Daily Dose of Real Estate for July 11

Consumer spending is down – but not out – coming in at 2.5% YoY growth (down 1% from this time last year). Home improvement slows as consumers struggle and the housing market grinds forward. Housing Cost Burdens are at 10-Year High (that’s not a good thing) with 38% of homeowners now spending more than 30% of their income on housing, the highest level in a decade. First-time buyers are even worse. Multifamily delinquencies have surged from $1.5 billion in 2020 to $9.4 billion in 2025, with loans 90+ days past due rising dramatically from $560 million to $6.71 billion during the same period The Northeast emerges as the hottest housing market with homes selling faster with more foot traffic. And we have our first confirmed head of the OCC for the first time since 2020 – congrats Jonathan Gould! Let’s get you caught up and out the door in 3 minutes. Tim 

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Key Takeaways

• Housing cost burden has reached a decade-long peak, with 38% of homeowners spending more than 30% of their income on housing in 2024, particularly affecting first-time homebuyers and older homeowners who are staying in place longer. 1
• The Northeast has emerged as the hottest housing market in June 2025, with homes selling 14 days faster than the national average and attracting 31% more views per property on listing sites, driven by relatively lower prices and strong economic fundamentals. 2
• Mortgage rates have shown a downward trajectory, with the average 30-year fixed rate at 6.72% as of July 10, down from recent highs but up slightly from 6.67% on July 3, leading to increased mortgage applications (purchase up 25%, refinance up 56% year-over-year). 3
• The U.S. Senate has confirmed Jonathan Gould as the head of the OCC – the nations top banking regulator in a 52-48 vote, giving him oversight of the largest U.S. banks and influence over capital requirements and stress testing. 4
• Harvard’s Joint Center for Housing Studies reports that high housing costs are straining household budgets nationwide, with 22.4 million renter households spending more than 30% of their income on housing in 2024, an increase of 1.2 million from the previous year. 5
• Bank of America’s latest Consumer Checkpoint shows household finances remain resilient despite economic pressures, with consumer spending growing at 2.5% year-over-year in June 2025, though spending on housing has increased as a percentage of total expenditures. 6

Residential Real Estate Markets

Overview: The housing market is experiencing significant shifts with rising inventory levels, persistent affordability challenges, and surprising regional variations in market activity. Both first-time buyers and older homeowners are feeling the squeeze of housing costs, while the Northeast has unexpectedly emerged as the country’s hottest market.

• Housing Cost Burden at 10-Year High: 38% of homeowners now spend more than 30% of their income on housing, the highest level in a decade. First-time buyers are particularly affected, spending 45% of their income on housing costs compared to 36% in 2019. 1
• Aging in Place Trend: The typical homeowner now stays in their home for 13.5 years, up from 8.7 years in 2010. This trend is partly driven by 62% of existing homeowners having mortgage rates below 4%, creating a “lock-in effect” that constrains inventory. 1
• Northeast Market Surge: The Northeast region has become the hottest housing market in the country, with homes selling 14 days faster than the national average and listings receiving 31% more views. Eight of the top 20 hottest markets in June were in the Northeast, including Albany, NY; Manchester, NH; and Portland, ME. 2
• Rental Cost Burden: A record 22.4 million renter households (up 1.2 million from last year) spent more than 30% of their income on housing in 2024, with 11.6 million of these households spending more than half their income on housing. 5
• Stagnant Homeownership Rate: The national homeownership rate remains at 65.7%, well below the 2004 peak of 69.2%. The median home price-to-income ratio has reached 5.2 nationally, far above the traditional affordability threshold of 3.0. 5
• Construction Challenges: Single-family housing starts increased 5.3% in the first half of 2025 compared to 2024, but remain 18.7% below pre-Great Recession levels. The U.S. remains underbuilt by approximately 3.5 million housing units according to First American. 1
• Builder Price Cuts: 37% of homebuilders reported cutting prices in June (average reduction: 5%), while 62% are using sales incentives to attract buyers amid increased competition from the existing home market. 5

Mortgage Markets

Overview: Mortgage rates have stabilized below 7% but remain elevated compared to historical norms, affecting affordability while simultaneously driving increased refinance and purchase activity. Experts predict modest rate moderation through the remainder of July, though the “new normal” for rates is expected to remain well above pre-pandemic levels.

