Mortgage rates climb to 3-week highs. Rates popped as investors took the Fed’s October statement — “inflation remains somewhat elevated” and “we’ll assess data carefully” — as code for don’t get too comfortable. That hawkish read pushed long-term yields and mortgage risk premiums higher.
Treasury Secretary Bessent is the latest to call it: housing recession. He blames the Fed’s high-rate policy for freezing the market and sidelining both buyers and builders.
Meanwhile, with just four working days before the Thanksgiving recess, lawmakers face a jam-packed week. Court orders are forcing the White House to release billions in aid to keep SNAP and WIC benefits flowing to 41 million Americans — a political and economic flashpoint heading into the holidays.
The rental market is growing up — literally. The typical renter is now 41 years old and more likely to live with a partner and children.
And in San Francisco, the housing crisis could trigger California’s “builder’s remedy,” as the city’s Family Zoning Plan is on track to deliver barely half of its required 82,000 units by 2031 — opening the door for developers to override local zoning and rent controls. Let’s get you caught up and out the door in 3 minutes.
Today’s newsletter was prepared by our AI platform ALFReD. Know Better.
KEY TAKEAWAYS
- Housing turnover hits historic lows: Only 28 out of every 1,000 homes changed hands in 2025, marking the lowest turnover rate in 30 years as economic uncertainty and affordability challenges keep both buyers and sellers on the sidelines 1.
- Fed officials split on December rate cuts: Federal Reserve Governor Lisa Cook expressed uncertainty about December policy moves while emphasizing concerns about persistent inflation above the 2% target for over four years, with tariff effects contributing to elevated price pressures 2.
- Mortgage rates climb to 3-week highs: 30-year fixed rates reached 6.34% on November 3rd, up from last week’s low of 6.13%, though still far below summer highs near 7% as post-Fed volatility continues 3.
- Treasury Secretary declares housing recession: Scott Bessent blamed the Federal Reserve’s high interest rate policy for pushing the housing market into recession, stating “housing is effectively in a recession that is hitting low-end consumers the hardest” 4.
- Fannie Mae undergoes major restructuring: The GSE eliminated over 62 positions in DEI and ESG roles as part of a broader shift toward deregulation and efficiency under FHFA’s 2026-2030 strategic plan, signaling potential preparation for public offering 5.
- Rental market demographics shift dramatically: Today’s typical renter is now 41 years old with more households including partners and children, while 94% demand full fee transparency upfront, according to Zillow’s 2026 Consumer Housing Trends Report 6.
- San Francisco’s housing crisis could trigger California’s “builder’s remedy” as the city’s Family Zoning Plan will deliver only half the required 82,000 new units by 2031, potentially overriding local zoning restrictions and rent controls 1
- CMBS delinquencies hit record highs with the overall rate climbing to 7.46% in October 2025, driven by office sector reaching 11.76% and multifamily breaching 7% for the first time since December 2015 2
- Multifamily foreclosure activity has surged dramatically with lenders filing 11,300 foreclosure complaints since the beginning of 2025 compared to just 7,500 in all of 2020, reflecting challenges from risky purchases during the 2020-2022 period 3
- AvalonBay’s Q3 earnings disappointed with the company revising its full-year 2025 FFO outlook down by 1.2% as the government shutdown particularly affected the D.C. region and softer apartment demand emerged from reduced job growth 4
- Brookfield lost five DC office assets in a foreclosure auction to CMBS lenders, with only one property selling to an outside bidder for $17.9 million, highlighting continued distress in the office sector from a $223.4 million CMBS loan default 5
RESIDENTIAL REAL ESTATE MARKETS
The residential real estate market is experiencing unprecedented stagnation with housing turnover at 30-year lows. While luxury segments continue outperforming, the broader market faces significant headwinds from affordability challenges and economic uncertainty. Regional variations show stark differences, with some metros like San Francisco demonstrating resilience while others struggle with minimal activity.
