Daily Dose of Real Estate

Daily Dose of Real Estate for November 21

Existing home sales ticked up 1.2% in October as buyers celebrated mortgage rates dipping slightly to 6.25%. Mortgage Delinquencies Rise Across All Categories as the MBA reported mortgage delinquencies increased to 3.99% in Q3 2025, with FHA seriously delinquent rates rising almost 50 basis points year-over-year while conventional and VA rates remained flat. Foreclosure filings surged 19% year-over-year.

The Federal Reserve revealed deep divisions over December rate cuts, while lower-income Americans watched their credit-card balances hit a five-year high of $106,700. Lot’s of plastic being used at grocery stores which is rarely a bullish sign for consumer strength.

Commercial real estate turned in a surprisingly solid quarter with $150.6 billion in transactions, though office buildings remain about as popular as a root canal with an 11.76% delinquency rate. Multifamily, on the other hand, is crushing it – posting 51.1% transaction growth while everyone else tries to keep up. And the true MVP might be AI marketing tech, which reportedly generated $874 for every dollar spent with deeper and broader coverage than conventional marketing. 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.

Table of Contents

KEY TAKEAWAYS

Fed Minutes Reveal Deep Division: Federal Reserve officials were sharply divided at their October meeting over future rate cuts, with “many” participants suggesting it would be appropriate to keep rates unchanged for the rest of 2025, casting doubt on a December cut 12
Housing Market Shows Signs of Life: Existing-home sales climbed 1.2% in October to 4.1 million units, marking the strongest performance since February as homebuyers took advantage of falling mortgage rates that averaged 6.25% 3
Credit Stress Intensifies for Lower-Income Consumers: VantageScore data shows lower-income borrowers leading year-over-year increases in 60+ day delinquencies since mid-2025, with average credit balances reaching a five-year high of $106,700 in October 4
Mortgage Delinquencies Rise Across All Categories: MBA reported mortgage delinquencies increased to 3.99% in Q3 2025, with FHA seriously delinquent rates rising almost 50 basis points year-over-year while conventional and VA rates remained flat 5
Mortgage Affordability Improves for Fifth Straight Month: The national median payment for purchase applicants decreased to $2,039 in October from $2,067 in September, with MBA’s affordability index at its lowest level since March 2022 6
Foreclosure Activity Surges: ATTOM reported 36,766 U.S. properties with foreclosure filings in October, up 19% year-over-year, marking the eighth straight month of increases with foreclosure starts up 20% and completed foreclosures up 32% 7
CRE Recovery Accelerates: US commercial real estate investment surged to $150.6B in Q3 2025, up 25.1% year-over-year, with multifamily leading at 51.1% annual growth 1
Multifamily Cap Rates Set to Fall: Industry experts predict multifamily cap rates will decline in 2026 as fundamentals improve, with current rates 60 basis points above market-supported levels 2
Office Delinquencies Hit Record High: CMBS office delinquency rates reached a record 11.76% in October 2025, while industrial remains strong at just 0.56% 3
Major NYC Development Deal: SL Green acquired two Midtown Manhattan properties for $160M, totaling 800,000 rentable square feet near Grand Central Terminal 4
AI Technology Drives Office Leasing: Class A office assets using AI-driven marketing achieved $874 return for every $1 invested, with 89% broker market coverage vs. 11% through traditional methods 5

RESIDENTIAL REAL ESTATE MARKETS

The residential real estate market demonstrated surprising resilience in October despite ongoing federal government shutdown impacts, with existing-home sales climbing to their strongest performance since February. However, underlying stress indicators including rising foreclosure activity and persistent affordability challenges suggest a more complex market dynamic.

OCTOBER SALES SURGE DESPITE GOVERNMENT SHUTDOWN

Sales Volume: Existing-home sales climbed 1.2% to a seasonally adjusted annual rate of 4.1 million units—the strongest performance since February
Mortgage Rate Impact: 30-year fixed mortgage rate averaged 6.25% in October, down from 6.35% in September and 6.43% a year ago
Year-over-Year Growth: Sales advanced 1.7% compared to October 2024, with median home price reaching $415,200 (up 2.1%)
Price Trend Continuation: Marks the 28th consecutive month of annual price gains despite supply constraints
Inventory Improvement: Housing inventory increased 10.9% year-over-year to 1.52 million units 3 8

