Daily Dose of Real Estate

Balancing act this Spring with inventory blooming and buyers taking their sweet time – homes now sit for 47 days on average. The debate about whether the CFPB would be reined in or burnt down was settled yesterday when they laid off 90% of its staff. “Ten stories of basement” is how HUD Sec Jack Kemp once described the HUD building. Now it could be yours as it’s up for sale! Home prices continue their resilient march upward at a 3.2% year-over-year. Please have an amazing holiday weekend, and make some bad decisions out there – mix it up. 😉

Tim

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Key Takeaways

• AEI’s Median home purchase rate at 6.5% (middle value of home purchase rates) ; purchase rate lock volume down 34% from 2019 and 13% year-over-year. 3
• Ohio Attorney General filed lawsuit against United Wholesale Mortgage alleging the company misled mortgage brokers about its “All-In” initiative and threatened $50,000+ penalties for working with competitors Rocket Mortgage and Fairway Independent. 4
• HUD selling Washington D.C. headquarters with $500 million in deferred maintenance as part of federal downsizing. 5
• CFPB dismissing 90% of workforce (1,500 employees), leaving just 200 staff across core divisions. 6
• New tariffs on construction materials expected to increase home building costs, particularly affecting softwood lumber from Canada and gypsum from Mexico. 7
• Home price appreciation remains healthy at 3.2% year-over-year in February despite market headwinds. 3

Residential Real Estate Markets

The housing market shows increasing inventory but slower sales pace. Buyers have more options but are taking longer to make decisions. Regional variations persist with some markets outperforming others.

• Inventory Growth: Active listings up 31.2% year-over-year as of April 12, giving buyers substantially more options. 1
• Slower Sales Pace: Homes taking 47 days on average to sell in March, the longest timeframe for that month since 2019. 2
• Regional Strength: Northern Virginia market showed 10.5% increase in sales volume ($1.08 billion) and 3.5% rise in median home price ($755,625) year-over-year in March. 8
• Price Growth: S&P CoreLogic Case-Shiller Home Price Index reported 4.1% annual gain in January, accelerating slightly from December’s 3.9%. 9
• Resilient Appreciation: Home price appreciation at 3.2% year-over-year in February, projected to moderate slightly to 2.9%, 2.7%, and 2.8% for March, April, and early May. 3
• Buyer Quality: Despite subdued activity, price appreciation remains healthy due to well-qualified buyers in the market. 3
• Existing Home Sales: Median existing home sale price increased 3.8% year-over-year to $398,400 in February, marking 20 consecutive months of year-over-year price growth. 10

Mortgage Markets

Mortgage rates remain elevated with limited signs of relief. Purchase activity has declined significantly compared to pre-pandemic levels. Affordability challenges persist for many potential homebuyers.

• Current Rates: Median purchase rate steady at 6.5% in week 15; average 30-year fixed rate at 6.98% as of April 14. 3
• Reduced Activity: Purchase rate lock volume down 34% compared to same week in 2019 and down 13% year-over-year. 3
• UWM Lawsuit: Ohio Attorney General filed lawsuit against United Wholesale Mortgage alleging the company deceived mortgage brokers about its “All-In” initiative, which required exclusivity agreements while falsely claiming brokers could still work with competitors. 4
• Broker Penalties: UWM allegedly threatened brokers with penalties of $50,000 or more for working with Rocket Mortgage and Fairway Independent Mortgage while enrolled in the program; lawsuit seeks restitution, civil penalties, and injunction. 4
• Rate Volatility: Tariff announcements on April 2 initially caused 10-Year Treasury rate to decline by 21 basis points before reversing course and adding 16 basis points. 11
• Rate Forecasts: Mortgage Bankers Association predicts rates could end 2025 at 6.50%; Realtor.com forecasts 6.20% by year-end. 12
• Affordability Crisis: Average mortgage payment now costs Americans equivalent of 10 full workdays each month. 13
• Regional Burden: Homeowners in Hawaii and California work up to 17 days per month just to cover housing costs. 13

Economic & Political News

Federal housing agencies face dramatic restructuring under the Trump administration. HUD is selling its headquarters while the CFPB is dismissing 90% of its workforce. New tariffs and immigration policies are reshaping the housing landscape.

• HUD Headquarters Sale: Department of Housing and Urban Development selling Washington D.C. headquarters with over $500 million in deferred maintenance costs. 5
• Office Utilization: Current HUD staff occupy only about half of the available office space in the 1968 Brutalist structure. 5
• Historic Designation: Sale could face complications due to building’s listing in the National Register of Historic Places. 5
• CFPB Workforce Reduction: Consumer Financial Protection Bureau dismissing approximately 1,500 employees (90% of workforce), leaving just 200 staff across core divisions. 6
• Legal Challenges: Employee union and consumer advocates filed emergency motion arguing CFPB is flouting court orders requiring “particularized assessment” prior to workforce reductions. 6
• Access Termination: Affected employees’ dismissals take effect in 60 days, but access to internal email and IT systems cut off by Friday evening. 6
• Tariff Impact: New tariffs (10-50%) on goods from 186 countries expected to increase building material costs, particularly affecting softwood lumber from Canada and gypsum from Mexico. 7
• Immigration Effects: Plans for increased deportations and reduced legal immigration could decrease housing demand while exacerbating construction labor shortages. 14

Commercial Real Estate Markets (including Multifamily)

Commercial real estate shows signs of selective recovery with transaction volume increasing across most sectors. Retail and office sales led February’s surge while multifamily absorption reached record levels in Q1. CMBS delinquencies and loan modifications highlight ongoing financing challenges.

• Transaction Volume: CRE sales jumped 30% year-over-year in February to $24.4 billion, with retail (+105%) and office (+55%) leading the growth. 21
• Retail Strength: Retail transactions more than doubled from February 2024, reaching $7.1 billion, powered by Blackstone’s $4 billion acquisition of Retail Opportunity Investments Corp. 21
• Office Recovery: Office sales increased 55% to $3.5 billion, with CBD transactions up 217%, signaling renewed investor interest in urban markets. 21
• Price Variations: Retail and industrial posted 5% price growth in February, while office (-3%), multifamily (-1%), and hospitality (-9%) experienced declines. 21
• Record Multifamily Demand: Over 138,000 market-rate units absorbed in Q1 2025—the highest first-quarter demand since tracking began—pushing national occupancy to 95.2%, the highest since October 2022. 20
• Rent Growth Resumes: Multifamily rents grew 0.75% in March and 1.1% year-over-year, with all 50 largest apartment markets posting positive monthly growth. 20
• Regional Variations: Midwest and Rust Belt markets led multifamily rent growth, while oversupplied Sun Belt metros (Austin, Phoenix, Denver) continued to face challenges. 20
• CMBS Delinquencies Rising: Overall CMBS delinquency rate jumped 35 basis points to 6.65% in March, with multifamily delinquencies up 98 basis points after $1.3 billion in loans became newly delinquent. 22
• Office Sector Stabilizing: Office was the only major property type whose delinquency rate decreased in March, sliding two basis points to 9.76%. 22
• Loan Modifications: Major CMBS loans receiving modifications in March include the $525 million 150 East 42nd Street office loan (36-month extension) and the $109.9 million Colorado Mills retail loan (24-month extension). 22
• Loan Loss Trends: CMBS loan losses pulled back to $79.7 million across 14 loans in February (47.87% average loss severity), down significantly from January’s $246.9 million. 23
• Servicing Leadership: Wells Fargo leads commercial/multifamily mortgage servicing with $646 billion in total loans, followed by PNC/Midland ($584 billion) and KeyBank ($478 billion). 24