Daily Dose of Real Estate

Daily Dose of Real estate for November 26

While mortgage rates climbed all around and landed around 6.35% this week—the housing market continues its slow-motion deceleration with home prices posting their weakest gains since mid-2023. Meanwhile, Denver’s regulatory approach to affordability has turned the tables so dramatically that first-time buyers captured 84% of starter homes while Miami investors feast on 57% of the market. Consumer confidence plunged to near-recession levels as Americans worry about everything from government shutdowns to tariffs, though they’re still planning to buy homes at near two-year highs because apparently optimism and pessimism can coexist in the same survey.

Commercial real estate had quite the November, with property prices hitting three-year highs just as deal volume plummeted 22% – everyone loves expensive real estate, they just don’t want to actually buy it. Meanwhile, data centers are officially the new darling of commercial real estate with $3.68 billion in securitizations, proving that our collective Netflix addiction has created an entire asset class. At least independent mortgage banks are finally profitable again, which should help them afford the increasingly expensive office space they’re probably not using thanks to hybrid work models. Let’s get you caught up and out the door in 3 minutes. Tim

Today’s newsletter was prepared by our Ai platform ALFReD. Know Better.

Table of Contents

KEY TAKEAWAYS

Housing market deceleration accelerates: The Case-Shiller National Home Price Index posted just a 1.3% annual gain in September, the weakest performance since mid-2023, with all 20 metros recording month-over-month declines before seasonal adjustment 1
FHFA sets 2026 multifamily caps at $88 billion each for GSEs: The Federal Housing Finance Agency announced $176 billion in combined loan purchase capacity for Fannie Mae and Freddie Mac, requiring at least 50% focus on affordable housing 2
Mortgage rates rise to 6.34% as Treasury yields climb: The 30-year fixed mortgage rate averaged 6.34% on November 25, with 15-year rates at 5.69%, as 10-year Treasury yields increased to 4.16% 3
Consumer confidence plunges to second-lowest level since April: The Conference Board Consumer Confidence Index fell 6.8 points to 88.7 in November, with the Expectations Index below the recession threshold for ten consecutive months 4
First-time buyers dominate Denver market at 84% share: Strict short-term rental regulations give first-time homebuyers significant advantage over investors, while Miami shows opposite trend with investors capturing 57% of starter-home purchases 5
Fannie Mae cuts 2026 home sales forecast amid rate stabilization: The GSE now projects 7.3% growth in home sales for 2026, down from previous 8.9% forecast, while NAR maintains optimistic 14% projection 6
Commercial property prices surged 4.2% year-over-year in October, marking the highest annual growth rate since 2022, with office assets leading at 6.5% annual growth despite a 22% drop in deal volume due to economic uncertainty. 1
CRE lending by banks jumped 48% year-over-year through Q3 2025, reaching pre-pandemic levels while banks maintain their 38% market share as the top financing source across all commercial sectors. 2
Data center securitized issuance reached $3.68 billion year-to-date in 2025, representing a dramatic evolution from $400 million annual levels in 2015-2020 as the sector transitions from niche to mainstream CRE investment. 3
Multifamily housing led all CRE sectors in bidding intensity during October, driven by a 3.5 million unit housing shortage across major U.S. markets while national median rent declined 1.7% to $1,696. 4 5
Public REIT implied cap rates exceeded private real estate appraisal cap rates across all major property types in Q3 2025, with spreads of 191 basis points for apartments and 121 for office, suggesting REITs offer more attractive pricing opportunities. 6

RESIDENTIAL REAL ESTATE MARKETS

The residential real estate market showed continued weakness in September with broad-based price deceleration across most major metros. Regional disparities emerged with Northeastern and Midwestern markets outperforming Sun Belt regions that experienced pandemic-era price surges. New analysis reveals significant variations in first-time buyer versus investor competition across major metropolitan areas, with regulatory policies playing a decisive role.

HOUSING MARKET SHOWS BROAD-BASED WEAKENING

National home price growth slows to 1.3% annually – S&P Case-Shiller National Home Price Index posted weakest performance since mid-2023, down from 1.4% in August 1
All 20 metros recorded month-over-month declines – Before seasonal adjustment, every major metropolitan area showed monthly price decreases in September 1
Inflation outpaces home prices for fourth straight month – September CPI ran 1.7 percentage points above housing appreciation, marking the widest gap since measures began diverging in June 1
Chicago leads annual gains at 5.5% – Followed by New York (5.2%) and Boston (4.1%), demonstrating sustained momentum in Northeastern and Midwestern metros 1
Tampa posts 4.1% annual decline – Marks 11th consecutive month of negative returns, with Phoenix (-2.0%), Dallas (-1.3%), and Miami (-1.3%) also in negative territory 1
FHFA quarterly index shows 2.2% annual growth – U.S. house prices rose just 0.2% quarter-over-quarter in Q3 2025, with Illinois leading state appreciation at 6.9% 7