FORECLOSURE ACTIVITY REACHES EIGHT-MONTH HIGH

Total Filings: 36,766 U.S. properties with foreclosure filings in October, up 3% monthly and 19% year-over-year
Consecutive Increases: Eighth straight month of year-over-year increases in foreclosure activity
Foreclosure Starts: Rose nearly 20% year-over-year, indicating growing financial stress among homeowners
Completed Foreclosures: Surged 32% compared to October 2024, showing acceleration in distressed property resolution
Market Trend: CEO Rob Barber noted the “steady upward trend” continues despite overall market improvements 7

REGIONAL MARKET DYNAMICS

Midwest Leadership: Led monthly gains with 5.3% increase, benefiting from plentiful supply of affordable houses
Northeast Stability: Held flat month-over-month, facing headwinds from lack of supply affecting first-time buyers
West Coast Decline: Declined 1.3% monthly due to high home prices creating affordability barriers
California Momentum: Home sales climbed to highest level since February, though seasonal slowdown expected
Premium Market Strength: San Jose-Sunnyvale-Santa Clara topped expensive markets at $1.9 million, up 0.8% year-over-year 9

MARKET CHALLENGES AND BUYER SEGMENTS

First-Time Buyer Share: Comprised 32% of October sales, facing regional headwinds in Northeast and West
Upper-Tier Strength: Sales of homes priced above $750,000 surged 10% to 16% from the year prior
Affordability Segment Weakness: Homes priced between $100,000 and $250,000 rose just 1%
Market Time: Homes remained on market for 34 days—longest stretch for any October on record since 2019
Supply-Demand Imbalance: Continued mismatch between available inventory and buyer demand at affordable price points 3

MORTGAGE MARKETS

Mortgage markets experienced significant volatility in mid-November with rising rates dampening application activity, while delinquency data revealed concerning trends particularly among government-backed loans. Credit stress indicators show mounting pressure on lower-income borrowers despite overall affordability improvements.

RATE VOLATILITY CREATES APPLICATION UNCERTAINTY

Application Decline: MBA reported 5.2% decrease in mortgage applications for week ending November 14
Rate Increase: 30-year fixed mortgage rate climbed to 6.37%—highest level in four weeks
Weekly Trend: Third consecutive week of rate increases pushing potential homebuyers to sidelines
Refinance Activity: Refinance Index decreased 7% weekly but remained 125% higher than same week last year
Purchase Applications: Seasonally adjusted Purchase Index decreased 2% weekly but 26% higher year-over-year 10 11

MORTGAGE DELINQUENCIES SURGE ACROSS ALL CATEGORIES

Overall Delinquency Rate: Increased to seasonally adjusted 3.99% of all loans outstanding at end of Q3 2025
Quarterly Increase: Up 6 basis points from Q2 2025 and 7 basis points from one year ago
Foreclosure Actions: Percentage of loans with foreclosure actions started rose 3 basis points to 0.20%
FHA Performance Deterioration: FHA seriously delinquent rate increased almost 50 basis points year-over-year
Government vs. Conventional: Conventional and VA seriously delinquent rates remained relatively flat 5

CREDIT STRESS INDICATORS FLASH WARNING SIGNALS

Lower-Income Delinquency Leadership: Lower-income borrowers leading year-over-year increases in 60+ day delinquencies since mid-2025
Credit Balance Peak: Average credit balance reached $106,700 in October, up $153 (+0.14%) monthly—a five-year high
Holiday Season Concerns: Consumers increasingly relying on credit to cover expenses due to slower wage growth and higher living costs
Mortgage Credit Deterioration: Mortgage credit delinquencies experienced most significant increase across all credit products in October
60-89 Day Category Surge: 60-89 day past due category rose 12.1%—highest relative increase among all credit products 4

AFFORDABILITY IMPROVEMENTS CONTINUE DESPITE STRESS

Fifth Consecutive Month: MBA’s Purchase Applications Payment Index (PAPI) fell to 152.0 from 155.0 in September
Payment Reduction: National median payment for purchase applicants decreased to $2,039 from $2,067 in September
Historical Context: Lowest PAPI level since March 2022, indicating significant affordability improvements
Year-over-Year Comparison: Median purchase application payment was $88 lower than one year ago (4.2% decrease)
Contributing Factors: Lower mortgage rates, higher household earnings, and flattening home-price growth 6

COMMERCIAL AND MULTIFAMILY LENDING SURGE

Overall Growth: Commercial and multifamily borrowing sector originations increased 36% in Q3 2025
Depository Lending: Loans for depositories increased 36% quarter-over-quarter
CMBS Activity: CMBS loan originations increased 31% showing strong securitization market
Investor-Driven Growth: Loans for investor-driven lenders increased 14%
Life Insurance Decline: Dollar volume of loans for life insurance companies decreased 22%, indicating selective lending patterns 12

REGULATORY DEVELOPMENTS IN REAL ESTATE

Federal Reserve policy uncertainty deepened with October meeting minutes revealing unprecedented division among policymakers, while new leadership nominations and court rulings shape the regulatory landscape for housing finance. The regulatory environment reflects growing concerns about credit quality and consumer protection.

