With Election Day Behind Us, and a Lower 10-Year Yield, what’s next?
The Fed held, the 10-year Treasury gave back its early-October spike, and Democrats won both chambers of Congress. Renewals carried rent growth while new leases stalled, and our best-returning capital project paid us through insurance instead of rent. Here’s what stood out in October, and how we’re reading it.
Last month we wrote that the Fed’s first hike in three years had reset what buyers can pay. October was the follow-through: no second hike yet, and a 10-year Treasury that peaked and then retreated. Most of what moved our numbers happened inside the buildings rather than in the bond market. Below we cover the Fed’s pause and what it did not change for us, what the midterm elections change for taxes, lenders and the bond market, why data centers matter to apartment owners, why renewals are doing the work new leases used to do, and a capital project that paid for itself without raising a single rent.
The Fed paused, the 10-year did a round trip
On October 28 the Federal Reserve held its target range for the federal funds rate at 3.75% to 4.00%, on a 10 to 2 vote. Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented in favor of another quarter-point hike, and the statement said plainly that “inflation remains elevated.” [1] The data gave them a case. Consumer prices rose 3.7% from a year earlier in September, with gasoline up 34.2% and shelter up 3.2%, [2] and the economy grew at a 3.4% annual rate in the third quarter. [3] After the meeting, Pensford put the market’s odds of a December hike at about 79%. [4]
The 10-year Treasury, the benchmark for many fixed-rate apartment loans, went the other way. It closed at 5.31% on October 5, its highest close since May 2002, then fell to 4.84% on November 5, a 47 basis point drop in a month with no rate cut. That was its lowest close since September 9, a week before the Fed’s hike, and it ended the week at 4.86%. [5] The push came from outside real estate. KPM Financial pointed to cracks in the debt-funded artificial intelligence (AI) buildout, [6] and Pensford relayed Goldman Sachs’s view that weakness in higher-yielding credit pulled yields lower. [7] Fed Chair Kevin Warsh noted that rates have stopped rising with oil prices, a break the Fed says it will investigate. [4]
Because fixed-rate loans are priced as a Treasury yield plus a lender’s spread, the drop pulled loan quotes down with it. We still did not bid as if the lower rate would last: in October we priced deals in Indiana, Kansas and North Carolina’s Piedmont Triad off the debt quotes in hand that day. On one Indiana property our offer came in about 7% below the seller’s cutoff. On another, bids had passed our number before we submitted, so we stepped back. One tempering note on hedging: Pensford wrote that buying rate caps “has been a painful business lately,” with cap volatility near its spring highs, [7] and KPM continues to favor shorter hedges. [6]
Losing a bid to a higher number costs less than owning the wrong basis.
Divided government keeps the tax code and tariffs in place
Democrats won control of both the House and the Senate on November 3. [8] With President Trump in office through January 2029, any new federal law now needs support from both parties.
That makes it hard to change the One Big Beautiful Bill Act, signed in July 2025, which made 100% bonus depreciation and the 20% pass-through deduction permanent and expanded the low-income housing tax credit. [9] Divided government “takes major sweeping tax and spending policies off the table,” as LPL Financial’s Jeff Buchbinder put it. [10] Steel and aluminum tariffs remain, and higher tariffs on cabinets and vanities take effect January 1, [11] though Goldman Sachs expects Democrats to seek tariff rollbacks in next year’s debt-limit talks. [10] The 21st Century ROAD to Housing Act, which we covered in June and July, remains law. [12]
Tariffs keep new construction expensive, which favors buying existing buildings over building new ones. They also raise the cost of the cabinets and vanities in our renovations.
The election moves property tax and Fed politics more than federal law.
Property taxes are where the election reaches our buildings
Property taxes are one of the largest lines in an apartment budget, and the election changed the rules in both states where we own apartments.
