Daily Dose of Real Estate

Daily Dose of Real Estate for February 4

Put a bow on the latest government shutdown – Congress called it at just four days. Federal Reserve Governor Stephen Miran is still pushing for 100 basis points of rate cuts in 2026 – double what markets expect (go big or go home) – while Rocket Companies reports mortgage originations hitting four-year highs amid forecasts of 25% volume growth. Newly revealed FHFA documents show Fannie Mae and Freddie Mac actively opposed the VantageScore 4.0 system that regulators forced them to adopt, preferring bi-merge credit reporting over the single-file approach that showed decreased reliability in predicting borrower performance.

December commercial real estate deal volume dropped 20% year-over-year despite 2025 finishing 17% above 2024 levels, while office transactions surged 21% as tech giants like Apple deployed over $1.1 billion capitalizing on discounted valuations. REITs began 2026 with broad-based strength posting 2.8% January returns, outperforming major stock indices, as multifamily rentals achieved a historic milestone comprising 33.1% of U.S. rentals for the first time since tracking began in 2011.

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Today’s newsletter was prepared by our AI platform ALFReD. Know Better. Tim

Table of Contents

KEY TAKEAWAYS

Housing market recalibration accelerates with national home price growth slowing to just 0.9% year-over-year in December 2025, while buyers secure the largest discounts since 2012 at 7.9% off asking prices 1 2
Mortgage rates above critical 6% threshold with current 30-year rates slightly above 6%, potentially unlocking pent-up buyer demand as experts predict rates could average 5.99%-6.125% in February 2026
Regional housing disparities widen dramatically as Northeastern and Midwestern markets gain momentum while Florida and Texas markets cool, with Miami homes taking 69 days to sell versus 47 days nationally 3
FHFA documents reveal GSE opposition to VantageScore 4.0, with Fannie Mae and Freddie Mac preferring bi-merge credit reporting over the single-file system pushed by federal regulators 4
Rocket Companies reports four-year high originations while forecasting 25% mortgage volume growth through 2026, signaling industry optimism about market recovery 5
Government shutdown delays critical jobs report, adding uncertainty to Federal Reserve policy decisions just as Fed Governor Miran pushes for 100 basis points of rate cuts versus market expectations of only 50 basis points 6 7
CRE Deal Volume Declines but Shows Annual Progress: December CRE deal volume dropped 20% year-over-year, marking the second consecutive monthly decline, yet 2025 full-year volume rose 17% above 2024 levels 1
Office Market Defies Expectations: Office deal volume surged 21% in 2025, concentrated in Class A and trophy assets, driven by AI employment boom and return-to-office mandates 1
Flight to Quality Dominates Pricing: Value-weighted office prices rose 3.8% year-over-year in December 2025, reversing 2024’s 11.4% decline, while capital flows increasingly target high-value assets in top-tier markets 2
CMBS Mall Loan Distress Signals Opportunity: The $53.23 billion universe of CMBS mall loans shows 11.20% delinquency rate versus 7.06% for all CMBS retail loans, with $2.89 billion in matured nonperforming loans 3
REITs Start 2026 Strong: REITs outperformed broader markets in January with FTSE Nareit All Equity REITs Index posting 2.8% total return, led by timberland (7.8%), diversified (7.6%), and specialty sectors (7.2%) 4

RESIDENTIAL REAL ESTATE MARKETS

The U.S. housing market opened 2026 in a state of recalibration, with national home price growth slowing dramatically and regional disparities widening. Buyers are securing the largest discounts since 2012, while previously hot markets like Florida show clear signs of cooling demand.

HOUSING MARKET ENTERS “RECALIBRATION MODE” AS PRICE GROWTH STALLS

National home price growth slowed to just 0.9% year-over-year in December 2025, down from 1% in November, signaling mounting affordability pressures 1
Regional disparities are widening significantly, with Northeastern and Midwestern cities posting renewed momentum while Florida and Texas markets recorded steep pullbacks 3
Wyoming and New Jersey lead the nation in annual home price appreciation, with Newark, NJ, Allentown, PA, and Chicago, IL all gaining traction in December 1

HOMEBUYERS SCORE BIGGEST DISCOUNTS SINCE 2012

Typical buyers who purchased below list price received a 7.9% discount, translating to average savings of $31,592 on a median original list price of $399,900 2
Nearly two-thirds (62.2%) of all homebuyers paid less than list price in 2025—the highest share since 2019—while only 22.8% paid above asking 2
West Palm Beach led the nation with 10.9% buyer discounts, followed by Detroit (10.3%) and Fort Lauderdale (10.3%) 2

FLORIDA MARKETS SHOW COOLING DEMAND

Miami homes spent a median 69 days on market in December, well above the national median of 47 days, while Tampa and Orlando inventory climbed roughly 10% year-over-year 3

MORTGAGE MARKETS

Mortgage rates are approaching the psychologically significant 6% threshold, with experts predicting potential breaks below this level in February 2026. Federal Reserve policy debates continue as some officials push for more aggressive rate cuts, while major lenders report surging origination volumes.