FEDERAL RESERVE POLICY UNCERTAINTY DEEPENS

October Meeting Division: Fed minutes revealed unprecedented division among policymakers regarding future rate cuts
December Cut Doubt: “Many” participants suggested keeping rates unchanged for rest of 2025—more than “several” in Fed parlance
Market Reaction: CME Group’s FedWatch shows only 1 in 3 chance of December cut, down from near certainty
Powell’s Position: Fed Chair stated December cut not a “foregone conclusion” in post-meeting statement
Rate Environment: Current target range of 3.75%-4% following October’s quarter-point reduction 1 2

CFPB LEADERSHIP NOMINATION

New Nominee: White House nominated Stuart Levenbach, a Vought aide, to lead Consumer Financial Protection Bureau
Strategic Significance: Signals potential significant changes in agency’s direction under Trump administration
Regulatory Implications: Could impact CFPB’s approach to mortgage lending oversight and consumer protection
Industry Impact: May affect enforcement priorities and regulatory guidance for mortgage originators and servicers
Confirmation Process: Nomination subject to Senate confirmation proceedings 13

MISMO PUBLISHES FEDERAL HOUSING AGENCY DATASET

New Dataset Launch: MISMO announced publication of Federal Government Housing Agency Servicing Dataset
VA Alignment: Designed specifically to align with VA’s modernization goals and requirements
Standardization Effort: Represents significant step forward in standardizing servicing data across federal housing agencies
Industry Review: Dataset underwent extensive review process before publication
Modernization Support: Helps support federal agencies’ technology and data modernization initiatives 14

COURT RULING ON AFFORDABLE HOUSING COVENANTS

Eleventh Circuit Decision: Court ruled FDIC can enforce affordable housing covenants even when laws change
Case Background: November 17 ruling stemmed from 1994 deal involving 192-unit apartment complex
Legal Precedent: Buyers of discounted multifamily properties from government remain bound by affordable housing promises
Compliance Impact: Significant implications for mortgage compliance and government-backed multifamily properties
Industry Responsibility: Establishes ongoing obligations for entities involved in government property transactions 15

FANNIE MAE AND FREDDIE MAC REFORM DISCUSSIONS

Ackman’s Proposal: Bill Ackman advocates market-based exit plan for Fannie Mae and Freddie Mac
IPO Feasibility: Investor argues Trump’s IPO plan is not feasible under current structure
Retail Participation: Proposal would allow retail investors to participate while maintaining government guarantees
Government Backing: Would not remove essential government guarantees that make GSEs reliable
Market Impact: Could reshape secondary mortgage market structure and investor participation 16

ECONOMIC NEWS

Economic data releases were significantly impacted by the federal government shutdown, with the long-delayed September jobs report showing underlying labor market weakness while consumer stress indicators signal challenging conditions ahead, particularly for lower-income Americans facing mounting credit pressures.

SEPTEMBER JOBS REPORT FINALLY RELEASED

Seven-Week Delay: BLS released September employment report on November 20 after federal government shutdown
Job Additions: 119,000 jobs added in September, slightly above expectations but revealing underlying weakness
Unemployment Rate: Remained at 4.4%, unchanged from previous month but higher than 4.1% a year earlier
Troubling Revisions: July revised down by 7,000 jobs, August revised down by 26,000 to show 4,000 jobs lost
Combined Impact: Employment in July and August was 33,000 lower than previously reported 17

OCTOBER JOBS REPORT CANCELED

Unprecedented Move: BLS announced October jobs report will not be published due to government shutdown
Data Collection Impact: Shutdown affected ability to collect necessary employment data for October
November Report Delay: Typically published first Friday of December, moved to December 16
Fed Policy Impact: Creates significant data gap for Federal Reserve’s December 9-10 meeting
Market Uncertainty: Lack of current employment data complicates economic assessment and policy decisions 18

