Daily Dose of Real Estate

Daily Dose of Real Estate for January 30

“America will always do the right thing, but only after they have exhausted all other possibilities.” – Churchill. More last-minute brinksmanship as Congress appears poised to deliver yet another government shutdown—this time over ICE reforms – just three months after ending the record-breaking 43-day shutdown that lasted from October to November 2025. Residential real estate and mortgage markets showed mixed signals on January 29, 2026, with home prices hitting a record $360,000 (feels low, right?) nationally while mortgage rates remained near three-year lows at 6.10%, leading to the first increase in new listings in over two months and improved affordability for seven consecutive months, though significant headwinds emerged including the Federal Reserve holding rates steady in a 10-2 vote and growing momentum for property tax elimination across multiple states.

Commercial real estate markets demonstrated robust activity with major transactions including Atlas Capital Group’s $112.3 million acquisition of a 130-unit East Village building and West Shore’s successful $630 million refinancing of a 13-property Sun Belt multifamily portfolio, while mortgage rates held steady at 6.10% near three-year lows. However, concentrated stress emerged in $64 billion worth of Fannie Mae and Freddie Mac multifamily loans from 2021-2022 vintages facing pressure from low debt yields and rising operating expenses, creating opportunities for opportunistic capital targeting discounted acquisitions and restructuring deals.

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

Home prices hit record highs with the national median sale price reaching $360,000 in 2025, up 2.6% from 2024, while profit margins declined from 55% to 49% 1
New listings rose 1% year-over-year for the first time in over two months, driven by mortgage rates near 6.10% – their lowest level in three years 2 3
Federal Reserve held rates steady at 3.5%-3.75% in a 10-2 vote, with President Trump announcing he will reveal his Fed chair pick next week 4
Property tax elimination efforts gain momentum across multiple states, with Georgia Republicans unveiling plans to phase out homeowner property taxes by 2032 and Florida considering similar measures 5
Regional affordability challenges intensify with the South experiencing the strongest wage growth but facing higher housing and gasoline costs that constrain discretionary spending 6
Build-to-rent developers emerge as winners from Trump’s housing policy crackdown, with private real estate investment seeing its first growth since 2021 at $222 billion 8
Multifamily Loan Stress Emerges: Nearly $64 billion in Fannie Mae and Freddie Mac loans from 2021-2022 vintages face pressure from low debt yields and rising expenses 1
Major Refinancing Activity: West Shore secured $630 million refinancing for 13-property Sun Belt portfolio spanning 4,077 apartments across five states 2
Record NYC Storage Deal: StorageMart completed the second-largest self-storage acquisition in NYC history, acquiring 15 properties with 1.3 million net rentable square feet 3
Development Pipeline Expands: JPI broke ground on $150 million Portico community in Long Beach, California, featuring 272 units with completion targeted for June 2028 4
NYC Transaction Volume: 120 transactions totaling $407 million were filed in New York City records in a single 24-hour period, with the largest commercial deal being Atlas Capital Group’s $112.3 million acquisition of a 130-unit East Village building 6

RESIDENTIAL REAL ESTATE MARKETS

The residential market closed 2025 with record-breaking prices but declining seller profits, while early 2026 data shows the first increase in new listings in over two months. Regional variations remain significant, with Midwest markets leading price growth while Florida markets experience corrections. Regional affordability challenges are intensifying despite strong wage growth in certain areas.

RECORD PRICES AMID DECLINING PROFIT MARGINS

National median home price reached $360,000 in 2025, up 2.6% from 2024 and 39% from 2020 levels, marking an all-time high 1
Seller profit margins fell to 49% in 2025 from 55% in 2024, marking the third consecutive year of decline as the market normalizes from pandemic-era highs 1
Typical home sale generated $118,710 in gross profits, down from $124,500 in 2024, indicating gradual market stabilization after extraordinary pandemic returns 1

REGIONAL PRICE VARIATIONS PAINT DIVERSE PICTURE

80.5% of metropolitan areas experienced price gains, with Birmingham, Alabama leading at 12.9% growth, followed by Syracuse, New York at 11.6% 1
Florida markets dominated price declines, with North Port leading downward trend at -9%, followed by Deltona at -5.4%, suggesting corrections in previously overheated areas 1
Major metro areas showed mixed results, with Detroit posting 8.5% growth while some California and Florida markets experienced significant declines 1

REGIONAL AFFORDABILITY CHALLENGES INTENSIFY

Southern states face affordability squeeze despite posting the strongest after-tax wage growth in December, with rising housing and gasoline costs absorbing income gains 6
Faster rent growth since 2019 in the South has constrained discretionary budgets, with durables spending down over 4% year-over-year and airline spending declining over 5% 6
Spending growth slowed in the South despite strong wage gains, suggesting rising fixed costs are absorbing much of households’ income improvements 6