HISTORIC MARKET STAGNATION GRIPS HOUSING
- Housing turnover hits 30-year low: Only 2.8% of homes (28 per 1,000) changed hands in 2025, down 38% from 2021’s pandemic-era peak of 44 per 1,000 homes 1
- Lock-in effect dominates seller behavior: Homeowners reluctant to give up sub-3% pandemic-era mortgage rates for current 6% rates, creating supply constraints 1
- Regional disparities stark: Virginia Beach leads with 35.2 homes per 1,000 sold, while New York lags at just 10.3 per 1,000, with California metros also showing exceptionally low turnover 7
LUXURY SEGMENT CONTINUES OUTPERFORMANCE
- Luxury prices hit record highs: Median luxury home prices (top 5% of metro pricing) reached $1.26 million in September 2025, up 4.8% year-over-year and the highest September level ever recorded
- Non-luxury homes lag significantly: Standard home prices rose only 1.8% to $371,583, highlighting growing market divide between luxury and mainstream segments
- Cash buyers drive luxury resilience: Affluent purchasers remain largely insulated from financing costs, continuing to drive demand despite broader economic uncertainty
REGIONAL MARKET DYNAMICS SHOW DIVERGENCE
- San Francisco leads recovery: Pending home sales jumped 17% YoY in September, with typical homes selling in 20 days—twice as fast as national average, benefiting from AI boom and tech sector strength 1
- South Florida shows mixed signals: September dollar volume surged 13% to $4.3 billion across Miami-Dade, Broward, and Palm Beach counties, though condo prices remained flat or declined due to oversaturation of branded projects 8
- Developers pivot strategies: Some find success with affordable short-term rental projects while others focus on ultra-luxury boutique properties to navigate challenging market conditions 8
RENTAL MARKET DEMOGRAPHICS UNDERGO MAJOR SHIFT
- Typical renter age rises to 41: Modern renters are older with more households including partners and children, requiring property managers to adjust inventory, messaging, and amenities accordingly 6
- Budget constraints dominate decisions: Over 90% of renters say staying within budget is essential, making transparent value propositions more important than vague positioning 6
- Digital-first search behavior: 81% of renters search on mobile, 73% use apps, and 77% apply online, making screen appeal and frictionless digital flows critical for property managers 6
- Fee transparency becomes mandatory: 94% of renters demand all fees disclosed upfront, with Zillow data showing listings advertising total monthly price see 12% increase in page views and 5.5% increase in leads 6
MORTGAGE MARKETS
Mortgage markets are experiencing increased volatility with rates climbing to 3-week highs following Fed policy uncertainty. Treasury Secretary Bessent’s declaration of a housing recession highlights growing political pressure to address affordability. Lending standards remain mixed while servicing dynamics continue evolving amid ongoing market stress.
MORTGAGE RATES CLIMB TO 3-WEEK HIGHS
- Rates surge post-Fed meeting: 30-year fixed rates reached 6.34% on November 3rd, up from last week’s low of 6.13%, marking highest levels in just over three weeks 3
- Still below summer peaks: Current rates remain far closer to long-term lows than summertime highs, with June rates just under 7% and earlier 2025 peaks at 7.25% 3
- Post-Fed volatility pattern emerges: Past two Fed announcement episodes have resulted in volatile bounces, though rates maintain proximity to yearly lows rather than highs 3
- Treasury yields drive pricing: 10-year Treasury yield movements continue serving as primary benchmark for mortgage rate direction amid ongoing market uncertainty 3
TREASURY SECRETARY DECLARES HOUSING RECESSION
- Bessent blames Fed policy: Treasury Secretary Scott Bessent stated “housing is effectively in a recession that is hitting low-end consumers the hardest because they have debts, not assets” 4
- Calls for faster rate cuts: Bessent argued that if the Fed “brings down mortgage rates, they can end this housing recession,” emphasizing impact on consumers with debt rather than assets 4
- Housing affordability becomes priority: Bessent indicates fixing housing affordability crisis will be one of his “big projects” this fall, suggesting coordinated policy efforts forthcoming 9
- Political pressure mounts on Fed: Treasury Secretary’s intervention highlights intersection of fiscal and monetary policy in addressing housing market challenges 10
LENDING STANDARDS SHOW MIXED SIGNALS
- Commercial lending demand strengthens: Fed’s October SLOOS survey revealed stronger demand for C&I loans from large and middle-market firms while maintaining tighter overall standards 11
- Residential mortgage demand improves modestly: Survey indicated slight improvements in residential mortgage demand though lending standards remain cautious 11
- FHA delinquencies remain elevated: FHA mortgage delinquency rate reached 10.90% at end of September, highlighting ongoing stress in certain market segments 12
- Bank-owned servicing continues decline: Owned servicing at banks continued to decline in 2025, reflecting ongoing industry consolidation trends 12
REGULATORY DEVELOPMENTS IN REAL ESTATE
Major regulatory shifts are underway with FHFA proposing to repeal fair lending rules while Fannie Mae undergoes significant restructuring. The CFPB faces continued uncertainty as legal challenges mount against administration efforts to dismantle the agency. These changes signal a fundamental shift toward deregulation in housing finance.
