Fannie Mae fires 100 employees due to fraud. Hope you locked in. Mortgage rates have jumped to nearly 7% and refinances have left the building. President Trump’s “Liberation Day” tariffs have sent global markets into a tailspin – more like “Liquidation Day.” Surprising resilience in CRE with retail sales up a whopping 105%. Meanwhile, the build-to-rent market has finally settled into a “stable pattern” after years of pandemic-fueled chaos. Let’s get you caught up and out the door in three minutes. Tim

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Key Takeaways

• Fannie Mae has dismissed over 100 employees for unethical conduct, including fraud, as part of a broader effort to address financial losses due to mortgage fraud, particularly in multifamily lending transactions 1
• Global stock markets have plunged in response to President Trump’s sweeping reciprocal tariffs, with major indices experiencing significant losses amid fears of a potential U.S. recession 2
• Mortgage rates have jumped significantly to 6.85%, reversing previous downward trends as markets react to inflation concerns and shifting investor sentiment despite ongoing economic uncertainty 3
• The multifamily housing sector showed remarkable strength in Q1 2025, with over 138,000 market-rate units absorbed—the highest first-quarter demand on record 4
• Commercial real estate sales jumped 30% in February, led by retail (105% increase) and office (55% increase) sectors, signaling a potential selective recovery in the market 5
• Nearly 20 million Americans (5.9% of the population) live in overcrowded homes, with California, Hawaii, and New York having the highest rates of overcrowding 6

Residential Real Estate Markets

The spring homebuying season faces significant affordability challenges despite increased inventory. Monthly mortgage payments have reached record highs of $2,802, requiring the average American to work 10 full days each month to afford a median-priced home. However, new listings have risen 12.7% year-over-year, and the multifamily sector shows exceptional strength with record absorption rates.

Housing Affordability & Demand

• Record-high monthly payments: Typical U.S. homebuyer’s monthly payment reached $2,802 for the four weeks ending March 30—a new record high driven by a 3.4% year-over-year rise in sale prices 7
• Work burden for homeownership: Average American must work approximately 10 full days each month to afford a median-priced home of $412,000, with significant regional variations 8
• Buyer interest increasing: Google searches for “homes for sale” have reached their highest level since August, and mortgage-purchase applications hit their highest level in over two months 7

Inventory & Supply

• New listings surge: New listings rose 12.7% year-over-year during the four weeks ending March 30—the largest increase in 11 months as sellers capitalize on high prices and increased buyer interest 7
• Overcrowding persists: Approximately 19.1 million Americans (5.9% of the population) live in overcrowded homes, with California, Hawaii, and New York having the highest rates 6
• Space disparity: Nearly 40% of Americans live in homes with more bedrooms than residents, with Wyoming having the highest percentage of extra space; New York is the only state with fewer bedrooms than residents 6

Build-to-Rent Market

The build-to-rent (BTR) sector has settled into a stable growth pattern after explosive pandemic-era expansion. With nearly 110,000 units in the construction pipeline across 613 communities nationwide, BTR inventory is expected to increase by more than 50% once completed. The sector continues to attract diverse demographics seeking single-family living without the financial burden of homeownership.

• Record completions: BTR market achieved a record high with 39,000 single-family rental homes completed in 2024, marking a 15.5% year-over-year increase 9
• Regional concentration: Phoenix (13,010 units), Dallas (8,450 units), and Atlanta (6,644 units) lead the BTR development pipeline, with the South and Southwest regions dominating new construction 9
• Changing renter demographics: BTR communities increasingly attract millennials, retirees, high-income renters by choice, and remote workers seeking space and privacy 9
• Mega-communities emerging: Large-scale BTR projects are becoming more common, with communities like Litsey Creek Cottages in Roanoke, TX (396 units) and Viviano at Riverton, UT (364 units) offering resort-style amenities comparable to master-planned neighborhoods 9
• Market stabilization: After explosive growth during the pandemic, the BTR sector is entering a period of normalcy with healthy fundamentals supporting continued expansion 10

Multifamily Market

• Record absorption: Over 138,000 market-rate units absorbed in Q1 2025—the highest first-quarter demand since tracking began, with nearly 708,000 units absorbed over the past year 4
• Occupancy improvement: National occupancy rates reached 95.2%, the highest since October 2022, with modest rent growth of 0.75% in March and 1.1% year-over-year 4
• Regional variations: All major apartment markets experienced positive rent growth, with Midwest and Rust Belt markets showing stronger performance while Sun Belt cities face challenges due to oversupply 4

Mortgage Markets

Mortgage rates have jumped significantly to 6.85%, reversing previous downward trends as markets react to inflation concerns and shifting investor sentiment. Refinance activity had surged to 25% of total mortgage activity—the highest level since September 2024—but may face headwinds with the recent rate increase. Meanwhile, Fannie Mae has dismissed over 100 employees for unethical conduct related to fraud and misuse of the company’s Matching Grants Program.

