👋👋 Good morning real estate watchers! Today, we are going to talk about...

1. It's called 'gentle densification,' which sounds like a Gwyneth Paltrow spa treatment, but is actually a shockingly rational housing policy. And in Texas of all places. What’s next? Universal healthcare at Buc-ee’s?

2. Adam Neumann’s rise from the WeWork ashes like a tech bro phoenix, this time selling co-living dreams with Flow—which sounds less like a company and more like a CBD wellness app for your cat.

3. The spring housing market is currently colder than your ex’s text replies. With monthly payments at an all-time high and economic uncertainty looming, buyers are saying “nah, I’m good” and ghosting real estate like it’s a bad Tinder date.

Let’s go!

TOP STORY

SILVER (HOUSING) BULLET

Just a few years ago, if you wanted to build a small apartment building in Dallas—say, four or six units on a tidy city lot—you were greeted with the same building code requirements as someone erecting a 200-unit mega complex. Fire suppression systems, elevator mandates, and commercial-grade materials turned “small” into “expensive.”

So developers did what was profitable: build another duplex or a single luxury home and move on.

But last week, something quietly revolutionary happened in Texas. The Dallas City Council voted to modernize its residential code, allowing buildings of up to eight units and three stories to be constructed under the residential—rather than commercial—code. It’s a shift that won’t make headlines like the latest celebrity mansion sale, but it has dramatic impacts on developers, and is proof that miracles do happen outside Chick-fil-A drive-thrus..

“This is a common-sense change that marks a transformative step in how we approach small-scale housing development in Dallas, all without changing zoning,” said Councilmember Paul Ridley, one of the key proponents behind the amendment.

Revising a building code may sound like the bureaucratic equivalent of watching paint dry to the average person. But for developers and housing advocates, it’s a game-changer. Known as “gentle densification,” this approach doesn’t call for towering condos or dramatic rezoning battles—it simply makes it legal and viable to build the kinds of homes America used to be good at: the humble fourplex, the corner triplex, the eight-unit walkup. You know, the type of housing that doesn’t trigger a neighborhood revolt.

“Dallas is facing a housing gap,” said Willie Franklin, Assistant Director of Planning & Development. “This amendment is a tool in the toolbox for Dallas to address this pressing issue.”

The Missing Middle Finds Its Moment

These small-scale multi-unit homes fall into what’s often called the “missing middle”—the dwellings that once formed the backbone of affordable urban housing but have all but vanished under decades of zoning restrictions and building code inflation.

In Dallas, the newly adopted “One- to Eight-Family Dwelling Code” applies to buildings under 7,500 square feet and three stories. Previously, anything over two units required adherence to the International Building Code, often ballooning costs to unaffordable levels.

“Our code today treats a fourplex the same as a 200-unit apartment building. That doesn’t make sense. It drives up construction costs and discourages the kinds of housing we say we want in Dallas,” said Ridley. “We’re bringing that pendulum back.”

The change was surprisingly drama-free—no angry town halls, no cries of “not in my backyard.” That’s partly because it doesn’t alter zoning. It simply reduces the red tape for projects already allowed under existing land-use rules. Think of it as zoning reform’s nerdy cousin: less controversial, but perhaps more impactful.

Dallas isn’t alone. Cities like Memphis, Austin, and many Canadian municipalities have started to adopt similar reforms. In 2023, Austin extended its residential code to cover up to three units. Memphis now allows three to six. Dallas just leapfrogged both.

“This is not a radical idea,” said Councilmember Chad West. “It’s a modernization of a regulatory burden on the housing industry that has worked in other cities.”

The Market Effect: Small Scale, Big Potential

Real estate markets run on incentives. If building more units on a lot is cheaper and easier, guess what? More units will be built. Developer and former Dallas councilmember Philip Kingston put it best: “I was thinking, why are their numbers not matching mine? I can build six units.” And yet time and again, small infill lots ended up with just one or two homes. Kingston estimates Dallas has lost over 1,000 housing units to “underbuilt” projects due to outdated building codes.

Now, with those barriers lowered, developers are expected to reconsider small-lot infill projects. The Dallas Builders Association and Dallas Housing Coalition supported the changes, seeing them as a path toward restoring housing diversity without bulldozing neighborhoods.

From a macroeconomic standpoint, this isn’t just about aesthetics or urban theory. It’s about affordability. According to a 2023 Freddie Mac analysis, the U.S. has a housing shortfall of roughly 3.8 million units (but it could be closer to 15 million). Yet large-scale multifamily construction remains concentrated in only a handful of high-density zones. Meanwhile, much of our cities are zoned—and coded—into housing stagnation.