North Carolina voters approved a constitutional amendment requiring the legislature to cap how much total property tax revenue each county and city collects each year. The cap limits those totals, not individual tax bills, and the amendment sets no number, so its effect on any one apartment property depends on the limit lawmakers write later. [13]
In Texas, Gina Hinojosa beat Governor Greg Abbott, the first Democrat to win the office in 36 years. Her property tax cut targets homeowners’ school taxes, and we doubt it will reach apartment buildings. She also promised to address landlords’ algorithmic pricing software and rent increases imposed during the application process, which could change how the industry sets rents. Neither plan is written. [14] Democrats also won the Texas House and the lieutenant governor’s office, which presides over the state Senate, but Republicans kept their 19 to 12 Senate majority, so both plans still need Republican votes there. [15]
North Carolina capped total levies, not any one property’s bill.
Our lenders’ rulebook stays the same
A Democratic Senate controls Federal Reserve confirmations, which Reuters called “a major guardrail” against the White House adding allies to the Fed’s board. [16] The election also slows the push to release Fannie Mae and Freddie Mac from government control: KBW’s Bose George put the odds at 30% or lower, saying the election “could just make things harder.” [17] A stalled privatization leaves agency lending working as it does today.
The election moved the Fed and Fannie Mae toward the status quo.
The debt ceiling is the next test for the 10-year
The election did not resolve what pushed the 10-year up. BlackRock expects heavy federal borrowing to continue, reinforcing its view of “structurally higher interest rates,” and calls debt ceiling standoffs “the bigger source of market volatility.” The next one comes in 2027, [10] with a Democratic Congress holding the vote over a Republican President, a role reversal CNBC warns could bring spending fights and the risk of a damaging default. [18] Investors noticed: stocks jumped after the election while Treasuries rallied only modestly, which Barron’s read as a sign that inflation and deficit concerns have not gone away. [19]
Stocks cheered the election. The bond market did not.
Why data centers matter to apartment owners
Texas has more than 300 data centers in operation and about 100 more planned. [20] In August, Governor Abbott paused new data centers’ connections to the state’s power grid pending an audit, and Hinojosa argued the pause did not go far enough. [21] Goldman Sachs expects her and other new governors to impose moratoria, though likely short-lived. [10] The buildout reaches apartments three ways.
The first is the electric bill. Electricity prices rose 4.4% in the year to September, faster than prices overall, [2] and Goldman estimates higher power prices add about 0.1 percentage point to core inflation in both 2026 and 2027. [22] That comes out of the same paycheck that pays rent.
The second is interest rates. Alphabet, Amazon, Meta, Microsoft, Oracle and SpaceX sold more than $180 billion of dollar bonds this year through early September, borrowing that TwentyFour Asset Management says lifts rates “by competing with sovereign debt for investor demand.” [23] It cuts both ways: in October, worries about debt-funded AI pulled yields lower. [6] Equity has not followed. In CBRE’s January survey, 74% of U.S. respondents targeted apartments, more than any other sector by a wide margin. [24]
The third is electricians. Between 45% and 70% of a data center’s construction budget goes to electrical subcontractors, according to the electricians’ union, and one Abilene contractor paying $20 an hour lost workers to data center jobs paying $35 plus overtime. [20] Our renovations, including the panel replacement we discuss below, rely on the same trades.
Data centers reach apartments through power bills, bond yields and electricians.
Renewals are carrying rent growth
National asking rents went nowhere in October. Apartments.com put the average at $1,749, down 0.15% from September and up 1.6% from a year earlier, [25] and Yardi Matrix had advertised rents up just 0.7% year over year in September. [26] The growth that exists comes from residents who stay. RealPage data show 56% of market-rate residents with leases expiring in the first half of 2026 renewed, at increases averaging 3.5% against 1.9% for new move-ins, [27] and CBRE counts renewals at 57% of all leasing activity, up from 51% in 2015. [28]
Our properties show the same split. In Fayetteville, North Carolina, RealPage data put new-lease rents flat and renewals up 3% to 4%. [29] At one of our Dallas properties, where 7 of the 12 competitors we survey offer one to two months free, 51 renewals had an average increase of about $40 a month, or 3.9%, and none took a decrease. [30] How we price new leases protects that. When the market forces a concession, we give a free month rather than cut the rent. A free month still costs revenue, and buyers and lenders look at effective rent, but it ends when the lease does. A lower rent acts as a drag on every renewal after it.