FIRST-TIME BUYERS VERSUS INVESTORS

Denver leads first-time buyer dominance at 84% – Strict short-term rental regulations limit investor upside, leaving investors with only 16% of starter-home purchases despite $495,000 median listing price 5
Miami shows inverse pattern with 57% investor share – Investors dominate starter-home purchases while first-time buyers capture only 43%, despite similar $499,000 median home price to Denver 5
Seattle restricts investors through rental caps – 81% of starter homes purchased by first-time buyers due to policies limiting each host to maximum two rentals, one of which must be primary residence 5
Los Angeles protects owner-occupants with 81% first-time buyer share – City limits short-term rentals to owner’s primary house while state law provides 45-day opportunity for owner-occupants to match investor offers on foreclosures 5
Indianapolis affordability drives 78% first-time buyer activity – Local initiatives redirect vacant and abandoned homes away from speculative investors by prioritizing sales to owner-occupants 5
Dayton achieves 75% first-time buyer share through deed restrictions – Montgomery County Land Bank program assists low-income buyers with owner-occupancy requirements 5

CONFLICTING 2026 SALES FORECASTS SIGNAL MARKET UNCERTAINTY

Fannie Mae scales back home sales expectations – Now projects 7.3% increase to 5,077 units in 2026, down from previous forecasts of 8.9% in October and 9.2% in September 6
NAR maintains optimistic 14% surge projection – National Association of Realtors expects existing-home sales to jump 14% after stagnant 2025 performance 6
Current rates at 6.34% dampen buyer enthusiasm – Rising mortgage rates have limited the buyer activity that emerged when rates fell from earlier highs this year 3

MARKET TRENDS AND DEMOGRAPHICS

Younger homebuyers rapidly entering market – Millennials now buying homes in their 30s at rates comparable to Gen X in their early 40s, fueled by rising incomes and career stability 10
Sellers outnumber buyers by 37% – Current market imbalance reflects high housing costs and economic uncertainty pressuring buyer demand 11
U.S. homebuyers drop 1.7% to record lows – Lowest level on record aside from pandemic start, while sellers have also retreated in response to low buyer interest 11
First-time buyers represent 69% of starter-home purchases nationally – Neighbors Bank survey shows investors captured 31% of starter-home market, with significant regional variations based on regulatory environment 5

MORTGAGE MARKETS

Mortgage interest rates rose this week as Treasury yields climbed, with the 30-year fixed rate reaching 6.34% according to Bankrate’s latest survey. The increase reflects growing risk premiums in mortgage lending as investors demand higher compensation. Despite the uptick, refinance activity is positioned for significant growth in 2026.

RATES RISE AS TREASURY YIELDS CLIMB AND RISK PREMIUMS INCREASE

30-year fixed rate averages 6.34% – Down modestly as 10-year Treasury yields dropped from 4.16% to just below 4% the previous week, with 15-year rates at 5.69% 3
Risk premium increases signal rate pressure – Mortgage rates dropped only modestly while 10-year Treasury’s decreased nearly 15 basis points, indicating perceived lending risk 3\
December Fed cut probability remains elevated – Mixed employment data showing job growth alongside rising unemployment continues to support rate cut expectations 8
Fed Governor Waller backs December cut – Cites labor market concerns while emphasizing data-dependent decisions suggest continued rate volatility through year-end 8
Rate variability index reads 5 out of 10 – Bankrate’s index indicates moderate volatility, with borrowers likely to find relatively similar offers when shopping 3

REFINANCE VOLUME POISED FOR SIGNIFICANT GROWTH

Single-family originations to surpass $1.88 trillion in 2025 – Fannie Mae projects growth to $2.34 trillion in 2026 as rate environment improves 6
Refinance share to jump to 36% in 2026 – Up from 26% this year and 21% in 2024 as borrowers rush to secure lower rates when 30-year mortgage approaches forecasted 5.9% baseline 6

REGULATORY DEVELOPMENTS

Federal housing agencies announced key policy updates including 2026 multifamily loan purchase caps and new servicing data standards. The FHFA increased GSE multifamily capacity while maintaining affordable housing requirements, while MISMO published standardized datasets to improve government agency data sharing.