Rate Trends & Market Activity

• Rates jump higher: Mortgage rates have increased to 6.85%, reversing previous downward momentum as markets reassess economic conditions and inflation risks 3
• Market volatility continues: The mortgage market remains highly volatile amid conflicting economic signals, with rates experiencing significant day-to-day fluctuations as investors react to tariff news and economic data 3
• Affordability impact: The rate increase further challenges housing affordability, potentially dampening the spring homebuying season despite increased inventory and buyer interest 3
• Refinance surge: Strong growth in refinance activity during March pushed the share of refinances up to 25%, the highest level since September 2024, with a pull-through rate of 63.3% 11
• Purchase volume mixed: Purchase activity increased month-over-month but declined 2% year-over-year in dollar volume; when isolating loan counts to control for home price appreciation, purchase activity showed a steeper 6% decline 11
• Loan product shifts: Non-conforming loan production hit its highest level since April 2022, accounting for 16.8% of total rate lock volume, while conforming loan share fell to 51% and FHA share dropped to 19.6% 11
• ARM popularity rising: Adjustable-rate mortgages accounted for just below 9% of total rate lock volume in March, tied to growing demand for non-conforming loan options as buyers search for greater affordability 11

Borrower Profiles & Loan Metrics

• Credit quality improvement: March saw a 3-point increase in average credit scores for both cash-out and rate-and-term refinances, rising to 735 and 699 respectively, as higher-credit homeowners acted quickly on refinance opportunities 11
• DTI trends downward: Average debt-to-income (DTI) ratio across all loans dropped from February’s 37.3% to 36.7% in March, reflecting income growth outpacing the rise in household debt 11
• Loan sizes increase: Average home purchase price rose from February’s $480.2K to $486.9K in March, driving a month-over-month increase in average loan amount from $380.5K to $391.7K 11
• Mixed application activity: Mortgage applications decreased 1.6% for the week ending March 28, with refinance applications down 6% week-over-week but 57% higher than one year ago 12

Fed Policy & Rate Outlook

• Multiple rate cuts predicted: Market analysts forecast up to five Fed rate cuts in 2025 (38% probability), potentially lowering the federal funds rate to between 3.00% and 3.25% amid recession concerns 13
• Current mortgage rate averages: As of April 7, 2025, 30-year conforming mortgage rate averaging 6.481%, 15-year conforming at 5.561%, and 30-year FHA at 6.231% 13

Fannie Mae Scandal

• Mass employee dismissal: FHFA and Fannie Mae dismissed over 100 employees for unethical conduct including fraud, following 700 additional layoffs the previous week (unsubstantiated) 1
• Matching Grants Program abuse: Employees allegedly conspired to exploit Fannie Mae’s Matching Grants Program for personal gain, resulting in millions of dollars being misappropriated over several years 1
• Trump administration stance: William J. Pulte, Chairman of Fannie Mae’s Board and FHFA Director, stated: “In President Trump’s housing market, there is no room for fraud, mortgage fraud, or any other deceitful act” 1
• Economic & Political News

President Trump’s “Liberation Day” tariffs have triggered global market turmoil, with rates reaching as high as 46% for certain goods from over 150 countries. Stock markets worldwide have plummeted while bond yields have cratered as investors seek safe havens. The economic uncertainty is having significant impacts across various sectors, including real estate and construction.

Tariff Impact

• Global market reaction: European shares followed Asian markets lower, with Germany’s DAX falling 6.5%, Paris’s CAC 40 shedding 5.9%, and Britain’s FTSE 100 losing 5% 14
• U.S. market futures: S&P 500 futures lost 3.4% and Dow Jones Industrial Average futures shed 3.1%, signaling continued market weakness 14
• Real estate sector impact: Sharp decline in stock prices of REITs and brokerages, with developers reconsidering projects due to anticipated rises in construction material costs 15

Bond Market Dynamics

• Global bond yields drop: Yield on Germany’s 10-year bund—the benchmark for the euro area—dropped from 2.72% on Wednesday to 2.59% on Monday as investors sought safe havens 16
• U.S. Treasury yield movement: Benchmark 10-year Treasury yield climbed back above 4% on Monday (4.043%), while the 2-year Treasury yield dropped to 3.639%, reflecting complex market dynamics 17

Policy & Regulations

Federal housing programs face significant changes under the Trump administration, creating uncertainty in the multifamily financing landscape. The discontinuation of the $1.4 billion Green and Resilient Retrofit Program has left many projects in limbo, while staffing cuts at agencies like HUD, Fannie Mae, and Freddie Mac have exacerbated market instability. Meanwhile, RealPage has filed a federal lawsuit challenging Berkeley’s ban on algorithmic rental pricing tools.

