Daily Dose of Real Estate

Daily Dose of Real Estate for January 23

The real estate, mortgage, and title insurance industries mourns the loss of Kurt Pfotenhauer, longtime ALTA CEO who championed industry modernization and consumer protection for over two decades, leaving behind a transformational legacy in real estate finance. A tremendous man and industry luminary. RIP brother.

December pending home sales collapsed 9.3% to record lows with the Midwest experiencing its worst performance ever, while the Trump administration launched comprehensive housing reforms including a $200 billion mortgage bond purchase program and restrictions on institutional single-family home ownership. The MBA proposed three “easy wins” for housing affordability including ending tri-merge credit reporting requirements, though industry experts warn this could enable system gaming as borrowers with vastly different credit scores across bureaus could qualify using only their highest score.

Commercial real estate markets are experiencing their first meaningful recovery since the pandemic, with national office vacancy rates declining to 18.4% from a March 2025 peak of 19.9% while private-label CMBS issuance surged 21% to $125.6 billion – the highest level since the financial crisis. Regional banks are preparing to resume commercial real estate lending growth as lower interest rates and stabilizing credit quality create more favorable conditions, though distressed situations in major markets like San Francisco continue to work through foreclosure processes.

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

Pending home sales plunged 9.3% in December to worst level for any December on record, with Midwest seeing worst sales on record and Northeast experiencing second-worst performance 1
MBA proposes three “easy wins” for housing affordability, including ending tri-merge credit reporting requirements, reducing FHA mortgage insurance premiums, and eliminating loan-level price adjustments on rate-and-term refinances 2
Industry experts warn against single-file credit reporting, citing potential for gaming the system when borrowers have vastly different scores across bureaus, with one example showing 734 Experian score versus 662 TransUnion and 580 Equifax scores 3
Mortgage rates edge higher to 6.09% but remain near three-year lows, with geopolitical tensions over Greenland contributing to bond market volatility 4
Trump administration launches major housing affordability initiative, directing Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities while restricting institutional investor participation in single-family housing markets 5
Title insurance industry mourns loss of Kurt Pfotenhauer, longtime ALTA CEO who championed industry modernization and consumer protection for over two decades
Office vacancy rates finally declining: National office vacancy fell to 18.4% in December 2025, down 150 basis points from March 2025 peak, with Manhattan leading the recovery at 13.6% 1
Global CRE investment surge: Institutional investors plan to deploy $144 billion into commercial real estate in 2026, with 87% planning to increase direct investment 2
Regional banks revive lending: Major regional banks project commercial real estate lending growth in 2026, driven by lower interest rates and stabilizing credit quality 3
Private-label CMBS hits post-crisis high: Issuance jumped nearly 21% in 2025 to $125.6 billion, the highest level since the financial crisis, with office properties making up 25% of collateral
San Francisco distress continues: $350 million nonperforming loan tied to 225 Bush Streettower goes up for sale as city’s office market faces ongoing defaults 4

RESIDENTIAL REAL ESTATE MARKETS

The residential real estate market experienced a dramatic downturn in December, with pending home sales plunging to historic lows across all regions while inventory dynamics continue to shift in favor of buyers.

PENDING HOME SALES COLLAPSE TO RECORD LOWS

National pending sales plunged 9.3% seasonally adjusted in December to lowest level for any December on record, down 21.5% compared to December 2010 during the Housing Bust 1
Market now in fourth year of transaction collapse with no improvement, as pending sales track contracts signed in December that haven’t closed yet and could still be canceled due to insurance issues or other factors
Cancellation rates running high in 2025, contributing to overall market weakness as buyers struggle with homeowner’s insurance availability and affordability challenges
December downturn occurred in all four regions from already low levels, with particularly pronounced weakness in Midwest and West regions

REGIONAL MARKET BREAKDOWN SHOWS WIDESPREAD WEAKNESS

Midwest pending sales collapsed 14.9% seasonally adjusted in December from November and 9.8% year-over-year to new record low, with sales down 39.6% compared to December 2021 and 41.3% versus December 2020
West region sales plunged 13.3% month-over-month to worst December level on record and fourth-lowest level for any month, down 41.0% from December 2021 and 51.2% from December 2020
Northeast sales fell 11.0% month-over-month to second-worst level on record, with year-over-year decline of 3.6% and massive drops of 36.5% from December 2021 and 44.5% from December 2020
South region showed relative resilience with 4.0% monthly decline but 2.0% year-over-year gain, though still down 36.6% from December 2021 and 39.8% from December 2020

