — Arizona, Colorado, Florida, Idaho, Nebraska, Oklahoma, Oregon, Tennessee, Texas, Utah, Washington. Read that list. Every Sun Belt growth corridor on it.

Midwest underbuilding is the mirror image. The Midwest delivered roughly 12,100 multifamily units in Q3 2025 — the only U.S. region below its 10-year-average build pace. Active inventory in most of the Midwest and Northeast is still well below pre-pandemic 2019 levels. Two markets running on opposite supply equations.

And institutional capital sees it. PwC and the Urban Land Institute's 2026 Emerging Trends Outlook — the bible for institutional real estate allocators — moved supply-constrained Midwest and Northeast metros up its rankings for the first time this cycle. The smart money isn't running to Phoenix anymore. The smart money is reading the 89-300 Split.

Rate context, because someone's going to ask. FRED's 30-year mortgage rate, as of April 23: 6.23%. Down from 6.30% the prior week. Down from 6.46% earlier in the month. Rates are softer than EP 120's 6.38% reference. But the rate-sensitive Sun Belt buyer pool is not responding. Affordability damage from the 2022-2024 price spike, plus the supply glut, overwhelms the rate relief.

The point of view: in this cycle, supply is the dominant variable, not rates. If you're modeling Sun Belt acquisitions on the assumption that "rates come down and demand comes back" — re-read the inventory data first.

The +3 Rule

Pull up the buy-box you're actively underwriting. Cross-check every metro on it against ResiClub's 89-metro negative list (link).

For any metro that appears, run the deal at 3 percentage points higher cap rate than your hurdle. That's the rough adjustment to compensate for a depreciation tailwind in the holding period. Call it The +3 Rule.

Quick math to make it real:

Phoenix duplex — listed at $250K, projecting $1,850/mo in rent. Pencils to a 5.5% cap rate, eyeballed. Looks decent on paper. But Phoenix prints -2.7% YoY. So you're underwriting against a property losing 2.5+ points of value per year while you hold it. Add the +3 to your hurdle: now you need an 8.5% cap to break even on the depreciation drag. Phoenix at 8.5% cap doesn't exist this year.

Cleveland duplex — $180K, projecting $1,550/mo in rent. Same math comes out at almost 7% cap. Plus an appreciation tailwind (+3.3% YoY March 2026). Same dollar of equity, two structurally different outcomes.

That's not a deal. That's a donation. (EP 120 quote, still true.)

If your deal still pencils after the +3 adjustment — fine, proceed with eyes open. If it doesn't — you've got a decision to make this week, not Q3.

Resources Mentioned

• EP 120 — The Two-Speed Market — Direct predecessor; the framework this episode refreshes with April data
• EP 112 — The Tier 2 Trinity — Cleveland/Birmingham/KC thesis from December; April data is the proof of work
• EP 131 (Thursday) — The $6,800 Insurance Line — How Florida insurance turns the +3 Rule into a +5 Rule for storm-state holders
• ResiClub Analytics 89-metro list (Lance Lambert, Apr 18, 2026) — resiclubanalytics.com/p/major-housing-markets-with-falling-rising-home-prices-april-2026
• Wolf Street's bifurcation tracking (Wolf Richter, Apr 16, 2026) — wolfstreet.com/2026/04/16/the-most-splendid-housing-bubbles-in-america-price-drops-gains-in-33-big-expensive-cities-march-2026
• FRED MORTGAGE30US — fred.stlouisfed.org/series/MORTGAGE30US
• Cleveland metro hub on REI Prime — reiprime.com/markets/ohio/cleveland-elyria-oh

Named Concepts Introduced

• The 89-300 Split — The count of America's 300 largest metros now printing year-over-year home-price declines. Currently 89, falling from 106 three months ago.
• The Disappearing National Market — The recognition that 2026 housing is regional, not national. "The housing market is..." is the wrong sentence; read regional data instead.
• The +3 Rule — Add 3 percentage points to your cap-rate hurdle when underwriting in a metro on the 89-list. Compensates for a depreciation tailwind during the holding period.
• The Three Flips — Atlanta, Nashville, Charlotte — the three Sun Belt safe-bets that crossed from positive YoY into negative since EP 120 (April 7).