NEW LISTINGS SHOW SIGNS OF LIFE

New listings rose 1% year-over-year during the four weeks ending January 25, marking the first increase in more than two months and bringing 69,655 homes to market 2
Homes taking 63 days to sell on average, representing a full week longer than last year and the longest sales timeline in at least six years 2
Only 19.2% of homes sold above listing price, down from 21% last year, with average sale-to-list price ratio declining to 97.7% from 98% 2

MORTGAGE MARKETS

Mortgage rates remain near three-year lows at 6.10%, while the Federal Reserve held rates steady in a 10-2 vote. Homebuyer affordability improved for the seventh consecutive month, though application activity shows mixed signals as the market adjusts to changing conditions.

RATES STABILIZE NEAR THREE-YEAR LOWS

30-year fixed-rate mortgage averaged 6.10% as of January 29, up slightly from 6.09% the previous week but nearly a full percentage point below the 6.95% level from one year ago 3
15-year fixed-rate mortgage averaged 5.49%, up from 5.44% the previous week but significantly below the 6.12% rate from January 2025 3
Lower rates driving increased purchase applications, with applications up 18% year-over-year as of the week ending January 23, near their highest level in three years 2

FEDERAL RESERVE MAINTAINS CAUTIOUS STANCE

Fed voted 10-2 to hold rates steady at 3.5%-3.75%, marking the first meeting of 2026 without a rate cut after three consecutive reductions in late 2025 4
Two dissenting votes came from Christopher Waller and Stephen Miran, who favored a 0.25 percentage point reduction, reflecting some internal pressure for continued easing 4
Data-dependent approach continues, with policymakers awaiting clearer evidence that inflation is sustainably moving toward target before implementing further easing 7

AFFORDABILITY CONDITIONS CONTINUE IMPROVING

National median mortgage payment decreased to $2,025 in December from $2,034 in November, marking the seventh consecutive month of improved affordability 9
Purchase Applications Payment Index fell 0.5% to 148.8, with mortgage payments down 4.8% year-over-year while earnings grew 2.9% 9
Homebuyers gained $36,600 more buying power compared to November 2024, with $13,100 from higher incomes and $23,500 from lower mortgage rates 10

REGULATORY DEVELOPMENTS IN REAL ESTATE AND MORTGAGE

President Trump announced he will reveal his Fed chair pick next week, creating anticipation in monetary policy circles. Political tensions complicate the confirmation process, while GSE policy discussions gain momentum and multifamily lending stress emerges from 2021-2022 vintages. A growing movement to eliminate property taxes for homeowners is gaining traction across multiple states.

TRUMP ANNOUNCES IMMINENT FED CHAIR SELECTION

Trump to reveal Fed chair choice “next week”, with Jerome Powell’s leadership term ending in May and several candidates reportedly under consideration 4
Kevin Hassett appears to be leading contender, known for favoring lower interest rates, with other potential nominees including Christopher Waller, Kevin Warsh, and Rick Rieder 4
Treasury Secretary Scott Bessent overseeing selection process, with the choice having profound implications for mortgage markets and monetary policy direction 4

PROPERTY TAX ELIMINATION MOVEMENT GAINS MOMENTUM

Georgia Republicans unveiled complex plan to phase out homeowner property taxes by 2032, requiring constitutional amendment and voter approval to eliminate $5.2 billion in annual taxes 5
Florida considering 10-year phase-out of nonschool property taxes for homeowners, with Gov. Ron DeSantis making elimination his goal amid disputes over local government spending 5
North Dakota using oil revenue to gradually eliminate homeowner property taxes, with $1,600 annual tax credit wiping out taxes for 50,000 households and reducing bills for 100,000 more 5
Texas Governor Greg Abbott wants to eliminate property taxes for schools, while ballot initiatives in Oklahoma and Ohio seek to eliminate all property taxes 5

POLITICAL TENSIONS COMPLICATE CONFIRMATION PROCESS

Senator Thom Tillis vows to block nominee until Justice Department probe into Powell and Fed headquarters renovation is resolved, adding uncertainty to transition 4
Powell emphasizes Fed independence in parting guidance, advising successor to stay “out of elected politics” and maintain accountability through Congress 4
Investigation creates unusual political pressure on traditionally independent central bank, potentially complicating confirmation timeline 4

GSE POLICY DISCUSSIONS GAIN MOMENTUM

Proposal to “take mortgage rates out of Fed’s hands” by having GSEs purchase MBS could fundamentally alter how mortgage rates are determined in marketplace 11
Potential limitations on institutional buyers of investment properties being discussed to address investor competition with traditional homebuyers 11
Administration appears committed to addressing affordability crisis through various policy mechanisms, suggesting more active federal role in housing policy 11

MULTIFAMILY LENDING STRESS EMERGES

$64 billion of Fannie Mae and Freddie Mac loans from 2021-2022 vintages face tightening financial cushions due to aggressive underwriting and expense growth 12
Loans originated during peak pricing period with optimistic rent growth projections now facing vulnerabilities as market conditions evolved 12
Sponsors facing higher costs and tighter margins, with some requiring equity infusions or recapitalizations to maintain financial stability 12

ECONOMIC NEWS

Wall Street has significantly scaled back rate cut expectations for 2026, though homebuyer purchasing power has surged due to aligned income growth and lower rates. Regional economic patterns show diverging trends between wage growth and spending power.