One tempering note: renewal pricing is not a permanent cushion. Yardi Matrix measured national renewal rent growth at 1.7% in September, the lowest since before 2020, [26] and residents can see the free months down the street. In markets where concessions persist, we expect renewal increases to shrink toward the flat growth we are seeing on new leases.
Retention is now the main source of rent growth.
The best-returning capital project never touched the rent roll
The return on a capital project usually gets judged by the rent it adds. One of our best returns this year came instead from the expense side. When we bought a three-property portfolio in North Carolina, 71 apartments at one of the properties still had Stab-Lok breaker panels, an older design that some insurers will not cover. The carrier insuring the other two properties refused it, so that property had to sit on its own policy at a much higher premium. We negotiated a seller credit of about $20,000 for the panels at closing, then replaced all 71 for about $125,000. [31]
With the panels replaced, the carrier endorsed the property onto the same policy as the other two in late June. Moving it off the standalone policy produced a net premium refund of about $31,000, and the portfolio’s renewal premium is about $100,000 lower. The lower premium also shrinks the insurance reserve the property’s Fannie Mae lender requires us to hold. [31] The seller credit, the refund and one year of lower premiums more than cover the project’s cost. If the savings hold, $100,000 a year of lower expenses adds about $1.67 million of value at a 6% cap rate, and 71 apartments no longer have a panel design insurers refuse to cover.
None of that shows up in a rent roll, a lease trade-out report or the renovation premium in a business plan. It shows up in the insurance line and the lender’s reserve account.
Some of the best returns don’t come from an improved rent roll and instead show up in expenses, reserves, and credits.
Closing Thought
October separated the bond market from the buildings. The 10-year Treasury rallied for reasons that had nothing to do with apartments, and the Fed kept the door open to another hike. Inside our properties, the month’s gains came from residents who renewed and an insurance policy we restructured. Neither depends on where rates go next or on who controls Congress.
As always, please reach out with questions or to discuss what we’re seeing in our active markets.
Sources
Federal Reserve, “Federal Reserve issues FOMC statement” (Federal Open Market Committee), October 28, 2026 (target range held at 3.75% to 4.00%; 10–2 vote; Lisa D. Cook and Beth M. Hammack preferred a 25 basis point increase; “Inflation remains elevated”). federalreserve.gov/newsevents/pressreleases/monetary20261028a.htm
U.S. Bureau of Labor Statistics, Consumer Price Index, September 2026, released October 14, 2026 (all items up 3.7% year over year, not seasonally adjusted; gasoline up 34.2%; shelter up 3.2%; electricity up 4.4%). bls.gov/news.release/cpi.nr0.htm
U.S. Bureau of Economic Analysis, “Gross Domestic Product, 3rd Quarter 2026 (Advance Estimate),” October 29, 2026 (real gross domestic product up 3.4% at an annual rate). bea.gov/news/2026/gdp-advance-estimate-3rd-quarter-2026
Pensford, “A Change to the FOMC Schedule,” FOMC Update, October 28, 2026 (market odds of a December hike at 79% after the meeting; Chair Warsh on interest rates no longer rising with oil prices). pensford.com
U.S. Department of the Treasury, Daily Treasury Par Yield Curve Rates, 10-year daily closes, September 1 to November 6, 2026 (4.83% on September 9, the last close at or below 4.84% before November 5; 5.31% on October 5; 5.05% on October 28; 4.84% on November 5; 4.86% on November 6). The last close above 5.31% was 5.32% on May 14, 2002 (Federal Reserve H.15, FRED series DGS10). The chart is an Oakdale recreation of the daily series. home.treasury.gov/resource-center/data-chart-center/interest-rates