FHFA PROPOSES FAIR LENDING RULE REPEAL
- 2024 Fair Lending Rule targeted for elimination: FHFA under Trump-appointed Director William Pulte proposes repealing rule addressing barriers to sustainable housing opportunities for underserved communities 13
- Regulatory burden reduction cited: FHFA states repeal primarily intended to reduce regulatory burden on Fannie Mae, Freddie Mac, and Federal Home Loan Banks while aligning with current administration DEI rollback policies 13
- Consumer groups oppose repeal: Advocacy organizations argue repeal would exacerbate housing crisis, allow discrimination to persist, and eliminate crucial safeguards preventing market instability 13
- Equitable Housing Finance Plans at risk: Rule requires GSEs and FHLBs to create public plans expanding credit access to underserved communities, which would be eliminated under proposed repeal 13
FANNIE MAE LEADERSHIP OVERHAUL CONTINUES
- CEO departure announced: President and CEO Priscilla Almodovar departing after nearly three years leading the GSE, accompanied by three senior leadership changes and two promotions 14
- DEI and ESG positions eliminated: Over 62 positions in diversity, equity, inclusion, and environmental, social, governance roles cut as part of broader organizational restructuring 5
- Strategic plan shift toward deregulation: Changes align with FHFA’s 2026-2030 strategic plan departing from DEI initiatives toward efficiency and deregulation 5
- Public offering preparation suspected: Industry observers view changes as potential preparation for Fannie Mae public offering, representing significant operational philosophy shift 5
CFPB FACES CONTINUED UNCERTAINTY
- Union appeals agency dismantling: CFPB union attorneys filed appeal seeking full U.S. Court of Appeals review to prevent dismissal of approximately 90% of agency staff 13
- Acting Director plans closure: Russell Vought stated plans to “close down the [CFPB]…probably within the next two or three months,” though legal experts note only Congress can eliminate the agency 13
- Limited work continues: Despite uncertainty, CFPB continues reconsideration of personal financial data rights rules allowing consumers to authorize third-party access to bank data 13
- Consumer groups support data protections: Organizations backing original rule’s privacy protections and data minimization requirements for payment apps and financial services 13
LEGAL DEVELOPMENTS AND INDUSTRY DISPUTES
- NEXA expands poaching lawsuit: Complaint now includes former president Mat Grella and Platinum One Lending, alleging multi-faceted scheme of corporate sabotage and trade-secret theft 22
- Accusations range from interference to cyberpiracy: Expanded complaint highlights fierce competition and ethical challenges within mortgage industry as companies compete for talent and market share 22
ECONOMIC NEWS
Federal Reserve officials express uncertainty about December policy moves amid persistent inflation concerns and government shutdown disruptions to key economic data. Manufacturing continues contracting while labor market shows signs of cyclical weakness. Consumer spending faces mounting pressure from tariff-related costs heading into the holiday season.