CONSUMER CREDIT STRESS REACHES CRITICAL LEVELS

Lower-Income Deterioration: VantageScore data shows mounting stress for Americans earning below $50,000
Delinquency Leadership: Lower-income borrowers leading year-over-year increases in 60+ day delinquencies since mid-2025
Credit Utilization Rising: Credit utilization rates have risen month-over-month since September 2025
Holiday Season Pressure: Consumers increasingly relying on available credit to contend with persistently higher cost of living
Average VantageScore Stability: Average VantageScore 4.0 credit score remained stable at 701 in October despite underlying stress 4

BROADER CONSUMER SPENDING CONCERNS

Bain & Company Analysis: Spending intentions for lower-income Americans dropped 5.6 points to 94.7—well below neutral 100 level
Income Group Divergence: Upper and middle-income consumers holding up while lower-income earners face serious decline
Job Market Challenges: Clear employment challenges affecting lower-income demographic disproportionately
Holiday Trading Season: Signals darkening prospects for consumer demand during crucial holiday period
Economic Bifurcation: Growing divide between income groups could trigger challenging conditions for consumer-facing businesses 19

INFLATION AND TARIFF CONCERNS

Fed Minutes Insights: Policymakers noted inflation close to 2% target “setting aside tariff effects”
Above-Target Persistence: Overall inflation above target for extended period with little sign of sustainable return to 2%
Core Goods Inflation: Many participants expected additional pickup over next few quarters
Tariff Pass-Through: Further pass-through of tariffs to firms’ pricing expected to drive inflation
Policy Implications: Tariff impacts complicating Federal Reserve’s inflation assessment and rate decisions 2

COMMERCIAL REAL ESTATE MARKETS (INCLUDING MULTIFAMILY)

The commercial real estate market demonstrated significant momentum in Q3 2025, with transaction activity rising across most sectors. Multifamily continues to lead recovery efforts while office markets show mixed signals of stabilization.

Q3 2025 MARKET RECOVERY GAINS MOMENTUM

Transaction Volume Surge: CRE transaction activity rose 12.6% quarter-over-quarter with over 45,000 properties changing hands nationwide, reaching $150.6 billion in cumulative dollar volume—the highest quarterly total since the Fed’s rate-hiking cycle began 1
Multifamily Dominance: Multifamily represents 30% of all transaction activity and 34% of single-asset sales by dollar volume, with sales volume jumping to $45 billion (+51.1% year-over-year) 1
Pricing Recovery: Median multifamily pricing climbed to $144 per square foot, up 17.3% year-over-year and 3.5% from Q2 2025 1

OFFICE MARKET SHOWS SIGNS OF LIFE

Volume Growth: Office property sales volumes reached $19 billion, up 28.0% year-over-year, with transaction counts increasing 14.6% 1
Pricing Gains: Median office deal size rose 23.8% with pricing hitting $135 per square foot—a 14.8% increase year-over-year and post-COVID high 1
Regional Variations: Miami office properties saw standout gains of +32.7%, while Los Angeles and Washington, D.C. experienced localized declines 1

INDUSTRIAL AND RETAIL MAINTAIN STEADY GROWTH

Industrial Strength: Industrial property volume rose to $29.6 billion (+26.5% year-over-year), demonstrating continued investor confidence in logistics and warehouse assets 1
Retail Recovery: Retail transactions totaled $23.1 billion (+10.9% year-over-year), with storage properties posting the largest quarter-over-quarter pricing gains at +7.6% 1
Specialty Sectors: Automotive retail (+5.0%) and medical office (+4.6%) showed strong quarter-over-quarter pricing gains 1

HOSPITALITY SECTOR CONTINUES TO STRUGGLE

Volume Decline: Hospitality property count declined 11.9% year-over-year with total dollar volume dropping 18.5%, suggesting weaker investor appetite for the sector 1

COMMERCIAL FINANCING MARKETS

Commercial financing markets are showing signs of improvement with CMBS issuance reaching multi-year highs and credit conditions stabilizing. Multifamily cap rates remain elevated but are expected to compress in 2026 as fundamentals improve.