KPM Financial, “Weekly Rate Update and Forward Curve,” October 19 and October 26, 2026 (“cracks appeared in the AI debt-fueled buildout”; 10-year swap rate 4.60% on October 26; “we continue to favor shorter hedges”). kpm-financial.com
Pensford, “FOMC Primer – Wednesday,” October 26, 2026 (Goldman Sachs on 10-year rates pulling back just over 30 basis points from their highs as cracks appear in higher-yielding credit; cap volatility near its spring highs; “Buying caps has been a painful business lately”). pensford.com
NBC News, “Live updates: Democrats win control of the House and Senate,” November 4, 2026 (NBC News projections of Democratic control of both chambers, with some races uncalled; results also called by the Associated Press). nbcwashington.com
Jones Day, “The One Big Beautiful Bill Becomes Law: Real Estate Tax Changes,” July 2025 (signed July 4, 2025; 100% bonus depreciation made permanent for property acquired after January 19, 2025; Section 199A 20% pass-through deduction made permanent; low-income housing tax credit allocations increased and the tax-exempt bond test lowered from 50% to 25%). jonesday.com
Morningstar, Sarah Hansen, “4 Big Impacts from the US Midterm Elections for Investors,” November 4, 2026 (Goldman Sachs expecting Democratic governors in Texas, Georgia and Michigan to impose conditional data center moratoria, likely not long-lived, and Democrats to use the debt limit to seek concessions including tariff rollbacks; LPL Financial’s Jeff Buchbinder on divided government; BlackRock Investment Institute on persistent deficits, structurally higher interest rates and debt ceiling standoffs as the bigger source of volatility; Morningstar DBRS on the debt ceiling needing to be raised in 2027). morningstar.com
RSM US, “What the 2026 U.S. midterm elections could mean for construction and real estate,” October 12, 2026 (2025 tax law made low-income housing tax credit allocations permanent; Section 232 metals tariffs in force; cabinet and vanity tariff increases effective January 1, 2027). rsmus.com
21st Century ROAD to Housing Act, Public Law 119-101 (H.R. 6644), approved July 11, 2026. govinfo.gov/app/details/PLAW-119publ101
WUNC, “Voters approve constitutional amendments around voter ID and capping taxes,” November 4, 2026 (property tax levy limit amendment passed; the measure “does not set a limit” and leaves the limit to the legislature). wunc.org
Realtor.com, Allaire Conte, “Gina Hinojosa Ousts Greg Abbott in Texas Governor’s Race – What Her Win Means for Housing,” via Yahoo News, November 4, 2026 (first Democrat elected Texas governor in 36 years; plans to cut residential property taxes, with a Houston Chronicle estimate of $8.6 billion a year to replace homeowners’ school taxes, and address algorithmic pricing software and application-stage rent increases; Republican Senate support needed). realtor.com
MultiState, “Texas 2026 Election Results,” November 2026 (Democrats winning control of the Texas House; Republicans keeping a 19–12 Senate majority; Democrat Vikki Goodwin defeating Lieutenant Governor Dan Patrick). multistate.us/elections/results/texas-2026
Reuters, Howard Schneider, “Election stiffens the Fed’s guardrails, but independence risks remain,” November 4, 2026 (Senate control of Fed appointments as “a major guardrail”). reuters.com
National Mortgage News, “How midterm outcome may shape housing bill follow-up, GSE reform,” November 4, 2026 (Bose George, KBW, putting odds of a conservatorship exit at 30% or lower; the election “could just make things harder”). nationalmortgagenews.com
CNBC, “Analysis: Democrats have one chance to extract concessions from Trump. Markets will hate it,” November 4, 2026 (the next debt-ceiling confrontation could reverse Washington’s traditional political roles, raising the possibility of spending concessions, market volatility and a damaging default). cnbc.com/2026/11/04/democrats-trump-debt-ceiling-fight.html
Barron’s, Martin Baccardax, “The Blue Tsunami Doesn’t Solve the Stock Market’s Bond Problem,” November 4, 2026 (stocks soaring after the midterms while a muted Treasury rally suggests inflation and deficit concerns persist). barrons.com/articles/bonds-treasury-yields-election-stock-market-rally-a55dc57b