FHFA SETS 2026 MULTIFAMILY LOAN PURCHASE CAPS

$88 billion caps set for each GSE – Combined $176 billion total for Fannie Mae and Freddie Mac represents $15 billion increase from previous levels 2
50% affordable housing requirement maintained – At least half of Enterprises’ multifamily businesses must be mission-driven, affordable housing 2
Workforce housing excluded from limits – Multifamily loans financing workforce housing will not count against 2026 volume caps 9
MBA expects increased lending activity – Stable market conditions, strong maturity volumes, and gradual interest rate declines projected to lift multifamily lending in 2026 9

MISMO PUBLISHES GOVERNMENT HOUSING AGENCY SERVICING DATASET

New standardized servicing dataset released – Developed with VA to modernize and streamline how federal housing agencies and servicers share data 10
Improves data interoperability – Represents significant step toward better data sharing across government housing programs 10

ECONOMIC NEWS

Consumer confidence experienced its sharpest decline since April, falling to levels that historically signal recession ahead. Inflation expectations remained elevated at 4.8% while housing purchase plans declined despite being near two-year highs, reflecting broader consumer caution about major expenditures amid government shutdown concerns.

CONSUMER CONFIDENCE PLUNGES AMID GOVERNMENT SHUTDOWN CONCERNS

Conference Board index falls 6.8 points to 88.7 – Down from October’s 95.5, with Present Situation Index dropping 4.3 points to 126.9 4
Expectations Index plummets 8.6 points to 63.2 – Has tracked below recession threshold of 80 for ten consecutive months, historically signaling economic downturn ahead 4
All five index components flag or remain weak – Consumers notably more pessimistic about business conditions six months from now 4
Top consumer concerns identified – Write-in responses highlight prices and inflation, tariffs and trade, politics, and federal government shutdown as primary economic worries 4

INFLATION EXPECTATIONS REMAIN ELEVATED

12-month inflation expectations rise to 4.8% – Median consumer expectation increased in November, remaining well above Federal Reserve’s 2% target 4
50% of consumers expect interest rate increases – Proportion expecting lower rates ticked down after rising over recent months 4

HOUSING PURCHASE PLANS DECLINE DESPITE NEAR TWO-YEAR HIGHS

Homebuying expectations tick down – Consumer plans for home purchases declined in November despite remaining near two-year highs 4
Big-ticket purchase plans decline broadly – Plans for cars, household appliances, and electronics also edged lower, reflecting consumer caution about major expenditures 4
Shift toward “cheap thrills and necessary services” – Consumers moving away from expensive discretionary activities, suggesting continued pressure on housing demand 4

COMMERCIAL REAL ESTATE MARKETS (INCLUDING MULTIFAMILY)

Commercial property prices hit three-year highs while multifamily assets dominate bidding competition amid ongoing housing shortages. Industrial and office sectors show renewed investor interest as utilization patterns shift.

CRE PRICES HIT THREE-YEAR HIGH

Price surge: U.S. commercial property prices jumped 4.2% year-over-year in October, marking the highest annual growth rate since 2022 according to RCA CPPI National All-Property Index 1
Monthly gains: Properties gained 0.8% month-over-month with office assets leading at 6.5% annual growth
Volume decline: Deal volume dropped 22% compared to October 2024 due to economic uncertainty from recent government shutdown

MULTIFAMILY DOMINATES BIDDING COMPETITION

Sector leadership: Multifamily housing led all CRE sectors in bidding intensity during October, driven by 3.5 million unit housing shortage across major U.S. markets 2
Market confidence: JLL’s Global Bid Intensity Index showed second-highest monthly gain over the past year with institutional investors signaling increased confidence
Rental dynamics: High vacancy rates expected to decline as expensive for-sale housing keeps renters in place longer

SMALL-SCALE INDUSTRIAL DRIVES INVESTOR DEMAND

Investment surge: Small-scale industrial properties experiencing unprecedented investor interest in 2025 with shifting distribution centers reshaping regional strategies 3
Port dynamics: Southern California port volumes softening, creating opportunities in emerging industrial markets
2026 outlook: Evolving distribution patterns expected to continue driving demand heading into next year

OFFICE UTILIZATION SHIFTS RESHAPE MARKETS

Traffic recovery: Office traffic rose in Q3 2025 as hybrid work models gain momentum, showing recovery from all-time lows in late 2023 4
Landlord adaptation: Property owners targeting high-end developments to fill voids left by shrinking traditional demand
Market participation: Expanding bidder pools and increased lender participation signaling sector stabilization

STNL MARKET SEES INVESTMENT SURGE

Transaction volume: Single Tenant Net Lease properties experiencing surge making 2025 the third-highest transaction year on record, trailing only 2021 and 2022 post-COVID surges 5
Investor profile: Individual investors increasingly dominating the space seeking stable, long-term returns
Tax advantages: Favorable tax treatment driving continued interest in STNL assets

COMMERCIAL FINANCING MARKETS

CRE lending rebounds to pre-pandemic levels with banks maintaining dominance while data centers enter mainstream financing. Cap rate spreads show mixed signals across property types and public-private markets.