MARKET CONDITIONS SHOW CAUTIOUS OPTIMISM AMID WEAKNESS

Home inventory increased 9.5% year-over-year while active listings in December were up 22% to 95% from prior four years, though down 15% to 25% from 2017-2019 levels 7
Median list prices declined 0.3% year-over-year to $399,950 nationally in December 2025, with median listing price per square foot falling 1.8% annually
Days on market extended to 61 days for typical homes sold, representing longest period in approximately three years and giving buyers significantly more negotiating leverage
Manhattan condominium sales rose 5.4% year-over-year with median prices increasing 2.3% to $1.1 million in Q4 2025, with demand heavily skewed toward turnkey properties 8

MORTGAGE MARKETS

Mortgage markets experienced mixed signals with rates edging higher amid geopolitical tensions while application activity surged, as industry debates intensify over proposed changes to credit reporting requirements.

INTEREST RATES EDGE HIGHER AMID GEOPOLITICAL TENSIONS

30-year fixed mortgage rates averaged 6.09% as of January 22, up from 6.06% previous week but significantly lower than 6.96% from a year ago, according to Freddie Mac’s Primary Mortgage Market Survey 4
15-year fixed mortgage rates averaged 5.44%, up from 5.38% the previous week, following broader bond market movements driven by geopolitical tensions
10-year Treasury yield jumped to 4.27% at midday Thursday from 4.17% a week earlier, attributed to Trump administration tariff threats regarding Greenland and turbulence in Japan’s bond market
Rates briefly dipped below 6% earlier in January after President Trump directed GSEs to buy $200 billion in mortgage-backed securities, but reversed when Greenland seizure proposal intensified international tensions

MORTGAGE APPLICATION ACTIVITY SURGES

Total mortgage applications rose 14.1% for week ending January 16 compared to previous week, according to Mortgage Bankers Association data
Refinance applications jumped 20% week-over-week and accounted for nearly 62% of all home loan applications, hitting strongest level since late 2025 as borrowers capitalize on lower rates
Purchase applications up 5% from previous week on seasonally adjusted basis, with unadjusted purchase index 18% higher than a year ago 7
Adjustable-rate mortgage applications reached 12.9% of total applications in mid-September 2025, highest level since 2008, though share has dropped as rates trended downward

INDUSTRY DEBATES SINGLE-FILE CREDIT REPORTING RISKS

Greg Sher warns against MBA’s single-file credit push, citing real-world example of borrower with 734 Experian score but 662 TransUnion and 580 Equifax scores due to unreported 60-day delinquencies 3
Potential for system gaming as lenders could select most favorable credit report, with borrower qualifying for best mortgage rates despite recent payment struggles on other bureaus
Chain reaction concerns include loan defaults leading to lender losses, increased loan-level price adjustments from Fannie Mae, and reduced servicing values affecting independent mortgage banks
Tim Rood notes controversy level, delicately stating “Abortion feels like a less controversial topic” while acknowledging cost savings arguments but emphasizing need for stress testing the proposal

REGULATORY DEVELOPMENTS IN REAL ESTATE AND MORTGAGE

The Trump administration launched comprehensive housing policy reforms while the MBA proposed immediate administrative actions to reduce mortgage costs, as industry debates intensify over credit reporting changes.

MBA PROPOSES THREE “EASY WINS” FOR HOUSING AFFORDABILITY

Letter delivered to White House National Economic Council outlining three “near-term administrative actions” that would directly lower mortgage costs without requiring Congressional legislation 2
End tri-merge credit reporting requirements for Fannie Mae and Freddie Mac eligible loans, potentially reducing borrower costs but raising industry concerns about risk assessment accuracy
Reduce FHA mortgage insurance premiums for government-backed mortgages, providing immediate relief to borrowers using Federal Housing Administration programs
Eliminate loan-level price adjustments on rate-and-term refinances for borrowers with strong payment histories while reducing risk-based fees on Fannie and Freddie loans
Letter signed by multiple trade organizations including America’s Credit Unions and Independent Community Bankers of America, representing aligned industry views on administrative housing reforms