Dallas may have just found the middle lane: more homes, less drama.

The Skeptics: Fire Risks and Familiar Fears

Not everyone is cheering. Councilmembers Jesse Moreno and Cara Mendelsohn raised concerns about fire safety, especially with denser housing in residential neighborhoods. But Dwight Freeman of the Dallas Fire Marshal’s office reassured the council that the three-story limit and other safety features addressed those worries. “The partnership that was created and the safeguards that were installed will help protect the citizens,” Freeman said.

Of course, this is Dallas, not Shangri-La. It will take time to see the effects. Zoning hasn’t changed—just the rules governing what’s already allowed. And that’s the beauty of it. No lawsuits, no bitter lawsuits over “spot zoning,” and no polarizing political fights. Just smarter rules for the kinds of housing cities used to build all the time.

A Blueprint for the Nation?

In a country where housing policy often feels trapped between gridlock and gentrification, Dallas is offering something radical in its simplicity: a better way to do the small stuff. And if gentle density can thrive in a city like Dallas—a place better known for sprawl than smart growth—it might just be the canary in the coal mine for a national shift.

As Henry Grabar of Slate noted: “A quiet reform in Texas could open the doors to more homes, lower rent, and a different kind of growth.” Now that’s something worth replicating, even if it didn’t come with a single zoning protest sign.

SNIPPETS

1️⃣ WeWork Again: Former WeWork CEO Adam Neumann has secured over $100 million in capital for his new proptech startup, Flow, bringing the company's valuation to approximately $2.5 billion. With continued backing from Andreessen Horowitz, who previously invested $350 million at a $1 billion valuation in 2022, Neumann is pivoting from his infamous WeWork experience (which dramatically collapsed from a $47 billion valuation to a $450 million Yardi acquisition) to focus on residential real estate and co-living spaces. Despite his turbulent past, Neumann remains confident, stating he believes Flow could go public. (TechCrunch)

2️⃣ Home Sweet Affordable Home: Despite high mortgage rates, new single-family home sales rose 7.4% month-over-month to 724,000 units, driven primarily by affordable housing options. The median sales price dropped to $403,600, with increased sales in lower price brackets ($300,000-$399,999), signaling a market shift toward more budget-friendly new builds. Regionally, the South dominated, accounting for about two-thirds of sales and experiencing a robust 22.3% year-over-year increase, while other regions saw declines. The market also shows an interesting trend in housing inventory, with 503,000 newly built homes available and a rising share (22.3%) of not-yet-started homes, suggesting potential opportunities for investors focusing on entry-level and Southern market segments. (Realtor.com)

3️⃣ Commercial Mortgage Mayhem: The overall commercial delinquency rate increased to 6.65%, driven primarily by multifamily and lodging sectors, with multifamily experiencing a significant 360-basis-point surge over the past year to its highest level since December 2015. The office sector showed some resilience, marking its third consecutive decline to 9.76%, while the largest newly delinquent loan was a massive multifamily portfolio loan approaching $1 billion. Notably, if loans beyond their maturity date but current on interest were included, the delinquency rate would climb to 8.37%. (MHN)

4️⃣ Price Growth Pause: In February 2025, U.S. home prices rose just 0.3%—the slowest monthly gain in over a year—according to the S&P CoreLogic Case-Shiller Index, as economic uncertainty, high mortgage rates, and stock market volatility cooled buyer demand. Year-over-year growth dipped to 3.9%, with Zillow forecasting a 1.9% decline in home value by the end of the year. The affordability crisis is intensifying, especially for buyers relying on investment portfolios for down payments, as market divergences between indices reveal cracks in consumer sentiment and housing momentum. (Zillow)

5️⃣ Buyers on Ice: Despite an uptick in new listings, the 2025 spring housing market is frozen as record-high monthly housing payments—now averaging $2,870—combine with economic uncertainty to keep buyers on the sidelines. Mortgage-purchase applications are down 6% month-over-month, and pending sales dipped 2.8% year-over-year, with buyer demand flat across Redfin’s activity index. As agent Bliss Ong notes, buyers are holding out for perfection or just holding off altogether, waiting for the economic fog to clear before making a high-stakes move. (Redfin)

6️⃣ Cautious Climb Ahead: Fannie Mae’s April 2025 Economic and Housing Outlook forecasts 4.86 million single-family home sales and 964,000 new builds by year-end, reflecting modest revisions based on softer economic expectations. With GDP growth projected at just 0.5% this year and mortgage rates expected to hover around 6.2%, the market is set for a slow recovery. Home prices, however, are still anticipated to rise 4.1% in 2025, suggesting that affordability will remain a challenge even as activity stabilizes. (Fannie Mae)