• Current Rates: The average 30-year fixed mortgage rate rose slightly to 6.72% on July 10 from 6.67% on July 3, but has remained below 7% for 25 consecutive weeks. 3
• Application Volume Surge: Mortgage applications have responded positively to the downward trajectory in rates, with purchase applications up 25% and refinance applications up 56% compared to the same time last year. 3
• July Rate Forecast: Industry experts predict average rates for July around 6.875% for 30-year fixed and 6.375% for 15-year fixed mortgages, with potential for modest decreases. 3
• Second Half Outlook: Harvard JCHS projects the 30-year fixed rate will average 6.4% in the second half of 2025, down from current levels but still significantly higher than the sub-3% rates of 2020-2021. 5
• Strong MSR Market: Mortgage Servicing Rights (MSR) trades have shown strong prices despite economic uncertainties, driven primarily by persistent low overall mortgage production volume. 7
• Rising Delinquencies: A slow upward trend in mortgage delinquencies, particularly with Ginnie Mae loans, and an increase in mortgage early buyouts during Q2 2025 could impact servicing valuations in coming months. 7

Economic & Political News

Overview: Recent economic indicators present a mixed picture for the housing market, with consumer spending showing resilience despite housing cost pressures. The confirmation of Jonathan Gould as the Fed’s top banking regulator signals potential changes in financial regulation, while commercial real estate shows signs of stabilization after a challenging period.

• Fed Regulator Confirmed: The U.S. Senate has confirmed Jonathan Gould as the head of the OCC for in a narrow 52-48 vote, giving him oversight of the largest U.S. banks and influence over capital requirements and stress testing. 4
• Regulatory Approach: During confirmation hearings, Gould emphasized the need for “appropriate safeguards” in the financial system while acknowledging the importance of maintaining credit availability, aligning with the Trump administration’s balanced approach to financial regulation. 4
• Consumer Spending Growth: Overall consumer spending grew at 2.5% year-over-year in June 2025, down from 3.7% in June 2024, with housing taking an increased percentage of total expenditures. 6
• Income-Based Spending Disparities: Higher-income households (>$125,000) maintained 3.1% spending growth, middle-income households ($50,000-$125,000) slowed to 2.3%, and lower-income households (<$50,000) saw just 1.8% growth as housing costs consume larger budget shares. 6
• Housing-Related Spending Decline: Spending on home improvement has declined by 3.2% year-over-year, while furniture and appliance purchases have dropped by 2.8%, suggesting households are prioritizing essential housing costs over discretionary spending. 6
• Commercial Real Estate Improvement: Moody’s CRE Credit Compass has moved to neutral in 2025 from unfavorable in 2024, with conditions expected to remain neutral into 2026 as commercial mortgage-backed security delinquencies stabilize. 8
• Commercial Sector Variations: Office vacancies remain elevated at 19.7% nationally, while industrial properties (4.3% vacancy) and retail (5.8% vacancy) have shown more resilience. Multifamily faces challenges from elevated supply with 7.2% vacancy rates nationally. 5

Commercial Real Estate Markets (including Multifamily)

Market Overview

The commercial real estate landscape shows divergent performance across sectors and regions, with data centers and multifamily emerging as bright spots amid broader economic uncertainty.

• Regional variations remain significant with Atlanta, Los Angeles, and Washington DC seeing strong data center demand, while markets like Houston and Dallas grapple with tariff-related uncertainty 1
• CRE lending growth at FDIC-insured banks slowed to just 1.22% in Q1 2025—the lowest rate since 2012 and well below the historical average of 4.55% 3
• Institutional investors are approaching markets like Chicago “with discipline, not urgency” given continued interest rate uncertainty 1

Multifamily Sector

Multifamily shows a complex picture with strong fundamentals in some regions contrasting with rising distress in others.

• Delinquencies have surged from $1.5 billion in 2020 to $9.4 billion in 2025, with loans 90+ days past due rising dramatically from $560 million to $6.71 billion during the same period 3
• Losses spiked to $767 million in Q1 2025, representing the highest quarterly level in over a decade 3
• Boston’s multifamily market remains attractive amid high demand, limited inventory, and new opportunities from the MBTA Communities Act, which requires towns to expand zoning for more as-of-right multifamily housing development 1
• Luxury multifamily in New York continues to see strong investor and tenant demand, particularly in well-located areas 1
• Washington DC’s multifamily market is holding steady as many workers look to rent rather than buy in an uncertain housing market, despite the impact of federal layoffs and continued inflation 1

Office Market

Office properties continue to face challenges nationwide, with demand increasingly concentrated in premium assets and locations.