TRUMP ADMINISTRATION LAUNCHES COMPREHENSIVE HOUSING POLICY INITIATIVE

Executive order signed to curb institutional ownership of single-family rentals, stating “large institutional investors should not buy single-family homes that could otherwise be purchased by families” 5
Federal agency heads have 60 days to issue guidance preventing government support for institutional investor purchases, including coordination between FHFA director and HUD secretary
GSEs prohibited from approving, insuring, guaranteeing, securitizing or facilitating sales of single-family homes to institutional investors, representing major policy shift
Attorney General and FTC chairman ordered to review acquisitions by large institutional investors for potential anti-competitive practices
Build-to-rent properties exempted from restrictions as they are planned, permitted, financed, and constructed as rental communities from inception

$200 BILLION MORTGAGE BOND PURCHASE PROGRAM

Government-backed institutions directed to purchase up to $200 billion in mortgage bonds to bring down interest rates, representing largest federal mortgage market intervention since financial crisis
Uncertainty around implementation may limit impact, according to Realtor.com senior economist Anthony Smith, who noted “to really move mortgage markets, you would need large, sustained, and credible asset purchases”

FEDERAL HOUSING FINANCE AGENCY DEVELOPMENTS

FHLB Des Moines announced 2026 Affordable Housing Advisory Council appointments, with Housing and Community Investment Committee appointing one new individual and re-appointing three to 15-member council
HUD Secretary Scott Turner faced bipartisan scrutiny in House Oversight hearing on housing policy, with extensive questioning on housing affordability, program administration, agency accountability, and FHA financial stability

ECONOMIC NEWS

Economic data revealed persistent inflation above Federal Reserve targets while strong GDP growth complicates monetary policy decisions, as consumer spending patterns show strain from reduced savings rates.

INFLATION REMAINS ELEVATED ABOVE FED TARGET

Consumer prices rose 2.8% year-over-year in November, remaining well above Federal Reserve’s 2% target, with core PCE inflation also at 2.8% annually 9
Personal savings rate hit three-year low of 3.5% in November, down from 3.7% in October and 4% in September, falling every month since April 2025 when Trump announced sweeping tariffs
Services prices rose 3.4% year-over-year in November, up from 3.3% in October, while goods prices increased 1.2% annually, up from 1% in October
Inflation-adjusted disposable income fell 0.1% in October before increasing 0.1% in November, highlighting ongoing pressure on household budgets during government shutdown period

STRONG GDP GROWTH COMPLICATES FED POLICY

U.S. economy posted 4.4% annualized GDP growth in Q3 2025, strongest quarterly growth in two years, driven largely by consumer spending accounting for roughly 70% of output
Trump administration officials forecast unprecedented growth, with Commerce Secretary Howard Lutnick predicting economy will exceed 5% growth in Q1 2026 and reach 6% by year-end
Federal Reserve faces complex policy dilemma as strong growth and persistent inflation create conflicting pressures, with markets expecting unchanged rates at upcoming meeting after three 2025 cuts

LABOR MARKET AND CONSUMER DYNAMICS

Personal income growth slowed as job market faltered late in 2025, with personal income rising 0.3% in November versus 0.4% expectations
Personal spending increased 0.5% as expected, but real personal spending rose 0.3%, indicating consumers maintaining spending levels despite income pressures
Rising stock market wealth supporting high-income household spending, but Oxford Economics’ Michael Pearce cautioned “this is not sustainable indefinitely” as disposable incomes stagnate

COMMERCIAL REAL ESTATE MARKETS (INCLUDING MULTIFAMILY)

The commercial real estate sector is showing early signs of recovery, with office vacancy rates declining for the first time since the pandemic while multifamily markets demonstrate continued strength. Transaction activity is picking up in key markets, though regional variations remain significant.

OFFICE MARKET SHOWS SIGNS OF RECOVERY

National office vacancy drops to 18.4% in December 2025, down from 19.9% peak in March 2025 – the first meaningful decline since the pandemic began 1
Manhattan leads recovery with vacancy falling 400+ basis points since 2023 to reach 13.6%, while Houston, San Francisco, and Bay Area posted declines exceeding 300 basis points in 2025
Coworking expansion accelerates with over 1,000 new locations added in 2025, increasing market share to 2.2% as companies seek flexible alternatives to traditional long-term leases
Bay Area office sales surge with 119 deals completed in 2025 – highest volume since 2021 – while average price per square foot jumped 35% to $392, reversing four years of declines
Nationwide office sales reach $53 billion in 2025, indicating renewed investor confidence in the sector’s recovery prospects