Federal Housing Programs

• GRRP discontinuation: HUD’s $1.4 billion Green and Resilient Retrofit Program has been cut, leaving developers who relied on federal commitments facing increased financing costs or project cancellations 18
• Agency staffing issues: Staffing cuts and unclear federal priorities from HUD, Fannie Mae, and Freddie Mac are causing project approval delays and developer hesitancy 18
• CFPB survival: A U.S. District Judge denied Trump administration actions to fire CFPB employees and ordered reinstatement of previously terminated workers, preventing the planned elimination of nearly 1,200 of the agency’s approximately 1,700 staff 1

Rental Market Regulations

• RealPage lawsuit: Property management software company RealPage has filed a federal lawsuit against Berkeley, California, challenging an ordinance banning algorithmic rental pricing tools as unconstitutional and violating free speech rights 19
• First-of-its-kind ban: Berkeley’s ordinance, effective April 24, 2025, is the first in the U.S. to ban rental pricing algorithms amid concerns they contribute to rising housing costs 19
• Broader implications: The lawsuit’s outcome is expected to influence future regulations on data and algorithms in the rental market and the trajectory of federal antitrust scrutiny 19

Construction & Development Impact

• Tariff effects on housing: President Trump’s tariffs are expected to raise construction material costs, causing developers to seek guaranteed maximum price contracts to mitigate risks 15
• Exemptions and previous tariffs: While Canada and Mexico are currently exempt from some new tariffs, previous tariffs on building materials are expected to raise the cost of new homes 20
• Affordability concerns: Builders may face challenges maintaining affordable inventory due to increased costs, potentially exacerbating the existing housing affordability crisis 20

Commercial Real Estate Markets (including Multifamily)

The commercial real estate market is showing signs of selective recovery with overall sales jumping 30% in February, led by retail and office sectors. The multifamily sector demonstrated exceptional performance in Q1 2025 with record absorption rates, while the build-to-rent market has stabilized after explosive growth. However, financing challenges persist amid rising interest rates and policy uncertainty.

CRE Market News

• Sector performance variations: At the beginning of 2025, office demand showed signs of recovery but wasn’t strong enough to push net absorption into positive territory, while the retail market remained tight due to limited new supply 21
• Multifamily stabilization: The multifamily sector showed signs of stabilization in early 2025, driven by strong rental demand and a 46% increase in net absorption, reaching nearly 551,000 units, with steady vacancy rates at 8% 21
• Retail sector resilience: The retail real estate sector has a promising outlook in 2025, with core retail sales rising 3.4% year-over-year in 2024, outpacing core inflation, though potential economic headwinds exist with interest rate uncertainty and tariff impacts 22
• Industrial sector slowdown: After several years of record-breaking growth, the industrial sector continued to slow through early 2025 as new supply outpaced demand, with vacancies rising to 7.0% and rent growth softening to 2.0% 21
• Economic uncertainty impact: The Federal Reserve’s upward revision of inflation forecasts from 2.4% to 2.7%, primarily driven by tariffs, has created uncertainty in the CRE market, with growth forecasts revised downward from 2.1% to 1.7% 23

CRE Financing News

• CMBS loan losses decrease: In February 2025, $79.7 million across 14 loans were resolved with $38.2 million in total losses, with an average loss severity of 47.87%, representing a significant pullback in loan loss volume from January’s $246.9 million 24
• Loan extensions reach record levels: Commercial real estate lenders extended a record $384 billion in loans, representing 40% of the $957 billion in CRE debt coming due in 2025, as borrowers struggle to refinance at today’s rates and lenders remain reluctant to foreclose 25
• CMBS issuance surge: CMBS issuances totaled $18.3 billion nationwide in February, more than double January’s total of $7.9 billion and up 196% year-over-year, with bond ratings associations predicting “no likely slowdown on the horizon” 26
• Private lenders gain market share: Private debt funds and alternative lenders are stepping in as traditional banks withdraw from CRE lending, with firms like Ares Management and Apollo Global Management expanding their commercial real estate debt platforms 27
• Refinancing challenges: With $150.9 billion in private-label CMBS loans set to mature by the end of 2025, the ability of borrowers to refinance at higher rates – or the potential for continued distress – will shape the next phase of the CRE cycle 23

CRE Servicing News

• AI adoption accelerates: Property managers are increasingly adopting AI and automation tools to improve efficiency and data analytics capabilities, with 34% now using AI to increase operational efficiency (66%) and use data more effectively (52%) 28
• Proptech revolutionizes operations: Smart building technologies using sensors, automation systems, and Internet of Things devices are helping commercial property owners reduce buildings’ carbon footprints, improve occupant comfort, and enhance operational efficiency 29
• Digital customer service tools: AI-powered chatbots and other digital customer service tools are quickly responding to inquiries, helping increase efficiencies, streamline communication, and provide potential occupants with the information they need 29
• Fraud detection improvements: With application fraud becoming more sophisticated, property managers are implementing AI-driven algorithms to analyze documents for signs of tampering, inconsistencies, and fraud, significantly increasing detection accuracy 30
• Workflow automation benefits: Commercial real estate firms are implementing AI-enhanced document analysis and automated workflow systems to reduce manual errors, enable consistent processing, and improve overall operational efficiency in property management 31