Daily Dose of Real Estate

Daily Dose of Real Estate for November 5

America’s housing market is moving slow – velocity and volume of sales are generally weak. Only 28 of every 1,000 homes are changing hands, and first-time buyers are now officially “over the hill” at 40. Meanwhile, Compass and Anywhere are planning a mega-merger as foreclosure auctions jump 31% (which experts swear is “good news” for 2026). Mortgage rates are still stubbornly above 6%, Virginia just elected its first female governor, and more young adults are back in their childhood bedrooms than at open houses. Office buildings are in full meltdown mode—CMBS delinquencies are spiking and Brookfield’s getting foreclosed faster than you can say “hybrid work.” Luxury homes, though, are still living their best lives at a record $1.26 million. And multifamily? The former teacher’s pet of real estate finally landed in detention thanks to oversupply. Let’s get you caught up and out the door in 3 minutes. Tim

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Table of Contents

KEY TAKEAWAYS

Historic Housing Market Slowdown: Housing turnover hits 30-year low with only 28 out of every 1,000 homes changing hands in 2025, while first-time homebuyer share falls to record low of 21% with median age rising to 40 1 2
Federal Reserve Policy Uncertainty: Fed Governor Cook warns of elevated risks to both employment and inflation, with government shutdown disrupting key economic data releases as policymakers navigate December rate decision 3
Mortgage Market Mixed Signals: Median purchase rate holds steady at 6.125% while purchase rate lock volume remains down 25% from 2019 levels, though mortgage originations rebound with Gen Z gaining ground despite rising delinquency rates to 1.36% 4 5
Real Estate Industry Consolidation: Compass reports record Q3 results with 80% increase in Adjusted EBITDA to $93.6 million while targeting Anywhere Real Estate integration for 2026, as Anywhere achieves $100M cost savings target 6 7
Election Results Shape Housing Policy: Virginia elects first female governor with Democrat Abigail Spanberger leading, while NYC’s mayoral race between democratic socialist Zohran Mamdani and former Gov. Andrew Cuomo could signal Democratic Party’s future direction 8
Office Sector Hits Crisis Point: CMBS delinquency rates for office properties reached an all-time high of 11.76% in October, with major foreclosures like Brookfield’s five-property Maryland portfolio loss signaling deepening distress in suburban office markets. 1
Multifamily Cracks Emerge: For the first time in nearly a decade, multifamily CMBS delinquencies breached 7% (hitting 7.12%), while oversupply concerns are dampening investment momentum even in previously resilient markets like Miami. 1
Refinancing Risk Intensifies: The spread between cap rates (6.34%) and interest rates (6.57%) narrowed to just 23 basis points in Q3, creating significant refinancing pressure, though the Fed’s October 25 basis point cut offers some relief. 2
Industry Consolidation Accelerates: The Compass-Anywhere merger moved forward with raised synergy targets exceeding $300 million, while both companies reported strong Q3 results and emphasized AI integration as the next competitive battleground. 3

RESIDENTIAL REAL ESTATE MARKETS

The residential real estate sector faces unprecedented stagnation with housing turnover at 30-year lows, while demographic shifts reshape buyer profiles and regional variations create pockets of opportunity. Despite broader market challenges, luxury segments demonstrate resilience and foreclosure activity suggests potential market normalization ahead.

HISTORIC MARKET STAGNATION GRIPS HOUSING SECTOR

Turnover crisis: Only 28 out of every 1,000 homes changed hands in first nine months of 2025, representing 38% decline from pandemic peak of 4.4% in 2021 2
First-time buyer demographics: Share falls to historic low of 21% with median age reaching 40 years old, up from late twenties/early thirties in previous decades 1
Price growth deceleration: Year-over-year increases slow to 1.2% in September 2025, with monthly decline of 0.2% despite regional variations 9
Regional winners and losers: Connecticut, New Jersey, Alaska, West Virginia, Wyoming show highest growth while Washington D.C. and Florida experience price declines 9