REGIONAL ECONOMIC PATTERNS SHOW DIVERGING TRENDS

South posts strongest after-tax wage growth but experiences spending slowdown as rising housing and gasoline costs absorb income gains, creating affordability squeeze 6
Durables spending declined over 4% year-over-year in the South, with airline spending down over 5%, while clothing and restaurant spending remained positive across regions 6
Fixed costs constraining discretionary budgets despite wage improvements, with faster rent growth since 2019 and higher gasoline spending relative to Northeast 6

INFLATION CONCERNS PERSIST GLOBALLY

Core inflation remains at 2.6% in the U.S. and has risen to 3.4% in the U.K., creating uncertainty about outlook for additional rate cuts in 2026 13
Business leaders at Davos expressed broad optimism about economic outlook for 2026, contrasting with decline in consumer confidence and suggesting divergence between corporate and household perspectives
Inflation dynamics will play crucial role in Federal Reserve decision-making as central bank balances dual mandate of price stability and maximum employment 13

WALL STREET REVISES RATE CUT EXPECTATIONS

J.P. Morgan no longer expects any rate cuts in 2026, projecting federal funds rate to remain at 3.5%-3.75% before potential 25 basis point increase in Q3 2027 14
Goldman Sachs anticipates only two cuts in June and September 2026, expecting fed funds rate to end 2026 at 3%-3.25% 14
SIFMA Economic Advisory Roundtable projects “one to two Fed cuts” by year-end 2026, with median funds rate of 3.25% in fourth quarter 14

HOUSE-BUYING POWER SURGES DESPITE CHALLENGES

Homebuyers gained approximately $36,600 more buying power compared to November 2024, with $13,100 from higher incomes and $23,500 from lower rates 10
House price growth fallen to near zero, with mortgage rates no longer climbing and incomes continuing to rise, creating more favorable environment 10
Inventory levels remain critical wild card, with renewed dips in listings raising caution flags about sustained market improvement despite improved conditions 10

COMMERCIAL REAL ESTATE MARKETS (INCLUDING MULTIFAMILY)

Commercial real estate markets demonstrated robust transaction activity across multiple sectors, with significant deals closing in major metropolitan areas and new development projects breaking ground.

MAJOR TRANSACTION ACTIVITY DRIVES MARKET MOMENTUM

Atlas Capital Group acquired a 130-unit multifamily rental building at 250 East Houston Streetin NYC’s East Village for $112.3 million from Dermot Company and Rockwood Capital, representing solid appreciation from the $105 million purchase price in 2016 6
BentallGreenOak sold a 400,000-square-foot office property at 101 Greenwich Street in the Financial District for $105 million to Quantum Pacific Management and Metro Loft, who secured a $220 million Apollo loan for residential conversion 6
Williamsburg development site at 159 Broadway traded for $30 million, with buyer Joel Wertzberger’s Joyland Group acquiring the two-parcel Opportunity Zone site approved for a 26-story hotel/residential building 6

WEST COAST DEVELOPMENT ACTIVITY ACCELERATES

JPI broke ground on the $150 million Portico community in Long Beach, California, featuring 272 units across an eight-story mixed-use building with 18,841 square feet of ground-floor retail, financed by Tokyo Tatemono US and BMO Bank 4
Broader master plan will deliver 900 residential units, 54 affordable apartments, and 38,000 square feet of commercial space across three buildings as part of the Mosaic shopping center redevelopment 4
Hines affiliate completed acquisition of the 235-unit Tempo at Riverpark Apartments in Oxnard, California for $105 million, with the property commanding average rents of $3,067 and 96.2% occupancy 7

MAJOR MULTIFAMILY DEVELOPMENTS SIGNAL MARKET CONFIDENCE

West Shore secured $630 million in financing for national portfolio of 4,077 apartments across five states, maintaining 93% occupancy rate with mix of market-rate and affordable units 16
Substantial financing reflects continued investor confidence in stabilized multifamily assets and demonstrates availability of capital for well-positioned portfolios 16

COMMERCIAL FINANCING MARKETS

Interest rate stability and improved lending conditions supported continued growth in commercial real estate financing, with multifamily lending showing particular strength.