FED GOVERNOR MIRAN PUSHES FOR DEEPER RATE CUTS

Fed Governor Stephen Miran advocates for 100 basis points of cuts in 2026, dissenting at January’s FOMC meeting when the majority held rates at 3.5% to 3.75% 7
Market expectations call for only two 25-basis-point reductions in 2026, creating tension between dovish Fed officials and market consensus

ROCKET COMPANIES REPORTS SOARING ORIGINATIONS

Rocket Companies’ mortgage originations are reaching four-year highs, with CEO Varun Krishna citing forecasts that mortgage volumes could grow as much as 25% through 2026 5
Existing home sales could rise around 10% as rates drift lower and pent-up demand returns to the market

REGULATORY DEVELOPMENTS

New revelations show FHFA pushed VantageScore 4.0 despite GSE resistance, while Fannie Mae reports strong performance with low delinquencies. The FHFA Inspector General continues highlighting areas for agency improvement in oversight and coordination.

FHFA PUSHED VANTAGESCORE 4.0 DESPITE GSE RESISTANCE

Fannie Mae and Freddie Mac opposed VantageScore 4.0 approval and instead supported bi-merge credit reporting, according to 316 pages of FHFA documents obtained through FOIA 4
GSEs determined tri-merge and bi-merge credit reports performed similarly, while single-file reports showed decreased reliability in predicting borrower performance 4
Trump administration appointee Bill Pulte announced GSEs would begin accepting VantageScore 4.0 immediately in July 2025, overriding GSE preferences

FANNIE MAE REPORTS STRONG PERFORMANCE AMID LOW DELINQUENCIES

Fannie Mae posted 1.1% annualized growth in its guaranty book with delinquencies remaining at historically low levels through December 2025 8
$184.3 billion maximum exposure to Freddie Mac-backed collateral through re-securitization activities reflects continued secondary market management

FHFA INSPECTOR GENERAL ISSUES FEBRUARY COMPENDIUM

Open recommendations include enhanced FHLB coordination, improved information security practices, and strengthened Enterprise remediation oversight 9

ECONOMIC NEWS

Federal Reserve banks are expanding economic data collection while manufacturing shows continued expansion. However, government shutdown delays are creating uncertainty around key economic reports that influence Fed policy and mortgage market direction.

NEW YORK FED LAUNCHES ENHANCED CONSUMER SPENDING DATASET

College graduates’ spending outpaced non-graduates since 2023, with graduate retail spending rising 6% relative to January 2023 by December 2025, while non-graduate spending stands at only 4% higher 10
Enhanced Economic Heterogeneity Indicators (EHIs) now include consumer spending metrics by income, education, race, ethnicity, age, and urban status from 200,000-consumer panel

MANUFACTURING PMI REACHES 52.6% IN JANUARY

Manufacturing PMI at 52.6% indicates continued sector expansion, providing insight into broader economic conditions influencing housing demand and construction activity 11

GOVERNMENT SHUTDOWN DELAYS KEY JOBS REPORT

January 2026 Employment Situation report will not be released as scheduled on Friday, February 6, 2026, due to government shutdown 6
Report will be rescheduled upon government funding resumption, adding uncertainty to Federal Reserve policy decisions and mortgage market direction

BANKS OPPOSE CREDIT CARD INTEREST RATE CAPS

Banking industry pushes back against proposed credit card interest rate limitations, arguing such caps could restrict credit access and harm consumers who rely on credit card financing 12

COMMERCIAL REAL ESTATE MARKETS (INCLUDING MULTIFAMILY)

Commercial real estate transaction activity showed mixed signals in late 2025, with December volume declining 20% year-over-year despite full-year 2025 volume rising 17% above 2024. The office sector emerged as an unexpected bright spot with 21% volume growth, while multifamily rentals achieved a historic milestone by comprising 33.1% of U.S. rentals for the first time since tracking began.

