Daily Dose of Real Estate for September 10

Private roundtable meetings with industry leadership at Treasury and FHFA this week on a variety of topics including GSE reform. BLS with another epic miss – largest downward revision in history with 911,000 jobs revised away from previous reports (my bad). The heads of members of the FOMC turned completely around on the news and now the question is “how much” of a rate cut we’ll get this month vs “whether.” Much needed mortgage rate drops breaths life into the housing and mortgage markets. The commercial real estate world is showing surprising resilience with Chicago’s medical offices booming, Manhattan’s office availability hitting four-year lows. Let’s get you caught up and out the door in 3 minutes. Tim

Today’s newsletter was prepared by our AI platform ALFReD. Know Better. Work Smarter. Be More Successful.

KEY TAKEAWAYS 

• Political Battle: Treasury Secretary Bessent and FHFA Director Pulte feuding over GSE privatization, frustrating Republican lawmakers 1
• Mortgage Rates: 30-year fixed rates hit 11-month lows at 6.36-6.55%, putting 3+ million borrowers “in the money” for refinancing 2
• Insurance Crisis: Property insurance now 9.6% of monthly mortgage payments (record high), up 70% over 5 years vs 23-27% for other components 3
• Lumber Collapse: Futures down 25% in one month to $522/1,000 board feet; housing permits at lowest since June 2020 4
• Fed Decision: Markets pricing 88% chance of 0.25% cut, 12% chance of 0.5% cut on September 17 5
• CRE financing remains stalled with transactions down 19% year-over-year in Q1 2025 1
• US banks experienced first decline in delinquent CRE loans since 2022 in Q2 2025 1
• Markets pricing 89% probability of 25-basis-point Fed rate cut at September 17 meeting 2
• Colliers acquires GREA Dallas multifamily platform
• Chicago multifamily rents up 6.4% year-over-year while national apartment rents fell in August 5 6

RESIDENTIAL REAL ESTATE MARKETS

Housing market cooling accelerates with price growth slowing dramatically and construction activity plummeting.

• Price Growth Slows: Year-over-year appreciation dropped to 1.4% in July 2025, nearly half the inflation rate 6
• Monthly Decline: Home values fell 0.2% June to July 2025, first negative monthly movement in recent memory 6
• Regional Leaders: South Dakota leads price growth at 6.2% year-over-year; top 5 states include New Jersey, Connecticut, Rhode Island, West Virginia 6
• Future Projections: AEI forecasts continued deceleration to 1.4%, 0.7%, 0.2% for August, September, October 2025 7
• Lumber Market Collapse: Futures down 25% in one month to $522/1,000 board feet due to excessive inventories and weak demand 4
• Construction Permits: July housing permits fell to lowest levels since June 2020 4
• Seller Struggles: Homebuyer shortage forcing sellers to reduce prices or withdraw listings rather than accept lower offers 8

MORTGAGE MARKETS 

Rates hit 11-month lows sparking refinancing boom, but insurance costs surge to record levels offsetting affordability gains.

• Rate Decline: 30-year fixed fell to 6.50% (Freddie Mac), 6.36% (current conforming rates), lowest since October 2024 2
• Refinancing Surge: Over 3 million borrowers now “in the money” for refinancing with meaningful payment reductions available
• Insurance Crisis: Average annual property insurance payment climbed to $2,370, representing 9.6% of monthly PITI payments (record high) 3
• Insurance Growth: Property insurance up 70% over 5 years vs 23% principal, 27% interest, 27% property taxes 3
• 2025 Insurance Surge: Payments up 4.9% first half 2025, 11.3% year-over-year 3
• California Spike: Los Angeles premiums up 9% in 6 months, 19.5% year-over-year 3
• Florida Moderation: Smaller premium growth despite historically high costs; state-backed plan usage dropped from 25% to 16% 3
• Purchase Activity Weak: Rate lock volume down 28% vs 2019, only 2% year-over-year increase despite rate improvements 7
• Current Rates: Median purchase rate 6.375% week 36, Mortgage News Daily average 6.28% September 8 7

REGULATORY DEVELOPMENTS 

Political tensions over GSE reform escalate while new tariff threats target lumber imports and consumer protection advances.

