Daily Dose of Real Estate

Daily Dose of Real estate for November 25

The housing market is serving up a perfect contradiction sandwich—inventory has recovered to near-normal levels while consumer confidence has cratered to 2009 crisis levels, with over half of Americans carrying nearly $8,000 in credit card debt just to afford basic expenses. Mortgage rates continue ping-ponging between 6-6.50% as the Fed contemplates rate cuts while policymakers float affordability solutions like 50-year portable mortgages that would cost borrowers 225% of their home’s value in interest. On the commercial side, real estate is having its best year in three with 4.2% price gains and Cincinnati somehow becoming the nation’s hottest rental market, proving that in 2025, even the Midwest can be trendy. Data centers are thriving with stable 6.5% cap rates and $3.68 billion in year-to-date issuance while the LIHTC affordable housing program faces an existential crisis with record numbers on watch lists, i.e. those experiencing financial or operational difficulties. 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

Housing inventory closes gap with pre-pandemic levels – active single-family inventory down only 4.7% compared to same week in 2019, up from 22% deficit at start of 2025 1
Mortgage rates surge to 6.37% this week – up from recent lows as 10-year Treasury yields rise to 4.16%, with Bankrate’s Variability Index reading 3 out of 10 2
Consumer debt crisis deepens – 53% of Americans carry average credit card debt of $7,719, with 29% unable to afford essential expenses without credit cards 3
Fannie Mae cuts 2026 home sales forecast to 7.3% growth, down from 8.9% predicted in October, citing rate stabilization above 6% dampening buyer enthusiasm 4
Fed Governor Waller backs December rate cut due to labor market concerns, with Treasury yields falling as policy rift widens within the Federal Reserve 5
Refinance volume projected to surge 36% of 2026 origination market as rates fall toward 5.9% baseline, up from 26% this year 4
Commercial real estate prices surged 4.2% annually in Q3 2025, reaching three-year highs as investor confidence returns across key sectors 1
Cincinnati leads national multifamily rental demand with 34% increase in page views and 52% jump in favorited listings, as Midwest markets dominate with 11 cities in top 30 1
Single-tenant net lease transactions jumped 18% year-over-year, making 2025 the third-highest transaction year on record, boosted by permanent reinstatement of 100% bonus depreciation 2
Data center financing reached institutional scale with $3.68 billion in year-to-date issuance while maintaining stable 6.5% cap rates, demonstrating growing confidence in income durability 3
LIHTC affordable housing program faces crisis with record 16.9% of properties on watch lists and 25% of stabilized projects reporting operating deficits amid rising costs and construction delays 4

RESIDENTIAL REAL ESTATE MARKETS

The residential market shows signs of inventory recovery while facing conflicting forecasts from major agencies. Housing supply has dramatically improved from early 2025 levels, though buyer activity remains constrained by affordability pressures and economic uncertainty.

INVENTORY AND SUPPLY CONDITIONS

Active single-family inventory recovering toward pre-pandemic levels – down only 4.7% compared to same week in 2019, significant improvement from 22% deficit at start of 2025 1
Weekly inventory shows seasonal decline pattern – down 1.1% week-over-week to 830,000 units (7-day average) as of November 21st, following typical fall/holiday season pattern 1
Year-over-year inventory gains moderating – up 15.5% compared to same week in 2024, down from 16.3% the previous week, suggesting inventory growth is slowing 1

MARKET FORECASTS AND OUTLOOK

Fannie Mae dramatically scales back home sales expectations – projecting modest 7.3% increase to 5,077 units in 2026, down from 8.9% growth predicted in October 4
National Association of Realtors maintains optimistic forecast – predicting 14% surge in existing-home sales, highlighting uncertainty in market predictions 4
Home price growth expected to decelerate sharply – Fannie Mae Home Price Index forecast to rise just 1.3% in 2026, down from 4.4% in 2024 and 2.5% projected for 2025 4

REGIONAL MARKET CONDITIONS

Fort Worth leads nation in home sale price drops – experiencing significant year-over-year declines reflecting broader buyer’s market shift in Texas Triangle region 6
Rust Belt cities show strongest price growth – Cincinnati leads at 10.5% increase, followed by Pittsburgh, Detroit, Milwaukee, and Cleveland 6
Luxury housing market shows mixed signals – national benchmarks slip 1.6% to $1.22 million in October, down 2.2% year-over-year, but homes selling faster than previous year 7

DEMOGRAPHIC TRENDS

Millennials rapidly catching up in homeownership – now buying homes in their 30s at rates comparable to Gen X in early 40s, driven by rising incomes and family formation 8
Younger generations entering market despite challenges – suggesting underlying demand from key demographic cohorts remains robust despite current affordability pressures 8

MORTGAGE MARKETS

Mortgage rates have surged this week to 6.37% as Treasury yields climb, creating volatility in borrowing costs. Despite recent increases, rates remain well below 2024 peaks, with Federal Reserve policy expectations continuing to drive market movements.

