Daily Dose of Real Estate for July 4

Good news: Jobs report to the upside! Bad news: Doesn’t help make the case to lower rates. Mortgage rates maintain at three lows. Florida real estate market gets hit with a nasty cold front. OBBB makes it over the finish line with the House and now heads to President Trump’s desk. I sure as hell hope it all works. Despite compelling demographic trends, we have a senior housing shortage. Let’s get you caught up and out the door (hopefully to buy fireworks, hotdogs, beer, etc) in just 3 dang minutes. Have a great 4th! God Bless America! 

Today’s newsletter was prepared by our AI platform ALFReD. Know Better. Work Smarter. Be More Successful.

Key Takeaways

• FHFA home price growth for April 2025 showed the first monthly decline since 2022, with annual growth slowing to 3%, the lowest since 2023, as inventory levels have risen to a five-year high of 1.54 million units. 1
• The U.S. labor market added 147,000 jobs in June, with unemployment dipping to 4.1%, though private sector hiring slowed to just 74,000 jobs amid uncertainty about tariff impacts and tightening immigration policies. 2 3
• Realtor.com’s latest data shows median time on market has increased to 45 days, up 7 days from last year, while median listing prices climbed 1.2% year-over-year to $445,000, indicating a continued market normalization. 5
• Florida’s housing market shows signs of cooling with single-family inventory up 32.7% year-over-year to 114,454 units, while condo and townhome inventory increased 35.2% to 77,300 units. 6
• Despite challenging fundamentals, institutional investors are cautiously returning, with May seeing a 1.2% month-over-month increase in repeat sales to $10.2 billion and investment-grade transactions rising 3.8% to $5.8 billion. 1
• Trump’s “Big Beautiful Bill” takes shape: The comprehensive economic package includes tax cuts, deregulation measures, and $500 billion for infrastructure over the next decade, with specific provisions targeting housing affordability through tax credits for first-time homebuyers and incentives for affordable housing development. 10
• Senior housing shortage: Despite growing demand driven by demographic trends, financing challenges from high interest rates have limited new supply growth, with only 5,264 units added year-over-year in Q1 2025. 3

Residential Real Estate Markets

Overview: The housing market continues its shift toward normalization with rising inventory levels, moderating price growth, and longer selling times. Regional differences are becoming more pronounced as Sunbelt markets cool faster than the Midwest and Northeast.

• Inventory reaches five-year high: Existing inventory has risen to 1.54 million units, the highest level in five years, providing more options for buyers and reducing upward pressure on prices. 1
• First monthly price decline since 2022: FHFA home price data for April 2025 showed prices declined month-over-month, with annual growth slowing to just 3%, the lowest rate since 2023. 1
• Homes taking longer to sell: Median time on market has increased to 45 days, 7 days longer than the same time last year and significantly higher than pandemic-era lows of 28 days. 5
• Listing prices up slightly: The median listing price climbed 1.2% year-over-year to $445,000, though prices are down 0.3% year-to-date, indicating a market that continues to normalize. 5
• Florida market cooling rapidly: Single-family inventory in Florida reached 114,454 units (up 32.7% year-over-year), while condo and townhome inventory increased 35.2% to 77,300 units, with the state’s homeowners insurance crisis contributing to longer market times. 6
• Construction spending declines: May private residential construction spending fell by 0.5%, marking the fifth straight month of decreases, with total spending down 6.7% compared to a year ago. 7
• Single-family starts rebounded in 2024: Despite challenges, 1,009,315 new single-family units started construction nationwide in 2024, showing resilience despite high mortgage rates and elevated financing costs. 7

Mortgage Markets

Overview: Mortgage rates remain elevated around 6.8% as the Fed holds steady on interest rates. Meanwhile, significant policy changes from the FHA and increasing use of GSE appraisal waivers are reshaping lending practices.

• GSE appraisal waivers gain prominence: Approximately 45% of all GSE purchase loans now receive appraisal waivers, representing a significant shift in mortgage underwriting practices as Fannie Mae and Freddie Mac expand their automated valuation models. 8
• Mortgage rates holding steady: The national average 30-year fixed mortgage APR is currently 6.74%, with the refinance APR at 6.83%, creating a “lock-in” effect where homeowners are reluctant to sell and take on higher rates. 6

Economic & Political News

Overview: The economy shows resilience with strong June job numbers, though private sector hiring has slowed amid tariff and immigration uncertainties. President Trump’s “Big Beautiful Bill” takes shape with provisions targeting housing affordability.