• GSE Reform Battle: Treasury Secretary Bessent vs FHFA Director Pulte over Fannie/Freddie privatization; Republican lawmakers frustrated with Pulte’s approach 1
• Lumber Tariffs: Trump administration announces 25% tariff on lumber products, orders 270-day national security investigation 4
• Canada Targeted: Canadian lumber accounts for 80% of U.S. structural lumber imports, 30% of entire market; current duties already 15-35% 4
• Appraisal Updates: UAD 3.6 and redesigned URAR launched in limited production; dynamic format reduces commentary and revision requests
• Agency Adoption: FHA, USDA, VA planning UAD 3.6 adoption on own timelines, broader implementation expected throughout 2026
• Consumer Protection: Trump signed Homebuyers Privacy Protection Act, ending trigger leads that allowed multiple lender contacts after mortgage applications

ECONOMIC NEWS

Critical inflation data approaches as labor market weakness intensifies and Fed rate cut expectations solidify.

• CPI Release: August Consumer Price Index due September 11; economists expect 2.9% all-items, 3.1% core 9
• Fed Decision: September 16-17 meeting; 88% chance 0.25% cut, 12% chance 0.5% cut; 0.75+ points expected by year-end 5
• Labor Weakness: August employment report showed significant deterioration; job openings at cycle lows 10
• Job Revisions: Largest downward revision in history with 911,000 jobs revised away from previous reports 11
• Trump Pressure: White House calls Fed “broken,” demands immediate rate cuts; fired BLS commissioner in August 11
• Consumer Confidence: Americans hit record-low confidence in finding new jobs since tracking began 2013 12
• Inflation Expectations: Household one-year expectations rising above Fed’s 2% target

COMMERCIAL REAL ESTATE (INCLUDING MULTIFAMILY)

Commercial Marketplace

Mixed market signals as investors await Fed rate clarity amid regional divergence.

• LightBox CRE Activity Index dropped 12% month-over-month but maintained 7 consecutive months above 100-point benchmark 7
• Manhattan office availability fell to 81.98M sq ft, lowest since January 2021, down 17% from February 2024 peak 8
• Chicago multifamily rents climbed 6.4% year-over-year with $2.7B in completed sales YTD vs $3.9B total in 2024 5
• Industrial assets up nearly 7% since 2022, leading all property types; overall CRE prices up 3%+ since 2022 9
• Major transactions: Greystar acquired Modera Glendale for $126M (LA County’s biggest multifamily deal 2025); Acacia Capital paid $190M for The Waymark in Walnut Creek 1 10
• Medical office leading Chicago CRE rebound with highest space delivery and tenant retention nationally 11

Commercial Financing Markets

Financing remains constrained by rate uncertainty despite signs of potential Fed easing.

• Fed rates stuck at 4.25%-4.5% with 89% market probability of 25bp cut September 17 2
• 10-Year Treasury stabilized near 4.08%, second-lowest point in 2025 after swinging between 3.6%-4.8% 2
• FTSE NAREIT index posted +0.59% gains; office-focused REIT index continued September rise 1 12
• Life insurers’ CRE mortgages returned 1.9% in Q2 2025 with steady income and rebounding originations 8
• Merit Hill Capital/Centerbridge secured $425M to refinance 78-property, 32K-unit self-storage portfolio 1
• Cap rates showing sector divergence: residential/industrial strength vs office/senior housing pressure 2

Commercial Servicing Markets

First improvement in delinquencies since 2022 offset by emerging CMBS pressures.

• US bank CRE delinquencies declined slightly in Q2 2025, first drop since 2022, though distress remains elevated for rental income properties 1
• JPMorgan’s 270 Park Avenue HQ pressuring $1.4B in Park Avenue CMBS loans across 8 deals; 45.04% of balance on watchlists 13
• 237 Park Avenue faces $150M lost income from JPMorgan’s 270K sq ft lease expiration and Jennison’s 160K sq ft departure; building valuation down 59% since 2019 13
• BBCCRE 2015-GTP loan transferred to special servicing in April 2025; loan modification with two-year extension targeted for mid-September closing 14
• Aztec Fund liquidating suburban D.C. offices at deep discounts in bankruptcy to repay Bank of America 1

INDUSTRY NEWS

Major consolidation activity continues amid strategic repositioning across sectors.

Mergers & Acquisitions:

• Colliers acquired GREA Dallas (25-person multifamily investment sales team) to strengthen Texas platform 3
• Yugo acquired Campus Advantage (~40K beds, 88 properties, 28 states) with founder Mike Peter becoming CEO of Yugo U.S. 4

Corporate Developments:

• BXP (Boston Properties) cut quarterly dividend 29% to free $50M quarterly for projects and debt reduction 1
• Extell Development secured $1.2B hedge fund backing for 9 projects including 1.8M sq ft Disney campus redevelopment 1
• NeueHouse abruptly shut all coworking locations and plans liquidation after decade serving Hollywood/NYC creatives 1