CURRENT RATE ENVIRONMENT

30-year mortgage rates rise to 6.37% this week – up from recent lows as 10-year Treasury yield climbs to 4.16% from 4.06% previous week 2
Rate variability remains low – Bankrate’s Mortgage Rate Variability Index reads 3 out of 10, suggesting consistent loan offers across lenders 2
Current rate breakdown by product – 30-year fixed at 6.33%, 15-year fixed at 5.64%, 10-year fixed at 5.59%, and 5/1 ARM at 5.54% 2
Refinance rates higher than purchase rates – 30-year refinance at 6.72%, 15-year refinance at 6.09%, reflecting typical pricing spreads 2

FEDERAL RESERVE POLICY IMPACT

Fed Governor Waller backs December rate cut – citing labor market concerns, with 80% probability of another 25 basis point reduction at December meeting 5
Unemployment report shows mixed signals – greater-than-anticipated job additions alongside rising unemployment rates creating complex policy environment 5
Treasury yields falling amid policy uncertainty – Waller’s meeting with Treasury Secretary Scott Bessent regarding possible Fed Chair nomination adds volatility to rate expectations 5

ORIGINATION AND REFINANCE ACTIVITY

Single-family mortgage originations projected to surge – Fannie Mae expects $1.88 trillion in 2025 climbing to $2.34 trillion in 2026 4
Refinance volume set for dramatic increase – projected to command 36% of 2026 origination market, up from 26% this year and 21% in 2024 4
Borrowers aggressively pursuing lower rates – as 30-year mortgage approaches 5.9% baseline, creating significant refinance opportunities for recent buyers 4

INDUSTRY CHALLENGES

Refinance rejection rates emerging as concern – rising property taxes and insurance premiums pushing debt-to-income ratios beyond acceptable thresholds 9
Industry experts warn of economic warning signs – refinance rejections described as “canary in the economic coal mine” suggesting individual loan details matter more than ever 9

REGULATORY DEVELOPMENTS IN REAL ESTATE

The Trump administration is advancing controversial housing policy initiatives while industry groups challenge rising costs and push for modernization. Regulatory changes could significantly impact mortgage products and market access.

FEDERAL HOUSING POLICY INITIATIVES

Trump administration developing 50-year mortgage product – FHFA Director Bill Pulte confirms active work on proposal to expand homeownership access 10
50-year mortgages face significant regulatory hurdles – loans longer than 30 years generally don’t qualify as “Qualified Mortgages” under CFPB’s Ability-to-Repay rule 10
UBS analysis reveals concerning cost implications – 50-year mortgage results in total interest payments equal to 225% of home price, with borrowers paying down only 11% of principal after 20 years 10

INDUSTRY ADVOCACY AND REFORM

Mortgage Bankers Association challenges credit report costs – blasting anticompetitive behavior and urging FHFA and federal regulators to investigate pricing practices 11
MBA calls for credit market modernization – studying move to single credit report for mortgage underwriting while FHFA approves VantageScore 4.0 11
MISMO releases standardized servicing dataset – developed with VA to modernize data sharing between federal housing agencies and servicers 8

CONGRESSIONAL AND AGENCY OVERSIGHT

Federal Reserve monitoring non-bank lending risks – emphasizing importance of supervision in understanding potential financial stability risks from direct lending institutions 12
Republican lawmakers grapple with housing affordability messaging – administration directive to “get Big Homebuilders going” reflects political urgency around housing supply issues 13
Critics argue some solutions could increase long-term costs – particularly 50-year mortgage concept potentially harming working families despite affordability claims 13

ECONOMIC NEWS

Consumer confidence has collapsed to crisis levels while a debt crisis deepens across American households. Credit card debt affects over half of Americans, with many unable to afford basic expenses without borrowing, creating challenging conditions for both spending and housing markets.