• Miami office rents rose 14.4% year-over-year in Q2, reaching $62.61 per square foot, with Miami Beach commanding nearly $110 PSF 4
• Class A space in Miami posted a 20.4% vacancy rate, while the overall market recorded 17%, remaining stable despite 1.9 million square feet under construction 4
• Atlanta’s office segment remains slow, although leasing of Class A, amenity-rich assets is experiencing positive activity 1
• San Francisco’s Class A office rents are showing resilience and remaining stable despite broader market challenges 1
• Seattle continues to face high office vacancies, while Houston’s office sector is particularly affected by elevated interest rates and policy shifts in Washington 1

Industrial & Logistics

The industrial sector shows mixed performance with tariff concerns creating both challenges and opportunities.

• DFW’s industrial vacancy rate stands at 9.3% for Q2 2025, among the highest of the 10 largest U.S. markets and trailing only Phoenix (11.9%) 2
• Positive net absorption reached 13.3 million square feet at midyear in DFW—a 34.7% increase over last year despite elevated vacancy rates 2
• Chinese companies are rushing to secure space in DFW because of tariff concerns, creating what one broker describes as a “mad rush” that has kept rental rates elevated 2
• Large-format space remains in demand with one expert noting: “We don’t have enough million-square-foot buildings on the ground or being developed, particularly on the Fort Worth side of town” 2
• Construction completions are expected to reach the lowest level since 2021 by year-end, presenting an opportunity to absorb recently delivered inventory 2
• Los Angeles industrial activity is uneven and slowed by tariff concerns, while Seattle’s industrial sector continues to show positive absorption and steady or rising rents 1

Retail Trends

Retail properties show resilience despite ongoing challenges from changing consumer behaviors and economic pressures.

• Mall traffic declined in June following a spring surge, though indoor malls showed resilience with only a 0.7% year-over-year drop compared to open-air centers (down 1.6%) and outlet malls (down 4.4%) 5
• Average dwell time increased across all shopping formats during the first half of the year, with indoor malls posting the largest increase at 3.3%, suggesting stronger consumer engagement 5
• Open-air shopping centers remain the only retail category to exceed pre-pandemic traffic levels, with first-half visits up 0.3% compared to 2019 5
• High-end retail in New York continues to see strong investor and tenant demand, while underperforming retail properties struggle to attract interest 1
• Seattle’s retail sector is facing headwinds from inflation and tariffs, while Charlotte reports solid momentum in specific retail submarkets 1

Data Centers & Technology

Data centers emerge as a standout performer across multiple markets, driven by continued digital transformation and AI adoption.

• Atlanta, Los Angeles, and Washington DC all report strong demand for data center space, making this sector a bright spot even in markets facing challenges in other segments 1
• San Francisco is seeing increased data center development, adding to the market’s resilience despite broader economic concerns 1
• Seattle reports growing data center demand, though new project activity appears uneven on the ground 1

Industry News

Overview: The real estate industry continues to evolve through strategic mergers and acquisitions, technological innovation, and structural changes like MLS consolidation. Companies are expanding their service offerings and leveraging AI and other technologies to improve efficiency and enhance the customer experience.

• RedKey’s Commercial Expansion: RedKey Realty Leaders has merged with RE Source LLC, launching its commercial real estate division and adding a new St. Louis office. The merger brings seven commercial agents to RedKey’s team of approximately 200 residential agents. 9
• AI-Powered Home Search: The Real Brokerage has acquired Flyhomes’ AI-powered home search portal to accelerate its vision of providing an AI concierge service that can respond to consumer inquiries via text message, helping customers find homes and answer basic questions. 10
• PropTech Investment Growth: Proptech investment reached $9.8 billion in 2024, a 15% increase from 2023, with key trends including iBuying platforms, rent payment technologies, property management solutions, and AI/VR in property marketing. 5
• MLS Consolidation: The number of Multiple Listing Services across the country has decreased from more than 900 a decade ago to 510 as of June 2025, with industry professionals pushing for further consolidation to at least statewide MLSs. 11
• Broker Pain Points: The push for MLS consolidation is driven by the desire to solve pain points for brokers and firms who often must belong to multiple MLSs to effectively run their businesses across different markets. 11