Daily Dose of Real Estate: May 5, 2025
Mortgage rates want to move lower but are stuck at 6.76% after retreating modestly last week. The economy continues its complicated relationship status with both “stag” and “flation” given the upcoming CPI report expected to show 3.4% following weak GDP and strong hiring numbers last Friday. CMBS Delinquency rates are starting to be worth watching at over 7%. Let’s get you caught up and out the door in three minutes. Tim
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Key Takeaways
- Housing inventory surged 30.6% year-over-year in April 2025, marking the 18th consecutive month of inventory growth and finally surpassing April 2020 levels for the first time since the pandemic began. 1
- The 30-year fixed mortgage rate decreased to 6.76% as of May 1, down from 6.81% the previous week and 7.22% a year ago, offering potential homebuyers some relief from recent rate pressures. 2
- Total nonfarm payroll employment increased by 177,000 in April, with unemployment holding steady at 4.2%, indicating continued labor market resilience despite broader economic concerns. 3
- April’s CPI inflation report (releasing May 8) is expected to show headline inflation of 3.4% year-over-year and core inflation at 3.6%, potentially influencing the Federal Reserve’s rate decisions in coming months. 4
- Related Companies and Oxford Properties Group proposed expanding their Hudson Yards West development from 1,500 to 4,000 residential units, responding to community feedback for more housing in this $12 billion mixed-use project. 5
- Anywhere Real Estate reported Q1 2025 revenue of $1.2 billion, up 7% year-over-year, with transaction sides down but average home prices up 11%, demonstrating the market’s continued price resilience. 6
Residential Real Estate Markets
Overview: Housing inventory continues its strong recovery, offering buyers more options while price growth moderates and homes take longer to sell. This shift toward more balanced market conditions is providing relief after years of extreme seller advantage.
- Inventory Growth: Active listings rose 30.6% year-over-year in April, surpassing April 2020 levels for the first time since the pandemic. This milestone represents a significant recovery in housing supply, though inventory remains 16.3% below typical 2017-19 levels. 1
- Regional Variations:
- West: +41.7% (now 4.8% above pre-pandemic levels)
- South: +33.3% (now 1.2% above pre-pandemic levels)
- Midwest: +18.7% (still below pre-pandemic levels)
- Northeast: +12.4% (still below pre-pandemic levels)
These geographic differences reflect varying economic conditions and migration patterns affecting local markets. 1
- New Listings: Increased 9.2% from a year ago, slightly down from March’s 10.2% growth. Higher mortgage rates late in April may have caused some sellers to delay listing their homes. 1
- Days on Market: Homes spent a median of 50 days on market, 4 days longer than a year ago. This gives buyers more time to make decisions, though still faster than pre-pandemic norms in many areas. 1
- Pricing Trends:
- Median list price: $431,250 (unchanged year-over-year)
- Price per square foot: +1.1% year-over-year (indicating modest underlying value growth)
- 18% of listings saw price reductions (highest April level since at least 2016), suggesting sellers are adjusting to market realities. 1
- Affordability Challenge: Income required to purchase a median-priced home has risen by almost $47,000 compared to 2019, underscoring the ongoing affordability pressures despite improving inventory conditions. 1
Mortgage Markets
Overview: Mortgage rates have edged lower, providing slight relief to buyers, while refinance opportunities emerge for recent borrowers with higher rates. The market remains sensitive to inflation data and Federal Reserve policy decisions.
- Current Rates:
- 30-year fixed: 6.76% (down from 6.81% last week and 7.22% a year ago), offering meaningful savings compared to early 2025 peaks. 2
- 15-year fixed: 5.92%, also showing modest improvement for those considering this option. 2
- Bankrate survey: 6.78% for 30-year fixed (down 8 basis points over last week), confirming the downward trend. 7
- Fed Policy: Benchmark rate maintained at 4.25% to 4.5% with projections of two rate cuts in 2025. This cautious approach reflects ongoing concerns about inflation and economic stability. 8
- Fannie Mae Forecast:
- Rates to end 2025 at 6.2% (revised downward from previous forecasts)
- Rates to end 2026 at 6.0%, suggesting gradual improvement in affordability conditions. 9
- Refinance Opportunity: 5.4 million recently-originated mortgages (2022-2025) have rates of 6.5% or higher, including 2.5 million at or above 7%. This represents a significant pool of homeowners who could benefit if rates continue their downward trend. 10
- Purchase Activity: Rate lock volume in Week 17 was down 31% from 2019 and down 9% year-over-year, indicating continued hesitancy among buyers despite the slight improvement in rates. 11
- Credit Scoring: VantageScore usage in mortgage originations surged 166% in 2024, though GSE usage declined by 42%. This shift reflects evolving approaches to credit assessment that could expand access to mortgage financing. 12
Economic & Political News
Overview: The labor market remains resilient while inflation concerns persist, with upcoming data and policy developments likely to impact housing markets. Economic growth forecasts have been revised downward, creating uncertainty for real estate.
- Employment:
- April job gains: 177,000 (in line with 12-month average of 152,000)
- Unemployment rate: 4.2% (unchanged since May 2024)
- Sector gains: Healthcare (+51,000), Transportation (+29,000), Financial activities
- Sector losses: Federal government
This sectoral variation reflects the uneven nature of the current economic landscape. 3
- Inflation Outlook:
- Economic Growth:
- Consumer Sentiment: April saw significant drop in expectations component, with consumers anticipating fewer jobs and income gains in the next 6 months. This could translate to slower growth in both spending and housing demand. 14
- Political Developments: NPR and PBS preparing to challenge Trump administration’s proposed cuts to public broadcasting funding, adding another layer of uncertainty to the economic landscape. 15
- Housing Outlook: Despite economic concerns, home prices expected to rise 4.1% in 2025 and 2.0% in 2026, suggesting continued resilience in the housing market even amid broader uncertainty. 13
Commercial Real Estate Markets (including Multifamily)
Market Overview
Commercial real estate lending rebounded strongly in 2024, led by multifamily financing, signaling robust investor confidence and an active refinancing environment in 2025.