MULTIFAMILY LENDING SHOWS CONTINUED GROWTH

West Shore successfully completed a $630 million refinancing for its 13-property Sun Belt portfolio, originated by Citi Real Estate Funding Inc., with properties across Florida, Texas, Tennessee, South Carolina, and Kentucky comprising 4,077 apartments 2
Transaction included a $60.5 million mezzanine component, with Wilmington Savings Fund Society and FSB Properties serving as trustees, while Trimont and Situs Holdings act as master and special servicer 2
Multifamily mortgage loan originations rose approximately 27% year-over-year and 12% quarter-over-quarter in Q3 2025, marking the fifth consecutive quarter of both annual and sequential growth according to Mortgage Bankers Association data 2
JPI broke ground on $150 million Portico community in Long Beach, California, featuring 325 residential units and 18,841 square feet of retail space, scheduled for completion in June 2028 15

CREATIVE FINANCING SOLUTIONS GAIN TRACTION

Higher interest rates have boosted the appeal of creative financing structures as debt service coverage ratios constrain traditional lenders, resulting in materially lower senior proceeds than sponsors require for transactions 9
Operating expense growth including large insurance premium increases and slow rent growth in some markets has created demand for structures that delay cash pay obligations until performance improves 9

COMMERCIAL SERVICING MARKETS

Concentrated stress emerged in specific loan vintages while broader servicing metrics remained stable, creating opportunities for opportunistic capital.

VINTAGE-SPECIFIC LOAN STRESS EMERGES

Freddie Mac holds roughly $33 billion of multifamily loans from 2021-2022 carrying debt yields below 7%, while Fannie Mae’s exposure totals approximately $30.7 billion, representing about 25% of its book from those years 1
These loans were underwritten during a period of aggressive rent growth projections and peak valuations that have not materialized, with rising expenses across taxes, wages, insurance, and utilities eroding margins despite stable occupancies 1
Official agency multifamily delinquencies remain modest at around 50 basis points at Freddie Mac, though this masks concentrated distress in recent origination years while the rest of the agency book maintains healthier performance 1

OPPORTUNISTIC CAPITAL TARGETS DISTRESSED ASSETS

Multifamily sponsors with 2021-2022 acquisitions now face higher costs and tighter margins, often requiring equity infusions, recapitalizations, or discounted sales to maintain viability 1
Opportunistic funds are actively pursuing discounted 2021-2022 loans to restructure capital stacks and reflect current net operating income realities, aiming to realign underwriting with today’s market conditions 1

INDUSTRY NEWS

The multifamily sector showed continued confidence with major developments and financing transactions, while private real estate investment rebounded for the first time since 2021. Build-to-rent developers emerged as unexpected beneficiaries of Trump administration policies, and notable property transactions demonstrated ongoing investor interest.

PRIVATE REAL ESTATE INVESTMENT REBOUNDS

$222 billion in private real estate fundraising achieved in 2025, marking first annual increase since 2021 and reflecting improved market conditions 17
Recovery indicates renewed institutional appetite for real estate assets and suggests improved access to capital for development and acquisition activities 17
Trend could support continued development activity and provide additional liquidity for real estate transactions across various property types 17

BUILD-TO-RENT SECTOR BENEFITS FROM POLICY SHIFTS

Build-to-rent developers emerge as unexpected beneficiaries of Trump administration housing policy initiatives designed to cool the housing market 8
Single-family rental model gains traction as alternative to traditional homeownership in markets where affordability constraints limit purchase activity 8
Policy dynamic reflects complex interplay between housing regulation and market outcomes, where measures intended for one sector create opportunities in adjacent areas 8

MAJOR SELF-STORAGE ACQUISITION RESHAPES NYC MARKET

StorageMart completed the second-largest self-storage deal in NYC history, acquiring a 15-property portfolio encompassing 25,498 units and 1.3 million net rentable square feet across Manhattan, Staten Island, Brooklyn, and Queens 3
The acquisition expands StorageMart’s Manhattan Mini Storage brand to 51 properties across metro New York City, building on the company’s 2021 purchase of Manhattan Mini Storage and its 18 facilities for $3 billion 3
NYC’s self-storage market commands average street rates of $34.52 per square foot as of December 2025, more than double the national average of $16.32 per square foot and the highest in the country 3

NOTABLE PROPERTY TRANSACTIONS

Madison Realty sold Beverly Grove apartment tower Ayan on Wilshire, a 325-unit property featuring fully furnished shared suites and premium amenities including rooftop pool 18
Cypress Equity Investments acquired 75-unit workforce housing portfolio for $30 million with plans to develop 52 additional units, demonstrating continued investor interest 18
Transactions demonstrate continued investor interest in multifamily assets, particularly in markets with strong rental demand fundamentals 18