The Texas Tribune, Sneha Dey, “Data Center Boom Strains Texas Homebuilders’ Need for Electricians,” via Insurance Journal, April 29, 2026 (more than 300 data centers operating in Texas and about 100 planned; 45% to 70% of data center construction budgets going to electrical subcontractors, per the International Brotherhood of Electrical Workers; an Abilene electrical contractor paying $20 an hour losing workers to data centers offering $35 plus overtime). insurancejournal.com
Houston Public Media, Natalie Weber, “Texas governor’s data center moratorium prompts calls for special legislative session,” via Texas Public Radio, August 5, 2026 (Governor Abbott’s moratorium temporarily preventing new data centers from connecting to the Texas power grid pending a state-led audit; Hinojosa calling for a pause until the Legislature convenes). tpr.org
Fortune, Sasha Rogelberg, “Middle-class Americans are paying for the data center and AI boom with higher electric bills and even food costs, Goldman Sachs warns,” February 13, 2026 (Goldman Sachs economists Manuel Abecasis and Hongcen Wei estimating higher electricity prices add 0.1 percentage point to core inflation in 2026 and 2027). fortune.com
TwentyFour Asset Management, Johnathan Owen, “How hyperscaler issuance is reshaping the Treasury curve,” September 3, 2026 (Alphabet, Amazon, Meta, Microsoft, Oracle and SpaceX issuing more than $180 billion of U.S. dollar bonds in 2026; AI borrowing “lifting borrowing costs generally by competing with sovereign debt for investor demand”; hyperscaler supply “adding to the pressure on the long end rather than being the source of it”). twentyfouram.com
CBRE, “2026 North America Investor Intentions Survey,” January 29, 2026 (74% of U.S. investors targeting multifamily, the most favored sector by a wide margin; data centers gaining favor with power availability and pricing as concerns). cbre.com
Apartments.com (CoStar Group), “Apartments.com Releases Multifamily Rent Growth Report for October 2026,” October 29, 2026 (national average asking rent $1,749; down 0.15% month over month; up 1.6% year over year). costargroup.com
Yardi Matrix, National Multifamily Report, September 2026, as reported by Multifamily Dive, October 7, 2026 (advertised rents up 0.7% year over year; renewal rent growth 1.7%, the lowest since before 2020). multifamilydive.com/news/september-rents-multifamily-apartments-yardi/832402/
RealPage data, as analyzed by Greg Willett, LeaseLock, July 30, 2026 (56% of market-rate residents with leases expiring in the first half of 2026 renewed; renewal lease price growth averaging 3.5% so far in 2026; move-in rent growth averaging 1.9%). leaselock.com
CBRE, 2026 U.S. Real Estate Market Outlook, Multifamily (renewals at 57% of all leasing activity, up from 51% in 2015 and 48% in 2005). cbre.com/insights/books/us-real-estate-market-outlook-2026/multifamily
Oakdale Capital, consultant’s read of RealPage lease data for Fayetteville, North Carolina, October 2026. Proprietary; not audited.
Oakdale Capital, renewal records and competitor concession survey for one Dallas property, July to October 2026. Proprietary; not audited.
Oakdale Capital, acquisition, contractor, insurance and lender records for a North Carolina property, 2026 (seller credit at closing, panel replacement cost, carrier endorsement, net premium refund, portfolio renewal premium and lender insurance reserve). Proprietary; not audited.
This letter is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. Forward-looking statements are based on current market conditions and may change. Nothing herein guarantees future results or the availability of any investment or acquisition opportunity. Past performance is not indicative of future results. All charts are Oakdale Capital recreations of third-party data and reflect approximate or illustrative figures. Market data is believed to be reliable but has not been independently audited. Oakdale Capital · Chicago, Illinois.