- Total CRE lending volume reached $498 billion in 2024, a 16% increase over 2023, with multifamily loans accounting for $326 billion (~65% of total lending).²⁰
- Depositories, life insurers, pension funds, CMBS conduits, and government agencies remain the primary capital sources supporting the market.²⁰
- Nearly $1 trillion in CRE loans are maturing in 2025, fueling substantial refinancing activity.²⁰
Manhattan Office Market Rebound
After pandemic-related disruptions, Manhattan office leasing is surging, especially in premium submarkets like Hudson Yards.
- Q1 2025 leasing volume hit 7.9 million sq ft, surpassing the five-year average of 5 million sq ft.²¹
- Deloitte committed to 800,000 sq ft at 70 Hudson Yards, nearly three-quarters of the new tower’s space.²¹
- Other major leases include Amazon and Santander, driving rents in Class A properties above $200 per sq ft in some cases.²¹
Multifamily Development and Lending
Multifamily continues to dominate CRE finance and development, addressing strong housing demand.
- Related Companies and Oxford Properties proposed 4,000 new apartments at Hudson Yards West, expanding residential capacity significantly.²²
- Public-private projects, such as Willow Creek Manor in Houston, focus on affordable housing using Low Income Housing Tax Credits and FHA loans.²⁸
- Multifamily loan originations remain the largest single CRE lending sector, reflecting steady investor interest.²⁰
CRE Servicing Landscape
Servicing of commercial and multifamily loans is concentrated among a few large institutional players adapting to new market challenges.
- Wells Fargo, PNC, and KeyBank lead as top servicers by loan volume and number of loans at year-end 2024.²³
- The sector is embracing AI and automation to improve efficiency, borrower communication, and regulatory compliance.²⁶
Delinquency Trends
Delinquencies in commercial mortgages, especially CMBS, have risen modestly, with sector-specific stress evident.
- CMBS delinquency rates topped 7% early 2025, highest since 2021, mainly from lodging and warehouse loan stress.²⁴
- Class A and B office properties show resilience due to tenant demand for amenity-rich, collaboration-focused spaces despite overall market pressures.²⁴
- Borrowers tend to prefer cash-neutral refinancing or loan modifications amid limited cash-out options.²⁴
Industrial Market and Emerging Trends
Industrial real estate benefits from e-commerce growth but faces rising vacancy and cost challenges.
- Online sales reached $1.19 trillion in 2024, sustaining demand for warehouse and logistics space.²⁵
- National industrial vacancy rate increased to 8.5%, with rents growing 6.8% year-over-year, especially in Sun Belt markets like Phoenix.²⁹
- Data centers and other alternative property types are gaining investor interest alongside senior housing and life sciences sectors.²⁷
Outlook and Innovation
The CRE sector is evolving with new technologies and shifting investor preferences shaping the landscape.
- Tokenized real estate assets and blockchain-enabled finance are increasing liquidity and transparency.²⁷
- Younger real estate executives prioritize alternative property types and technology adoption for portfolio diversification.²⁷
- The Mortgage Bankers Association offers education focusing on AI-driven servicing automation, risk management, and compliance challenges in 2025.²⁶
Industry News
Overview: Major corporate developments and technological innovations are reshaping the real estate landscape, with significant investments in housing development and digital transformation. Companies are adapting to changing market conditions with strategic initiatives.
- Anywhere Real Estate Performance:
- Q1 2025 revenue: $1.2 billion (+7% year-over-year)
- Net loss: $78 million (improved from $101 million in Q1 2024)
- Transaction sides: -4% year-over-year
- Average home sale price: +11% year-over-year
These results demonstrate the market’s price resilience despite transaction volume challenges. 6
- Private Listings Strategy: Anywhere extending private listing capabilities to franchise brands by mid-2025 while supporting broad listing distribution. CEO Ryan Schneider emphasized the company wants to be prepared “so that we’re never at a competitive disadvantage if private listings really do become more prevalent.” 6
- Major Development Projects:
- Hudson Yards West: Related Companies and Oxford Properties Group proposed expanding from 1,500 to 4,000 residential units as part of a $12 billion mixed-use project. The development is currently undergoing the Uniform Land Use Review Procedure and requires city council approval. 5
- Acquisition Activity:
- Willton/29th Street Capital: Acquired 311-unit Fenwick Apartments in Silver Spring, MD (assuming $61.6 million Fannie Mae loan). The property’s proximity to Washington, D.C. and major employment centers highlights its strategic value. 16
- Tower 16/Raith Capital: Acquired Sanctuary at South Mountain in Phoenix for $48 million, rebranding it as Obsidian at South Mountain. This transaction underscores continued interest in the build-to-rent sector. 17
- Technology Trends:
- 65% of small businesses already using AI, especially in finance, customer support, and HR. For real estate firms, AI offers opportunities to increase productivity in marketing, customer service, and operations. 18
- Real estate experts advising multi-platform social media approach rather than relying on single channels. This strategy has become increasingly important given potential regulatory changes affecting platforms like TikTok. 19