CMBS ISSUANCE REACHES MULTI-YEAR HIGHS

Record Pace: Private-label CMBS issuance reached $32.31 billion in Q3 2025, bringing year-to-date volume to $92.48 billion—on pace to top $123 billion for the year, the heaviest annual issuance since 2007 3
Credit Improvement: Low-LTV office loan spreads over the 10-year Treasury are now around 204 basis points, the lowest level of 2025 and roughly 2.5 basis points tighter over the last month 3

MULTIFAMILY CAP RATES POISED FOR DECLINE

Strong Performance: Multifamily sector posted 5.48% annualized returns in Q3 2025, beating the NCREIF All Property Index for the sixth consecutive year 2
Cap Rate Stability: Cap rates have held steady at 5.7% for seven quarters—the longest such streak in 25 years—but analysts expect this trend to end in 2026 2
Geographic Leaders: San Jose (9.3% returns), Houston (9.0%), Miami (8.4%), and Orange County, San Diego, San Francisco (all 7%+ returns) led national performance 2
Fundamental Gap: First American’s model shows “true” cap rate supported by fundamentals sits at 5.1%, creating a 60-basis-point gap with observed rates 2

REITS AND CAPITAL MARKETS RECOVERY

REIT Rally: Public REITs have rallied 35% from their 2023 lows, with major CRE valuation indices showing recovery across the board 6
Index Performance: Green Street CPPI (+6.3% above low), RCA/MSCI Index (+2.8%), CoStar Repeat-Sales Index (+1.7%), and NCREIF Property Index (+5.6%) all showing positive momentum 6

COMMERCIAL SERVICING MARKETS

The servicing sector shows stark bifurcation with office delinquencies reaching record levels while industrial properties maintain strong performance. Maturity extensions continue to dominate workout strategies.

OFFICE DELINQUENCIES REACH RECORD LEVELS

Record High: Office delinquencies reached a record 11.76% in October 2025, driving the overall CMBS delinquency rate to 7.46% 3
Sector Breakdown: Industrial (0.56% – lowest), Retail (6.76% – steady), Hotel (5.81% – lowest since early 2024), Office (11.76% – record high) 3

MAJOR DISTRESSED ASSET ACTIVITY

Brookfield Downtown LA: Distressed Brookfield-owned downtown office tower at 333 South Grand Avenue being marketed by Eastdil Secured following $506 million loan default 7
Asset Details: The 1.4 million-square-foot Wells Fargo Center — North Tower is only 61% leased, with debt amounting to $346 per square foot 7

MATURITY EXTENSIONS CONTINUE

Extend-and-Amend Strategy: Approximately $23 billion in CMBS loans are now past contractual maturity, reflecting the ongoing trend that continues to replace forced sales 3
Market Opportunities: Ongoing ratings downgrades and redemption-driven liquidations continue to pressure sellers, creating a buyer’s market for select CMBS tranches 8

INDUSTRY NEWS

Technology innovation, major transactions, and strategic fund raises dominated industry news, with AI-driven marketing showing measurable ROI for office assets and institutional capital flowing into AI infrastructure.

AI TECHNOLOGY TRANSFORMS OFFICE LEASING

RealtyAds ROI Report: Class A office assets using AI-driven marketing achieved $874 return for every $1 invested in 2025, with $5.56 billion in deals found and $1.49 billion in deals closed 5
Market Coverage: AI-enabled assets achieved 89% broker market coverage vs. 11% through traditional methods, coinciding with Class A leasing surging 12.5% in 2025—strongest performance since 2019 5

MAJOR DEVELOPMENT TRANSACTIONS

SL Green Midtown Acquisition: SL Green Realty acquired two adjacent properties at 346 Madison Avenue and 11 East 44th Street for $160 million from Claudio Del Vecchio, totaling approximately 800,000 rentable square feet near Grand Central Terminal 4
NYC Market Activity: New York City recorded 226 transactions totaling $427 million over a 24-hour period on November 19, 2025, indicating continued robust market activity 4

SELF STORAGE MARKET STABILIZATION

2025 Stabilization: Industry experts describe 2025 as a year of stabilization for self storage following post-COVID development surges, with the first month of incremental rate increases in September after nearly three years of declines 10
Rate Recovery: National advertised asking rents rose 0.9% in September, marking the first positive movement in nearly three years 10

COMMERCIAL LENDING GROWTH

Q3 Lending Surge: Commercial and multifamily borrowing increased 36% in Q3 2025, marking five straight quarters of growth on both quarterly and annual basis 11
Broad-Based Growth: Lending activity increased across most major property types and capital sources, led by particularly strong growth in office, retail, and hotel properties 11

AI INFRASTRUCTURE INVESTMENT

Brookfield Fund: Raised $10 billion for AI infrastructure fund with backing from Nvidia and KIA
Real Estate-AI Intersection: Highlights growing connection between real estate and artificial intelligence infrastructure
Physical Infrastructure Focus: Fund will develop facilities necessary to support AI operations including data centers
Specialized Facilities: Investment in specialized real estate assets supporting AI technology advancement
Market Opportunity: Demonstrates significant capital flowing into AI-related real estate development 20