TRANSACTION VOLUME SHOWS MIXED SIGNALS

December Decline Masks Annual Progress: Top 50 CRE sales showed 20% year-over-year decline in December, marking second consecutive monthly drop, but 2025 full-year volume climbed 17% above 2024 levels, suggesting capital “edging back into the market rather than rushing for the exits” 1
Large Deal Recovery: Transactions over $100 million jumped 23% from 2024, though still at only half their 2019 levels, while smaller deals below $5 million moved 4% above pre-pandemic benchmarks 1
Overall Market Position: Total transactions remain roughly 30% below 2019 pre-pandemic levels, indicating continued recovery needed to reach historical norms 1

OFFICE MARKET DEFIES PANDEMIC NARRATIVE

Sector Rebound: Office deal volume surged 21% in 2025 compared to previous year, driven by stricter return-to-office policies and AI-related hiring wave 1
Tech Giant Activity: Apple deployed over $1.1 billion in California’s Santa Clara County, while Microsoft made similar strategic moves, both capitalizing on 20-30% pricing reset from 2022 peaks 1
Manhattan Recovery: Office leasing activity soared 37% in 2025 to 32 million square feet, with vacancy dropping below 13% citywide and Hudson Yards achieving lowest availability rate at 7.6% 5
Record Lease: Deloitte signed record-breaking $2.6 billion, 22-year lease at 70 Hudson Yards, highlighting sustained demand for trophy-class towers 5

MULTIFAMILY RENTAL LANDSCAPE SHIFTS

Historic Milestone: Large multifamily buildings (20+ units) comprised 33.1% of U.S. rentals in 2024—first time multifamily rentals outpaced single-family rentals since data tracking began in 2011 6
Single-Family Decline: Single-family home rentals declined to just 31%, the smallest share on record, reflecting longer-term construction trends favoring apartment development 6
Deal Volume Leadership: Multifamily led 2025 dealmaking with volume up 24% from 2024, benefiting from higher mortgage rates keeping renters from becoming buyers 1
San Francisco Recovery: Occupancy finally hit 95-96% after years of struggle, creating conditions for rent increases as available stock dwindles 1

ALTERNATIVE SECTORS DRIVE INVESTMENT

Medical Office Record: Largest sale of 2025 was a 296-property medical office portfolio purchased by Remedy Medical Properties from Welltower, marking largest-ever transaction in medical office sector 1
Data Center Land Premium: Ninth-largest sale of 2025 was $615 million land deal in northern Virginia, where SDC Capital Partners purchased 97 acres of entitled data center land at record-setting $6.3 million per acre 1

COMMERCIAL FINANCING MARKETS

Commercial financing markets showed cautious optimism entering 2026, with interest rates stabilizing and agency lending expanding. REITs began the year with strong performance, posting 2.8% returns in January, while mortgage rates declined nearly a full percentage point from February 2025 levels.

INTEREST RATE ENVIRONMENT AND FEDERAL RESERVE OUTLOOK

Treasury and SOFR Rates: 10-year Treasury yield finished January at 4.26%, up 8 basis points from year-end, while 30-day average SOFR held steady at 3.66% 2
Mortgage Rate Improvement: 30-year mortgages at 5.99% as of February 3, 2026—nearly a full percentage point lower than February 2025 levels, with 15-year mortgage rate at 5.37% 7
2026 Outlook: Market participants anticipate tailwinds from more dovish Federal Reserve under incoming chair Kevin Warsh and potential fiscal lifts from tax cuts, though rates unlikely to drop precipitously 1

AGENCY LENDING EXPANSION

GSE Allocation Increase: Fannie Mae and Freddie Mac increased lending allocations by 20%, contributing to improved financing conditions in multifamily sector 8
CRE Lending Rebound: Total CRE lending in 2024 rebounded 16% from prior year, with multifamily, office, and healthcare loans leading year-over-year growth according to Mortgage Bankers Association 9

REIT PERFORMANCE AND CAPITAL MARKETS

Strong January Performance: FTSE Nareit All Equity REITs Index posted 2.8% total return in January, outperforming Dow Jones U.S. Total Stock Market (1.6%) and Russell 1000 (1.4%) 4
Sector Leadership: Timberland led with 7.8% total return, followed by diversified REITs (7.6%) and specialty sectors (7.2%), while office sector lagged with 2.2% decline 4
Dividend Yield Advantage: FTSE Nareit All Equity REITs index dividend yield was 3.98% as of January 31, compared to 1.09% for S&P 500 4
Mortgage REIT Performance: FTSE Nareit Mortgage REITs Index rose 2.8% in January, with home financing gaining 3.4% and commercial financing returning 1.2% 4