FED OFFICIALS EXPRESS DECEMBER MEETING UNCERTAINTY
- Governor Cook highlights inflation persistence: Fed Governor Lisa Cook noted inflation has remained above 2% target for four and a half years and is “trending the wrong way” with tariff effects contributing to elevated pressures 2
- Government shutdown disrupts data: Key economic releases from Bureau of Labor Statistics, Census Bureau, and Bureau of Economic Analysis disrupted, forcing Fed to rely on alternative data sources 2
- Alternative data sources utilized: Fed using state unemployment insurance claims, online job postings, and private sector pricing data to assess economic conditions amid data blackout 2
- December rate cut uncertainty: Cook expressed uncertainty about December policy decisions while emphasizing need to address persistent inflationary pressures 2
MANUFACTURING SECTOR SHOWS CONTINUED WEAKNESS
- ISM Manufacturing PMI contracts again: October reading of 48.7% marks eighth consecutive month of manufacturing contraction, with key subindexes including new orders, production, and employment in contractionary territory 15
- Production Index falls sharply: Production Index dropped to 48.2%, down 2.8 percentage points from September, with only Transportation Equipment among six largest sectors reporting increased production 15
- Sector resilience varies: Primary Metals, Transportation Equipment, Plastics & Rubber Products, and Fabricated Metal Products showed production growth despite overall weakness 15
- Trade policy impacts evident: Manufacturing weakness reflects broader economic uncertainties including trade policy impacts and global supply chain disruptions 15
LABOR MARKET SHOWS SIGNS OF CYCLICAL WEAKNESS
- Part-time employment challenges emerge: San Francisco Fed research indicates potential cyclical weakness with involuntary part-time workers facing increased difficulty transitioning to full-time positions 16
- Historical trends disrupted: Departure from historical patterns suggests underlying labor market challenges despite seemingly low unemployment rates 16
- Consumer spending under pressure: Tariff-related costs could increase holiday budgets by average of $132 per person, totaling $28.6 billion in extra costs nationwide 17
- Electronics and clothing hit hardest: These categories expected to see biggest price impacts, potentially reshaping holiday spending patterns and consumer behavior 17
COMMERCIAL REAL ESTATE MARKETS (INCLUDING MULTIFAMILY)
The commercial real estate markets are showing mixed signals with regulatory challenges emerging in key markets like San Francisco, while multifamily continues to face headwinds from oversupply and declining pricing. Major transactions continue in Sun Belt markets despite broader sector challenges.
SAN FRANCISCO FACES BUILDER’S REMEDY THREAT OVER HOUSING SHORTFALL
- San Francisco’s Family Zoning Plan will deliver only half the required 82,000 new units by 2031 according to city economist Ted Egan’s report
- The shortfall could trigger California’s “builder’s remedy” which would automatically approve most development proposals and override local zoning restrictions
- California Housing Defense Fund has threatened legal action while YIMBY Action pushes state intervention
- Builder’s remedy would override height limits and rent-control protections if triggered 1
MULTIFAMILY PRICING DECLINES AMID OVERSUPPLY CONCERNS
- Multifamily was the only property type to see pricing decline in September, dropping 0.3% month-over-month and 0.8% year-over-year
- Miami’s multifamily market experiencing strain with over 23,000 new units under construction and asking rents down nearly 6% over the past year
- Equity investors pulling back as rising construction costs and declining rents make many projects unprofitable 2
MAJOR TRANSACTIONS SIGNAL CONTINUED MARKET ACTIVITY
- Millburn & Co. acquired 215-unit Echo Biltmore community in Phoenix for $71.3 million with $41.3 million Fannie Mae loan
- Metro Phoenix registered $3.7 billion in multifamily sales from 68 properties totaling 14,113 units year-to-date through October
- Average price per unit dropped from $277,376 to $267,933 despite higher total volume 3
MARKET OUTLOOK AND CREDIT CONDITIONS
- CMBS spreads for investment-grade securities at tightest levels since Great Financial Crisis
- Newly issued CMBS in 2025 averaged 20 basis points tighter across tranches compared to 2024
- Analysts caution tight spreads could mask latent fragilities that may emerge if macroeconomic uncertainty intensifies 5
COMMERCIAL FINANCING MARKETS
Commercial financing markets are experiencing stress with CMBS delinquencies reaching new highs, particularly in office and multifamily sectors. Federal Reserve rate cuts provide some relief, but government shutdown impacts and tight credit spreads present ongoing challenges.
CMBS DELINQUENCIES REACH NEW RECORD HIGHS
- U.S. CMBS delinquency rate climbed 23 basis points to 7.46% in October 2025
- Office sector hit record high at 11.76% while multifamily breached 7% threshold for first time since December 2015
- $1.1 billion increase in delinquent loan balances driving the overall increase 4
FEDERAL RESERVE IMPACTS AND GOVERNMENT SHUTDOWN CONCERNS
- Federal Reserve rate cuts providing some relief but government shutdown could impact CRE financing
- Government services administration office leases face vulnerability to shutdown-driven non-renewals
- CRE financing reliant on government guarantees may face interruptions during shutdown 5
REIT PERFORMANCE AND CREDIT RATING UPDATES
- Realty Income reported net income of $315.8 million ($0.35 per share) and AFFO of $1.08 per share
- Company invested $1.4 billion at 7.7% initial weighted average cash yield and updated 2025 guidance to $5.5 billion investment volume
- Fitch Ratings revised MKT 2020-525M Mortgage Trust outlook to stable from negative due to improved San Francisco property performance 6 7
COMMERCIAL SERVICING MARKETS
Commercial servicing markets are experiencing significant distress with major foreclosure actions and surging multifamily foreclosure activity. The debt maturity wall continues to be pushed forward, concentrating future risk.