CONSUMER DEBT CRISIS

Majority of Americans carry credit card debt – 53% have average balances of $7,719, with 32% owing $10,000 or more and 9% carrying over $20,000 in debt 3
Credit cards become necessity for basic expenses – 29% of Americans couldn’t afford essential living expenses without credit cards, while 39% couldn’t handle a $2,000 emergency 3
Debt spiral accelerating for many – 27% of those with credit card debt say they go deeper into debt every month, with average payments consuming 30% of take-home pay 3
Housing costs driving credit card reliance – 36% of Americans rely more on credit cards due to rising housing costs, with 18% of renters putting rent payments on cards 3

CONSUMER CONFIDENCE AND SPENDING

Consumer confidence plummets to 2009 financial crisis levels – University of Michigan survey shows readings just slightly above June 2022 low when inflation was soaring 14
Black Friday spending plans drop significantly – consumers plan to spend average $622 between November 27-December 1, down 4% from last year due to higher living costs 14
Spending cuts span all income levels – consumers making less than $50,000 plan to spend 12% less, while those earning over $200,000 plan 18% reduction 14
69% of respondents expect unemployment to increase – double the percentage from a year ago, reflecting widespread economic anxiety 14

INFLATION AND MONETARY POLICY

Inflation rate climbs to 3% annually – rising since April according to federal data, with consumers not expecting relief anytime soon 14
University of Michigan survey shows inflation expectations at 4.5% – for next year, creating challenging environment for consumer spending and housing affordability 14
Federal Reserve faces data gap for December decision – no October employment report and November data arriving after FOMC meeting creates uncertainty 15

ECONOMIC DATA AND MARKET INDICATORS

Key economic releases this week provide crucial insights – Tuesday’s retail sales, producer price index, and business inventories followed by Wednesday’s durable goods orders 15
K-shaped recovery pattern becoming apparent – lower-income consumers face mounting pressure while higher-income households strengthen through stock gains and home appreciation 16
Retail earnings reports offer real-time consumer insights – Best Buy and HP Inc. scheduled to report, providing data on luxury versus essential spending patterns 15

COMMERCIAL REAL ESTATE MARKETS (INCLUDING MULTIFAMILY)

Commercial real estate markets showed strong momentum in Q3 2025, with prices reaching three-year highs and multifamily rental demand surging across Midwest markets. The office sector also demonstrated early signs of recovery as hybrid work arrangements gained traction.

CRE PRICES SURGE TO THREE-YEAR HIGH

Commercial real estate prices posted a 4.2% annual gain in Q3 2025, marking the highest annual growth rate in three years as investors demonstrate surprising confidence across key sectors 1

MIDWEST DOMINATES MULTIFAMILY RENTAL DEMAND

Cincinnati claimed the #1 spot for renter engagement nationally in Q3 2025, with page views up 34%, listings added to favorites up 52%, and saved searches up 56% 1
The Midwest dominated with 11 cities in the top 30 rental markets, including four in the top 10
St. Louis surged 74 spots – the largest quarter-over-quarter gain
Las Vegas jumped to #5 with a 157% increase in saved searches
Long Beach, CA broke into the top 10 for the first time
Atlanta climbed to second place, leading the nation in favorited listings

OFFICE MARKET SHOWS SIGNS OF RECOVERY

Office traffic rose in Q3 2025 as hybrid work gained momentum, with gradual increases in foot traffic as companies focus on flexible work arrangements 5
This represents a potential turning point for the struggling office sector

MAJOR MULTIFAMILY TRANSACTION ACTIVITY

Camden Property Trust sold the Marquis Enclave in Houston, a 394-unit community, to CWS Capital Partners for an undisclosed amount 6
Houston multifamily sales activity totaled $2.1 billion across 133 properties in October 2025, slightly higher than the $2 billion registered during the same period in 2024

COMMERCIAL FINANCING MARKETS

Commercial financing markets experienced robust activity in 2025, with single-tenant net lease transactions reaching record levels and data center financing achieving institutional scale. Federal Reserve rate cut expectations continued to influence market dynamics.

SINGLE TENANT (STNL) MARKET REACHES RECORD TRANSACTION LEVELS

Single-tenant net lease (STNL) transaction activity jumped 18% year-over-year through September 2025, making it the third-highest transaction year on record 2
Market was boosted by the permanent reinstatement of 100% bonus depreciation in 2025
Top-tier credit tenants: Mid-5% cap rate range
Mid-tier tenants: High-6% cap rate range
Lower-tier tenants: Around 7% cap rate
Properties with <5 years remaining: 7.7% average cap rate
Properties with >15 years remaining: 6.1% average cap rate

DATA CENTERS ACHIEVE INSTITUTIONAL SCALE

Data centers financed through securitized CRE markets are pricing near a 6.5% cap rate in 2025, even as issuance climbed to $3.68 billion year-to-date 3
This combination of rising issuance and stable pricing underscores growing confidence in income durability for smaller colocation assets

FEDERAL RESERVE RATE CUT EXPECTATIONS RISE

Fed Governor Christopher Waller backed a December rate cut citing labor market concerns, pushing market expectations for a December reduction to approximately 78% probability 7

CAP RATES EXPECTED TO DECLINE FURTHER

Industry analysts project additional cap rate declines in 2026, with multifamily valuations potentially rising as cap rates catch up to market fundamentals 1

COMMERCIAL SERVICING MARKETS

Commercial servicing markets showed mixed signals with some improvement in CRE CLO distress reaching 2025 lows, while retail properties faced pressure from shifting consumer spending patterns and rising defaults on matured loans raised concerns.