MULTIFAMILY MARKET DYNAMICS

Columbia Banking System multifamily lending reaches $10.28 billion in Q4 2025, representing 77% year-over-year growth with only 1% sequential quarter decline showing strong underlying demand
Manhattan condo sales rise 5.4% year-over-year with median prices increasing 2.3% to $1.1 million in Q4 2025, driven by buyer preference for move-in-ready quality and financial transparency 5

NEW YORK TRANSACTION ACTIVITY

NYC records 215 transactions totaling $392 million in single 24-hour period on January 21, 2026, with top residential deal being $15 million penthouse at 470 Columbus Avenue 6

COMMERCIAL FINANCING MARKETS

Financing conditions are improving as regional banks prepare to resume lending growth and CMBS markets reach post-crisis highs. Lower interest rates and stabilizing credit quality are creating more favorable conditions for borrowers and lenders alike.

INTEREST RATE ENVIRONMENT IMPROVES LENDING CONDITIONS

Regional banks project CRE lending growth for 2026 following years of reduced exposure, boosted by Fed’s 25-basis-point December 2024 rate cut and expectations for additional reductions 3
PNC expects moderate growth with hopes for significant gains in first half 2026, while M&T Bank reports problem loans at lowest levels since 2007
US Bancorp sees paydowns slowing with modest growth resuming, focused on multifamily and industrial sectors, while KeyCorp projects flat lending on average but up 3% by year-end

CMBS MARKET REACHES NEW HEIGHTS

Private-label CMBS issuance jumps 21% to $125.6 billion in 2025 – highest level since financial crisis – with single-asset, single-borrower deals accounting for nearly three-quarters at $91.3 billion
Office properties comprise 25% of private-label collateral, up dramatically from just 8% in 2024, showing renewed lender confidence in the sector
Wells Fargo Securities leads market as most active bookrunner with $23.64 billion (19% of all deals), followed by Citigroup and Goldman Sachs
Underwriting standards remain steady with weighted average loan-to-value ratios at 56.89% and debt yields at 12.77%

GLOBAL INVESTMENT CAPITAL MOBILIZATION

Institutional investors prepare to deploy $144 billion into commercial real estate in 2026, with 87% planning to increase direct investment according to Knight Frank’s Active Capital survey 2
Target markets include UK (60%) and Germany (52%), while asset preferences show offices regaining attention (69%), industrial/logistics (63%), and living assets including multifamily (65%)

REIT CAPITAL ACTIVITY

REIT capital offerings rise to $80 billion in 2025, with M&A deals worth $18.2 billion in Q4 alone, pushing total M&A volume to $24 billion – nearly doubling 2024’s $12.9 billion
Property acquisitions total $40.5 billion through Q3 2025, led by retail ($10.9B), healthcare ($10.1B), and residential ($5B) sectors

COMMERCIAL SERVICING MARKETS

Distressed situations continue to work through the system, particularly in San Francisco’s office market, while regional bank asset quality shows signs of stabilization. Foreclosure activity remains elevated in select markets as owners face refinancing challenges.

SAN FRANCISCO OFFICE DISTRESS CONTINUES

225 Bush Street’s $350 million nonperforming loan being prepared for sale by special servicers in discussions with JLL, after owner Kylli defaulted in November 2024 4
Building’s appraised value plummets from $589 million in 2019 to just $153 million ($263 per square foot) by December 2024, with Douglas Wilson Companies appointed as receiver in August 2025
Pattern of SF office defaults continues including Columbia Property Trust receiving notice of default on $1.7 billion CMBS loan backed by 650 California Street and CIM Group’s default on $61.5 million loan at 55 Hawthorne Street

CHARLES COHEN’S 750 LEXINGTON FORECLOSURE

750 Lexington Avenue auctioned off after special servicer LNR Partners filed foreclosure and won summary judgment in summer 2025 7
Building’s NOI drops to 25% of underwritten levels in 2023, with occupancy falling from 100% to 69% after major tenant departures including Zara and WeWork

REGIONAL BANK ASSET QUALITY IMPROVEMENTS

M&T Bank reports problem loans at lowest levels since 2007, while First Horizon’s commercial real estate loan declines slow to just $111 million in Q4 2025

INDUSTRY NEWS

The real estate industry experienced significant transaction activity and strategic partnerships while mourning the loss of a transformational leader in title insurance and grappling with proposed regulatory changes.