CRE LENDING REBOUNDS TO PRE-PANDEMIC LEVELS

Lending surge: Commercial real estate loan issuance by banks jumped 48% year-over-year through Q3 2025, reaching pre-pandemic levels according to Newmark data 6
Market share: Banks maintain position as top CRE financing source at 38% of all lending, though debt funds and securitized lenders gaining share
Sector growth: Lending increased across all sectors, especially office, senior housing, and retail properties

DATA CENTERS ENTER MAINSTREAM CRE

Securitization volume: Data center securitized issuance reached $3.68 billion year-to-date in 2025, up dramatically from $400 million annual levels seen 2015-2020 7
Cap rate stability: Rates stabilizing near 6.5% for CMBS-financed assets
Market evolution: Sector’s transition from niche to mainstream commercial real estate investment complete

INDUSTRIAL CRE SPREADS TIGHTEN

Spread compression: Industrial commercial real estate loan spreads continued steady tightening through 2025, signaling growing lender appetite 8
Market outlook: Downward trend indicates positive market outlook for balance sheet lenders in industrial sector
Economic resilience: Tightening continues despite broader economic uncertainty

REIT CAP RATE SPREADS WIDEN

Public-private gap: Public REIT implied cap rates exceeded private real estate appraisal cap rates across all major property types in Q3 2025 9
Spread details: Public-private cap rate spreads were 191 basis points for apartments, 121 for office, 94 for industrial, and 79 for retail
Investment opportunity: REITs offer more attractive pricing relative to private real estate markets

COMMERCIAL SERVICING MARKETS

CMBS ratings activity intensifies with multiple new transactions while special servicing shows mixed performance. Resolution activity remains robust despite increased monitoring of distressed assets.

CMBS RATINGS ACTIVITY INTENSIFIES

New transactions: Fitch Ratings assigned expected ratings to multiple CMBS transactions including BRCK Trust 2025-830B with $630 million mortgage loan 10
Market activity: A10 2025-FL6 rated with $350 million in collateral across 21 loans secured by 27 commercial properties
Market resilience: Continued CMBS market activity despite economic uncertainty

SPECIAL SERVICING ACTIVITY UPDATES

Resolution volume: CWCapital Asset Management resolved 72 loans totaling $2.4 billion in unpaid principal balance in 2024 11
Activity increase: Active special servicing increased 42% by balance from 2023
Asset monitoring: Several CMBS loans under watch for performance issues including office properties facing occupancy challenges and multifamily assets with operational difficulties

INDUSTRY NEWS

Real estate technology companies received recognition for innovation while corporate activity included special distributions and executive appointments. Demographic trends show younger homebuyers entering the market at accelerated rates, though current conditions favor sellers over buyers by significant margins. Independent mortgage banks show renewed profitability while rental markets soften nationally. Office-to-data center conversions accelerate as digital infrastructure demand reshapes commercial real estate strategies.

TECHNOLOGY AND LEADERSHIP DEVELOPMENTS

LERETA adds Wells Fargo executive to board – Kristy Fercho brings extensive financial services and mortgage operations experience to real estate technology solutions company 11
ATTOM wins 2025 Inman Best of Proptech Award – Recognized in Data and Intelligence Platforms category for analytics, insights, and property intelligence that power smarter real estate decisions 12
RealtyAds unveils AI leasing efficiency insights – New report “Filling the Gaps: Transforming Leasing Efficiency in CRE with Digital Marketing and AI” explores how artificial intelligence is reshaping commercial leasing 13

CORPORATE ACTIVITY AND EARNINGS

Zillow Group to present at UBS conference – CFO Jeremy Hofmann will participate in fireside chat at UBS Global Technology and AI Conference 2025 on December 2 14
Net Lease Office Properties declares $4.10 special distribution – Totaling approximately $60.7 million, payable December 19 to shareholders of record as of December 4 15
Net Lease sells Morrisville, NC office property – $33 million sale of office property continues company’s portfolio optimization strategy 15

RENTAL AFFORDABILITY IMPROVES IN MAJOR CITIES

Rent decline: National median rent dipped 1.7% annually to $1,696 in October amid softer rental market conditions 13
Demand patterns: 20 major metros reported higher out-of-market demand than before the pandemic
Market dynamics: Evolving affordability landscape redefining renter decisions across key markets

OFFICE-TO-DATA CENTER CONVERSIONS ACCELERATE

Conversion trend: Data centers driving office building conversions as digital infrastructure demand creates new value opportunities 14
Asset repositioning: Trend represents significant shift in how distressed office assets being repositioned for digital economy
Market transformation: Conversions providing solution for struggling office properties while meeting data center demand

CINCINNATI LEADS RENTER ENGAGEMENT TRENDS

Regional leadership: Cincinnati topped renter engagement charts as Midwest leads in Q3 2025 with renters strategically planning moves rather than just moving 15
Market strategy: Shift highlights value of targeting emerging markets and supporting digital apartment search tools
Behavioral change: Renters showing more deliberate decision-making patterns in current market environment