CRE CLO DISTRESS HITS 2025 LOW

October 2025 numbers showed progress in CRE CLO delinquency, with distress hitting 2025 lows 1
However, rising defaults on matured loans raised new concerns about upcoming maturities

RETAIL CRE UNDER PRESSURE FROM CONSUMER SPENDING SHIFTS

Trepp’s Chief Economist warned of margin pressure affecting retail-linked CRE properties 8
Regional and super-regional malls, luxury centers, and discretionary-heavy centers face particular vulnerability as consumer spending patterns evolve
Different property types potentially responding differently based on tenant performance

INDUSTRY NEWS

Real estate and mortgage companies continue strategic moves while technology developments reshape operations. Market volatility is driving emphasis on adaptability and stronger financial cushions across sectors. Industry developments included challenges in affordable housing programs, executive appointments, technology awards, and mixed forecasts for the housing market as companies expressed cautious optimism about M&A activity

EXECUTIVE APPOINTMENTS AND CORPORATE MOVES

LERETA appoints Wells Fargo executive to board – Kristy Fercho, Senior EVP and Head of Financial Inclusion at Wells Fargo, joins property data and analytics company board 17
Camden Property Trust completes Houston asset sale – transaction reflects ongoing portfolio optimization strategies in multifamily sector despite economic uncertainties 18

MARKET CONDITIONS AND OUTLOOK

Leveraged finance market shifts toward M&A activity – mergers and acquisitions becoming primary source of new direct loans rather than refinancing, with Q3 M&A-driven lending reaching $2.1 billion 19
Fitch maintains neutral outlook for finance companies – despite macroeconomic headwinds including subdued GDP growth and weaker consumption, offset by resilient business fundamentals 20
Mortgage sector outlook upgraded to “improving” – while truck leasing and debt purchasers face “deteriorating” conditions according to Fitch Ratings 20

TECHNOLOGY AND OPERATIONAL DEVELOPMENTS

MISMO releases standardized servicing dataset – collaboration with VA aims to modernize data sharing and reduce costs across mortgage servicing ecosystem 8
Commercial real estate adapts to volatile conditions – industry emphasizing combination of relationships, data, and execution in operations amid challenging retail-linked property environment 18
LIHTC performance shows signs of stress – rising costs and project delays forcing industry to revisit underwriting assumptions and build stronger financial cushions 21

LIHTC PROGRAM FACES PERFORMANCE CHALLENGES

The Low-Income Housing Tax Credit (LIHTC) program experienced weakened performance in 2024 amid rising costs and delays 4
A record 16.9% of LIHTC properties landed on the watch list
25% of stabilized projects reporting operating deficits
Construction delays affected projects that closed between 2019-2022, with 31% still in pre-stabilization and 30% in lease-up by end of 2024

LERETA ADDS WELLS FARGO EXECUTIVE TO BOARD

LERETA announced the addition of Kristy Fercho, a Wells Fargo executive, to its board of directors 9
Move strengthens the company’s leadership as it continues to expand its real estate technology and services offerings

M&A ACTIVITY SHOWS OPTIMISM FOR 2025

Fitch Ratings reported that M&A activity surged in Q3 2025 11
Blackstone Inc., Blue Owl Capital Inc., and other business development companies expressed cautious optimism toward the future M&A landscape during recent earnings calls

YOUNGER HOMEBUYERS ENTERING MARKET

After a slower start, younger generations are rapidly catching up in homeownership, fueled by rising incomes, career stability, and family formation 12
Millennials are now buying homes in their 30s at rates comparable to Gen X in their early 40s, signaling a potential shift in housing demand patterns

FANNIE MAE CUTS 2026 HOME SALES FORECAST

Fannie Mae reduced its 2026 home sales projections, predicting the 30-year fixed-rate mortgage will average 6.2% in Q1 2026 before declining to 5.9% by year-end 13
This contrasts with the National Association of REALTORS projecting a 14% surge in existing-home sales after a stagnant 2025