TITLE INSURANCE INDUSTRY MOURNS KURT PFOTENHAUER

Kurt Pfotenhauer, legend, longtime ALTA CEO, passed away after championing title insurance industry modernization and consumer protection for over two decades 6
Led industry through digital transformation and regulatory challenges, establishing ALTA as premier voice for title insurance professionals nationwide
Championed consumer protection initiatives while advancing industry best practices and professional standards throughout his tenure
Legacy includes modernization of title insurance practices and strengthening relationships between industry stakeholders and regulatory bodies

CREDIT REPORTING DEBATE INTENSIFIES

Industry professionals express concerns about MBA’s single-file credit reporting proposal, with mortgage professionals citing potential for increased defaults and system gaming
Real-world examples demonstrate risk, including borrowers with excellent scores on one bureau but poor scores on others due to selective reporting by creditors
Potential unintended consequences include increased loan-level price adjustments, reduced servicing values, and strain on independent mortgage banks if defaults rise
MBA Residential/Single Family Board of Governors voted unanimously in favor of proposal, though industry critics question whether board members would want such loans on their own books

REAL ESTATE INVESTMENT TRUST ACTIVITY SURGES

REIT capital offerings rose to $80 billion in 2025, with Q4 deals worth $18.2 billion, pushing year’s total M&A volume to $24 billion, nearly doubling 2024’s $12.9 billion
REIT property acquisitions totaled $40.5 billion through Q3 2025, with $25.6 billion in dispositions, reflecting active portfolio management in response to market conditions
Retail, healthcare, and residential properties led acquisition volume at $10.9 billion, $10.1 billion, and $5 billion respectively, with lower interest rates making new multifamily projects more attractive

MAJOR REAL ESTATE TRANSACTIONS

New York City recorded 215 transactions totaling $392 million in 24 hours before 4 p.m. January 21, 2026, with top residential transaction being $15 million penthouse at Charlotte at 470 Columbus Avenue
Carolwood Estates partnered with Knight Frank, positioning luxury real estate firm for expanded market presence after notching $3.3 billion across 478 transactions between July 2024-2025

BANKING SECTOR MORTGAGE PERFORMANCE

Columbia Banking System reported mixed Q4 2025 results, with residential mortgage banking origination revenue flat at $19 million compared to $16 million in 2024, while servicing revenue totaled $23 million, down 4% year-over-year
South Atlantic Bancshares reported $2.10 per diluted share earnings for year ended December 31, 2025, noting Federal Reserve signals for further rate cuts amid lingering inflationary pressures

CONDOMINIUM MARKET EVOLUTION

U.S. condominium sector started 2026 with resilience and complexity, with demand for well-located, design-forward product remaining steady in established gateway markets 8
Quality, livability, and financial transparency emerged as common priorities across markets from NYC’s resale environment to Miami’s branded towers and Tampa’s expanding condo-hotel pipeline
Industry leaders emphasize quality over quantity, with success favoring developers, lenders, and buyers pairing disciplined capital strategies with products connected to place and responsive to changing preferences

MAJOR CORPORATE DEVELOPMENTS

NAR’s 2026 legislative agenda prioritizes housing affordability as bipartisan issue, with Congressional Real Estate Caucus growing to 100 members in 2025 after defeating 11 “harmful” tax proposals preventing $1.3 trillion in new real estate taxes 9
Place expands leadership with Chris Heller appointment as “force multiplier” for company’s expansion into comprehensive homeownership ecosystem, bringing platform strategy and revenue architecture experience 10

BROKERAGE PARTNERSHIPS AND EXPANSIONS

Carolwood Estates partners with Knight Frank, leveraging luxury brokerage’s $3.3 billion in closed deals across 478 transactions between July 2024-2025, placing Knight Frank back into U.S. market mix 11
Koriny Real Estate positions for breakout 2026 with CEO Tae Moon building global luxury platform connecting Manhattan inventory with international demand, hosting 70+ ultra-high-net-worth clients in Seoul showcasing U.S. developments 12

LEGAL AND REGULATORY DEVELOPMENTS

NAR settlement legal challenge continues in Eighth Circuit with law professor Tanya Monestier filing brief questioning settlement’s legal validity, creating ongoing uncertainty for brokers and agents 13