PORTFOLIO REBALANCING TRENDS

Institutional Return: Major institutional investors returning while public REITs sell large, multi-tenant portfolios to private equity firms deploying capital that sat on sidelines during higher-rate environment 1
Middle Market Challenges: Middle-sized deals ($15-100 million) struggling most due to financing difficulties, reflecting broader capital markets recalibration 1

COMMERCIAL SERVICING MARKETS

Commercial servicing markets showed elevated distress in specific sectors, particularly CMBS mall loans with 11.20% delinquency rates, while multifamily servicing faced challenges in rent-regulated markets. Foreclosure and receivership activity increased as $19 billion in Texas multifamily CMBS debt approaches 2026 maturity.

CMBS MALL LOAN DISTRESS CREATES OPPORTUNITIES

Elevated Delinquency Rates: $53.23 billion universe of CMBS mall loans carries 11.20% delinquency rate, significantly higher than 7.06% rate for all CMBS retail loans 3
Nonperforming Loan Volume: $2.89 billion in matured nonperforming mall loans, with another $2.22 billion either in foreclosure or converted to real estate-owned properties 3
Supply Constraints: Mall inventory peaked at 1,500 properties in 2012 but shrunk to estimated 1,200, with malls closing at roughly 40 per year since 2017 and no large mall built since 2014 3

DISTRESSED ASSET REPOSITIONING

Chesterfield Towne Center: Pacific Retail Capital Partners paid $80 million for largest mall in Richmond area, previously backed by troubled $69.78 million CMBS loan 3
White Marsh Mall Conversion: Spinoso Real Estate Group purchased Baltimore mall in 2024, assuming $186.73 million CMBS loan with plans to convert part of property into apartments 3

MULTIFAMILY SERVICING CHALLENGES

Flagstar Portfolio Reduction: Bank reduced CRE portfolio by $12 billion since 2023, with multifamily loans declining $1.5 billion in Q4 2025 alone, achieving first profitable quarter in Q4 2025 10
New York Exposure: Flagstar remains heavily exposed to New York multifamily properties where rent regulations and declining asset values drove many buildings into distress, facing $113 million write-off on over 5,000 rent-stabilized units 10

FORECLOSURE AND RECEIVERSHIP ACTIVITY

Del Sol Apartments Receivership: Fannie Mae requested receiver for 152-unit Galveston complex after 2024 fire displaced residents and damaged 16 units, sparking disputes between owners and lenders 11
Texas Maturity Wall: $19 billion in CMBS debt tied to Texas multifamily properties set to mature in 2026, with industry experts warning of rising foreclosures and receiverships 11
Worldwide Plaza Default: $940 million senior CMBS loan on Manhattan’s Worldwide Plaza entered special servicing after SL Green and RXR defaulted in July 2024 12

INDUSTRY NEWS

Real estate M&A activity is shifting toward local deals and selective national consolidation, while major companies report strong 2025 performance. Technology acquisitions and fraud reduction efforts highlight ongoing industry evolution and risk management improvements.

REAL ESTATE M&A SHIFTS TO LOCAL FOCUS

2026 M&A landscape characterized by more local deals and selective national consolidation following Compass’s Anywhere acquisition and Stone Point’s Keller Williams investment 13
Experts expect one to two additional large-scale acquisitions involving national real estate organizations this year, with Berkshire Hathaway potentially re-entering if transaction volumes improve
Local brokerage combinations particularly attractive due to cultural compatibility and reduced integration risk

RITHM CAPITAL REPORTS STRONG 2025 PERFORMANCE

Rithm Capital reported $567.2 million net income for 2025, driven by subsidiary Newrez delivering $1.1 billion pretax income 14
Newrez expanded servicing portfolio to $850 billion in unpaid principal balance while completing eight non-QM securitizations totaling $4 billion
Approximately $9 billion invested in residential mortgage assets during 2025

EXPERIAN ACQUIRES MORTGAGE SHOPPING PLATFORM OWN UP

Experian announced acquisition of AI-powered mortgage shopping platform Own Up, with transaction expected to close within 90 days subject to regulatory approvals 15
Financial terms not disclosed but acquisition expands Experian’s mortgage technology capabilities

MULTIFAMILY FRAUD CASES DROP AT FANNIE MAE

Fannie Mae successfully reduced multifamily fraud cases through 2025 reforms including increased appraisal requirements, expanded review teams, and stricter penalties 16
Enhanced oversight measures include loan repurchases and lender sanctions following allegations of hundreds of millions in questionable loan exposure