BROOKFIELD LOSES FIVE DC OFFICE ASSETS IN FORECLOSURE
- CMBS lender group seized five suburban Maryland office properties from Brookfield during Montgomery County foreclosure auction
- Only Montrose Metro I sold to outside bidder for $17.9 million, well above lender’s $7.8 million opening bid
- Foreclosure stems from Brookfield’s default on $223.4 million CMBS loan backed by 12-property office portfolio 8
MULTIFAMILY FORECLOSURE ACTIVITY SURGES DRAMATICALLY
- Lenders filed 11,300 multifamily foreclosure complaints since beginning of 2025 compared to 7,500 in all of 2020
- Surge reflects challenges faced by inexperienced investors and syndicators who made risky purchases during 2020-2022 period
- Activity concentrated among properties purchased during peak pricing period 9
DEBT MATURITY WALL PUSHED TO 2026
- CRE’s debt maturity wall pushed from 2024 to 2026 due to widespread loan extensions
- Provides temporary relief but concentrates future distress in 2026
- Extensions masking underlying credit quality issues 4
INDUSTRY NEWS
Major real estate companies reported mixed earnings results with Zillow showing strong performance while commercial real estate faces mounting pressures. Technology innovations in blockchain-powered equity access are emerging alongside legal disputes highlighting industry competition. Market structure changes reflect ongoing challenges in multifamily and retail sectors.
MAJOR REAL ESTATE EARNINGS RELEASES
- Zillow reports strong Q3 performance: Revenue rose 16% year-over-year to $676 million, exceeding projections and outpacing broader real estate industry with adjusted EBITDA of $165 million at 24% margin 18
- Mortgage revenue surges 36%: Driven by 57% year-over-year increase in purchase loan originations, highlighting strength in Zillow’s lending operations 18
- Simon Property Group maintains strength: Q3 results show continued performance in premier shopping, dining, and entertainment properties despite challenging retail environment 19
- Realty Income provides portfolio update: “The Monthly Dividend Company” reported on extensive portfolio performance amid challenging retail conditions 20
TECHNOLOGY INNOVATION IN REAL ESTATE FINANCE
- Beeline launches blockchain equity platform: BeelineEquity allows homeowners to access home equity without traditional debt or monthly payments, using blockchain for transparency and efficiency 21
- Initial transactions successful: Platform targeting vast market of trapped residential equity with enhanced security and transparency in equity transactions 21
- Revolutionary approach to equity access: Technology promises to transform how homeowners access property wealth without traditional borrowing constraints 21
- AI transforms rental experience: Zillow AI Assist provides renters instant answers and tour scheduling, while Zillow App in ChatGPT becomes first real estate app on the platform, opening new “front door” to multifamily listings 6
AVALONBAY Q3 EARNINGS DISAPPOINT AMID SHUTDOWN IMPACT
- AvalonBay posted lower-than-projected Q3 results with NOI as biggest drag
- Company revised full-year 2025 FFO outlook down by 1.2% due to softer apartment demand
- Government shutdown particularly affected D.C. region since Q2 with market expected to remain weak until year-end
- Purchased three assets totaling 584 units for $187 million and sold six communities with 1,594 units for $585.1 million
- Repurchased $150 million of stock and reauthorized share program with $500 million additional authority 10
REALTY INCOME RAISES GUIDANCE ON STRONG PERFORMANCE
- Raised 2025 AFFO per share guidance to $4.25-$4.27 and investment volume guidance to $5.5 billion
- Achieved 103.5% rent recapture rate on re-leased properties and maintained 98.7% portfolio occupancy
- Issued $800 million in senior unsecured notes in October 6
TECHNOLOGY AND MARKET DEVELOPMENTS
- Crexi’s AI-powered Vault platform continues transforming CRE by automating document review to reduce deal time and errors
- Retail real estate investment volume rose 21.7% year-over-year in 2025 but faces pressure from rising tariffs, softening labor market, and cautious consumer spending
- New York real estate law firms experienced busy 2025 with Fried Frank leading with $3.2 billion in closed deals 4 11 12