Louisiana Leads the Nation in Underwater Properties — 10.7% of homes are seriously underwater (phrasing we probably wouldn’t have chosen in 2005, but here we are). Refinance Activity Surges to 17-Week High — MBA data shows refinances now make up 62% of all applications, as nearly 1.3 million mortgages with rates between 6.875% and 6.99% became refinancing candidates. The Affordability Gap Persists for First-Time Buyers — Despite rate improvements, monthly payments for a median-priced home ($427,000) still easily outpace average household earnings ($83,000), with younger Americans facing additional challenges from down payment requirements and student loan debt. Mortgage Affordability Hits Four-Year High (that’s a good thing) — January rates dropped to 6.04%, creating refinancing opportunities for 4.8 million borrowers and reducing monthly payments by $164/month year-over-year.
The commercial real estate sector showed strong momentum heading into 2026. GSE multifamily lending hit record levels at $151.6 billion in 2025 (up 25%), and Q4 commercial/multifamily borrowing surged 30%, while tech companies dominated NYC office leasing and credit markets displayed selective improvement. Industry consolidation continued with SitusAMC capturing 24% of the CMBS special servicing market amid ongoing distress in office and lodging sectors, as major players like Camden Property Trust strategically exited challenging California markets.
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.
KEY TAKEAWAYS
- Mortgage affordability hits four-year high as January rates dropped to 6.04%, creating refinancing opportunities for 4.8 million borrowers and reducing monthly payments by $164 year-over-year 1
- Louisiana leads nation in underwater properties with 10.7% of homes seriously underwater, while Garden City, Kansas ZIP code 67846 has 52% of mortgaged homes with negative equity exceeding 25% 2
- Mortgage market shows “tale of two cities” dynamic as Rocket Companies achieves highest production volume in four years while younger generations remain largely excluded from homeownership due to affordability constraints 3
- Home price growth slows to decade low with just 0.6% annual increase in 2025, the smallest gain since 2011, as regional declines in South and West offset Northeast and Midwest stability 1
- HUD proposes eliminating fair housing disparate impact regulations entirely, following Trump’s Executive Order 14281 and leaving liability interpretations to courts 4
- MBA projects $2.2 trillion in 2026 mortgage originations, up from $2.05 trillion in 2025, indicating market recovery after years of elevated rates 6
- GSE Multifamily Lending Surges: Fannie Mae and Freddie Mac set records with $151.6 billion in multifamily financing in 2025 (25% increase), while FHFA raised 2026 caps to $176 billion combined 1
- Q4 2025 Commercial/Multifamily Borrowing Surges: Commercial and multifamily borrowing increased 30% in the fourth quarter of 2025, signaling strong market recovery momentum 1
- Special Servicing Market Consolidates: SitusAMC captured 24% market share as top CMBS special servicer with $30.2 billion in new appointments, while office and lodging sectors drive distress activity 2
- Tech Dominates NYC Office Leasing: Technology companies secured four of the top ten office leases in January, led by PayPal’s 261,000 sf Soho deal 3
- CRE Credit Markets Show Selective Improvement: Balance-sheet lending spreads tightened for multifamily and retail loans as rate uncertainty diminishes, though selectivity remains high 4
- Office-to-Residential Conversions Gain Momentum: Major financing deals like Bushberg’s $78 million for 100 William Street signal continued investor appetite for adaptive reuse projects 5
REGULATORY AND POLICY DEVELOPMENTS
Louisiana Leads Nation in Underwater Properties → ATTOM data shows 10.7% of Louisiana properties are seriously underwater (owing 25%+ more than market value), followed by Mississippi (8.3%) and Kentucky (7.9%), with Garden City, Kansas ZIP code 67846 having 52% of mortgaged homes underwater. → 2
ICE: Mortgage Affordability Hits Four-Year High → January’s mortgage rate decline to 6.04% created refinancing opportunities for 4.8 million borrowers and pushed housing affordability to its best level in four years, with monthly payments falling $164 year-over-year to $2,091. → 1
Home Price Growth Hits Decade Low → Home prices rose just 0.6% in 2025, marking the smallest annual increase since 2011, with regional declines in the South and West offsetting stability in the Northeast and Midwest. → 1
Northeast States Show Strongest Equity Positions → Vermont leads with 87% of homes equity-rich (loan-to-value ratios of 50% or lower), followed by New Hampshire (60%) and Rhode Island (59%), while only 0.7% of Vermont properties are seriously underwater. → 2
Life Events Expected to Drive Gradual Recovery → First Am projects January existing-home sales will rise 0.7% month-over-month and 7.1% year-over-year, though sales remain well below pre-pandemic levels. → 8
MORTGAGE MARKETS
Rocket Companies CEO Describes Market as “Tale of Two Cities” → Rocket CEO Varun Krishna reports the company is achieving its highest mortgage production volume in four years as rates dip below 6%, while younger generations remain largely excluded due to affordability constraints and competition from cash buyers. → 3
Refinance Activity Surges to 17-Week High → MBA data shows refinances hit a 17-week high, making up 62% of all applications as nearly 1.3 million mortgages with rates between 6.875% and 6.99% became refinancing candidates. → 1
MBA Projects $2.2 Trillion in 2026 Originations → The Mortgage Bankers Association forecasts single-family mortgage origination volume will increase to $2.2 trillion in 2026, up from $2.05 trillion in 2025, with mortgage markets expected to grow up to 25%. → 6 3