• June jobs report exceeds expectations: Employers added 147,000 jobs in June, exceeding economists’ expectations of 110,000, with the unemployment rate falling from 4.2% to 4.1%. 3 2
• Private sector hiring slows: The private sector added just 74,000 jobs in June, the fewest since October, while state and local governments led job gains with 70,000 positions. 3
• Trump’s “Big Beautiful Bill” takes shape: The comprehensive economic package includes tax cuts, deregulation measures, and $500 billion for infrastructure over the next decade, with specific provisions targeting housing affordability through tax credits for first-time homebuyers and incentives for affordable housing development. 10
• Labor force participation declines: The share of Americans working or looking for jobs fell from 62.4% to 62.3%, the lowest since December 2022, with economists suggesting that immigration enforcement may be keeping workers away. 3
• Immigration policies impact construction: Labor shortages attributed to immigration policies have contributed to rising construction costs and project delays, exacerbating housing supply constraints. 10
• Markets anticipate Fed policy changes: The solid job gains may influence the Federal Reserve’s decisions on interest rates at its upcoming late July meeting, despite pressure from the Trump administration. 3

Commercial Real Estate Markets (Including Multifamily)

Market Performance

Overview: Commercial property values declined for the third consecutive month, with investment-grade assets experiencing the sharpest drops while multifamily shows relative stability.

• Commercial property values fell for a third straight month, with the value-weighted composite index tracking high-dollar institutional sales dropping 1.3% from April and 3.5% over the last three months. 1
• Tenants vacated 50.9 million square feet in Q2 2025, marking the 13th consecutive quarter of weakening demand, particularly affecting office, retail, and industrial sectors. 1
• Investment-grade properties account for nearly 60% of negative net absorption, with nonresidential assets (office and retail) experiencing a 1.8% price correction over the last quarter compared to multifamily’s modest 0.3% decline. 1
• Despite challenging fundamentals, institutional investors are cautiously returning, with May seeing a 1.2% month-over-month increase in repeat sales to $10.2 billion and investment-grade transactions rising 3.8% to $5.8 billion. 1

Multifamily Market Highlights

Overview: The Midwest multifamily market is gaining significant investor attention due to strong rent growth, limited new supply, and attractive yields compared to overbuilt Sun Belt markets.

• Chicago posted 4.2% year-over-year rent growth in May 2025, the third-highest nationally, while other Midwest cities like Indianapolis (2.6%) and Madison (2.3%) significantly outpaced the national average of 1%. 2
• Major capital is flowing into the region, with Morgan Properties announcing a $500 million multifamily investment push in April and Chicago-based Clear Investment Group launching a $300 million workforce housing fund in March. 2
• New construction remains constrained across the Midwest, with only 1,200 Class-A units expected in Chicago over the next three years, creating a supply-demand imbalance that’s driving rent growth. 2

Senior Housing Recovery

Overview: Senior housing has nearly completed its post-pandemic recovery, with vacancy rates approaching pre-pandemic levels after 16 consecutive quarters of improvement.

• Senior housing vacancy rates reached 10.1% in Q1 2025, almost matching the pre-pandemic level of 10% from Q4 2019, following a steady recovery from the pandemic peak of 17% in Q1 2021. 3
• Despite growing demand driven by demographic trends, financing challenges from high interest rates have limited new supply growth, with only 5,264 units added year-over-year in Q1 2025. 3
• Annual senior housing inventory expansion has fallen below 1%, compared to the broader multifamily market’s consistent 2%+ annual growth, creating favorable conditions for existing properties. 3

Regulatory Updates

Overview: Recent federal regulations impact various aspects of commercial real estate transactions, including international sanctions and market competition.

• The Department of the Treasury implemented new International Criminal Court-Related Sanctions Regulations affecting real estate transactions, including mortgages, deeds of trust, vendors’ sales agreements, and land contracts. 5
• The Federal Trade Commission issued a consent agreement addressing anticompetitive effects in concentrated local markets, noting significant entry barriers including the availability of attractive real estate and regulatory approvals. 6

Industrial Sector Stability

Overview: Industrial real estate continues to demonstrate relative stability compared to other commercial property types, as evidenced by Prologis’s strong financial performance.

• Prologis, Inc., a leading industrial REIT, reported assets worth $95.99 billion, liabilities of $37.92 billion, and stockholders’ equity of $53.47 billion as of March 31, 2025. 7
• The company generated quarterly revenues of $2.14 billion with a net income of $592.95 million, translating to earnings per share of $0.64, indicating continued strength in the industrial sector. 7

Industry News

Overview: The real estate industry continues to evolve through legal challenges, expansion plans, and accelerated technology adoption as companies adapt to changing market conditions.

• Berkshire Hathaway Energy seeks arbitration: The company is pursuing arbitration in the Gibson commission lawsuit, part of broader legal challenges facing the industry regarding commission structures and practices.
• LPT Realty announces expansion: Michael Valdes has outlined the company’s expansion plans and agent choice models, potentially reshaping agent recruitment and retention strategies across the industry.
• Digital listing views increase: Realtor.com reports that digital listing views have increased by 15% year-over-year, reflecting growing consumer reliance on online platforms and driving investment in virtual touring technologies, AI-powered recommendation engines, and digital transaction management systems. 5
• Automated valuation models gain traction: The increasing prevalence of GSE appraisal waivers represents a technological transformation in the industry, with potential benefits for transaction costs and closing timelines. 8