National Delinquency Rate Improves Despite Late-Stage Concerns → The national delinquency rate dipped 16 basis points in December to 3.68%, though 90-day-plus delinquencies rose to their highest point in almost three years. → 1
Affordability Gap Persists for First-Time Buyers → Despite rate improvements, monthly payments for a median-priced home ($427,000) easily exceed average household earnings ($83,000), with younger Americans facing additional challenges from down payment requirements and student loan debt. → 3
REGULATORY & POLICY DEVELOPMENTS
HUD Proposes Elimination of Fair Housing Disparate Impact Regulations → HUD issued a proposed rule to remove its discriminatory effects regulations entirely, following President Trump’s Executive Order 14281 and leaving disparate impact liability interpretations to courts. → 4
FHFA Raises Multifamily Loan Purchase Caps by $15B Per GSE → FHFA increased multifamily loan purchase caps to $88B each for Fannie Mae and Freddie Mac in 2026, representing a 20% increase and totaling $176B combined capacity. → 5
House Advances Major Housing Affordability Bill → The House moved forward with the Housing for the 21st Century Act, a 199-page bill with two dozen provisions aimed at streamlining development reviews and expanding affordable housing financing. → 9
MBA CEO Highlights Administration’s Regulatory Shift → MBA President Bob Broeksmit praised the current administration’s “profound shift” from process-focused to common-sense regulation across agencies. → 10
ECONOMIC NEWS
Fed Survey Shows Improved Consumer Expectations → The New York Fed’s January survey revealed households’ short-term inflation expectations declined to 3.1% from 3.4% in December, while labor market expectations improved. → 7
NAR Economist Predicts 14% Sales Increase in 2026 → NAR Chief Economist Lawrence Yun expects “little better” conditions with 14% nationwide home sales growth due to rising inventory levels and gradual disappearance of the lock-in effect as life-changing events drive listings. → 3
Investors Await Critical Employment and Inflation Data → Markets focus on Wednesday’s Jan jobs report (forecast: 55K-60K new jobs) and Friday’s consumer price index reading (expected annual inflation: 2.5%). → 11
2025 Job Creation May Be Revised Significantly Lower → Fed Governor Chris Waller predicted 2025 employment data will be revised downward to show “virtually no growth in payroll employment.” → 12
COMMERCIAL REAL ESTATE MARKETS (Including Multifamily)
Tech Firms Dominate NYC Office Leasing → Tech companies secured four of the top ten office leases in NYC during January, with PayPal leading at 261,000 sf in Soho. 3
Houston Office Market Sees Owner-Occupier Activity → McKinley Homes purchased distressed Sam Houston Crossing I (160,000 sf), part of 2+ million sf removed from Houston’s sluggish office market by owner-occupiers in 2025. 6
South Florida Multifamily Transaction → Spira Equity Partners acquired a 300-unit low-income complex in Weston for $50.5 million, up from $9.8 million in 1993. 7
Tempe Industrial Development Advances → Panattoni Development cleared regulatory hurdles to convert former State Farm offices into 1.2 million sf of advanced manufacturing space targeting semiconductor industries. 8
COMMERCIAL FINANCING MARKETS
GSEs Set Multifamily Lending Records → Fannie Mae and Freddie Mac financed $151.6 billion in multifamily loans in 2025 (25% increase), with FHFA raising 2026 caps to $176 billion combined. 1
CRE Credit Pricing Shows Selective Easing → Balance-sheet lending spreads tightened for multifamily and retail loans as rate uncertainty diminishes, though selectivity remains high. 4
Office-to-Residential Conversion Financing → Bushberg Properties secured $78 million for 100 William Street acquisition and conversion to 400 units with 25% affordable housing. 5
Fitch Upgrades SLG Office Trust CMBS → Multiple classes upgraded with positive outlooks, citing improved 2.39x debt service coverage and $160.4 million sustainable NCF. 9
Q4 2025 Commercial/Multifamily Borrowing Jumps 30% → Commercial and multifamily borrowing volume increased 30% in the fourth quarter of 2025, reflecting improved market conditions and lending appetite as the sector continues its recovery trajectory. 1
COMMERCIAL SERVICING & DISTRESS
SitusAMC Claims Top Special Servicer Ranking → Named #1 U.S. CMBS special servicer with 24% market share, appointed on $30.2 billion in newly issued CMBS and $7.4 billion in CLO coverage. 2
MBA Releases 2025 Servicer Rankings → Year-end rankings show Trimont, PNC/Midland, and KeyBank leading as primary and master servicers for CMBS and ABS loans. 10
Distressed Asset Bankruptcy Sale → Hilco Global announced Chapter 7 sale for 25-acre Hawaii development parcel, with qualifying bid deadline April 13, 2026. 11
INDUSTRY NEWS
Fannie Mae and Freddie Mac Set Multifamily Lending Records → The GSEs financed a combined $151.6B in multifamily loans in 2025, a 25% increase from the previous year, with Fannie Mae up 34% and Freddie Mac up 17%. → 5
ATTOM Appoints Kara Taylor as Chief Growth Officer → The property data and AI-powered analytics provider named Taylor to drive scalable revenue expansion and strengthen market position. → 13
Miami Association of Realtors Installs 2026 Leadership → The nation’s largest local realtor association named Compass agent Alfredo Pujol as chairman of the board during a February 6 ceremony. → 14
Camden Property Trust Exits California → Apartment REIT continues strategic California exit due to regulatory challenges and complex operating environment. 14
ARMLS CEO Announces Retirement → Arizona Regional MLS CEO Matt Consalvo plans spring 2027 retirement after 15 years leading one of the nation’s largest MLS systems. 15