LUXURY MARKET DEFIES BROADER TRENDS

Record luxury prices: Median luxury home price reaches $1.26 million in September 2025, up 4.8% year-over-year and highest level ever recorded for the month 10
Non-luxury comparison: Non-luxury homes rise modest 1.8% year-over-year to median price of $371,583, highlighting stark performance gap 10
Cash buyer dominance: Luxury segment strength attributed to cash buyers who dominate high-end transactions, insulating from mortgage rate volatility 10

FORECLOSURE ACTIVITY SIGNALS MARKET NORMALIZATION

Auction volume surge: Foreclosure auctions increase 31% year-over-year, with 33,000 properties scheduled for auction in October 2025 11
Market health indicator: Rising foreclosure activity viewed as positive sign for market normalization after years of artificially suppressed distressed inventory 11
Regional concentration: Foreclosure activity concentrated in specific markets where economic stress and overvaluation converge, providing targeted opportunities 11
2026 outlook: Industry experts predict continued normalization of foreclosure activity will help balance supply-demand dynamics and improve market functioning 11

YOUNG ADULT HOUSING CHALLENGES INTENSIFY

Unemployment impact: Rising unemployment rates disproportionately affect young adults aged 18-24, worsening already challenging housing affordability conditions 12
Economic vulnerability: Young adults face higher unemployment rates during economic downturns, creating cascading effects on housing stability and homeownership prospects 12
Housing formation delays: Economic uncertainty forces young adults to delay household formation, extending periods of living with parents or in shared housing arrangements 12
Long-term implications: Current economic pressures on young adults could have lasting effects on homeownership rates and housing demand patterns through the decade 12

MORTGAGE MARKETS

The mortgage sector navigates persistent rate challenges while experiencing demographic shifts and credit quality concerns. Despite elevated rates, certain segments show resilience with Generation Z gaining market share and refinancing activity providing some support.

INTEREST RATE ENVIRONMENT REMAINS CHALLENGING

Rate stability: Median purchase rate holds steady at 6.125% in week 44 of 2025, with 30-year rate reaching 6.34% on November 3rd 4
Volume depression: Purchase rate lock volume down 25% from 2019 levels despite moderate 9% year-over-year increase suggesting some stabilization 4
Fed disconnect: Mortgage rates fail to decline dramatically despite Federal Reserve rate cuts due to broader economic uncertainties and bond market dynamics 4

GENERATIONAL SHIFTS IN MORTGAGE ORIGINATIONS

Gen Z emergence: Generation Z borrowers gain significant ground in mortgage market, reflecting entry into prime homebuying years and adaptation to current conditions 5
Loan amount increases: Average loan amount reaches $371,467 in Q2 2025, up from $347,692 year earlier, reflecting higher home prices and stronger borrower profiles 5
Total balance growth: Mortgage balances climb to $12.7 trillion, representing $400 billion increase over same period, showing continued market expansion 5

CREDIT QUALITY AND RISK MANAGEMENT CONCERNS

Delinquency rate rise: Consumer-level delinquency rate (60+ days past due) rises to 1.36% from 1.24% in Q3 2024, signaling increased borrower stress 5
FHA concentration: FHA loans continue accounting for largest share of delinquencies, maintaining historical pattern of higher risk profile 5
VA loan concerns: Sharp 35% year-over-year increase in VA loan delinquencies suggests stress even in traditionally stable borrower segments 5
Down payment trends: Homebuyers increase down payments with median of 19% overall, 10% for first-time buyers, 23% for repeat buyers as strategy adaptation 13

REGULATORY DEVELOPMENTS IN REAL ESTATE

Federal agencies face significant disruptions from government shutdown while implementing major policy shifts. Banking sector lending standards tighten amid changing demand patterns, and housing agencies undergo restructuring with new strategic directions.

FEDERAL RESERVE POLICY OUTLOOK AND ECONOMIC ASSESSMENT

Data disruption challenges: Government shutdown prevents production of regularly used economic indicators including monthly employment data and PCE price index 3
Alternative monitoring: Fed continues monitoring through state unemployment claims, online job board data, and private-sector pricing information despite data limitations 3
Inflation persistence: Both headline and core PCE remain elevated at 2.8% in September, significantly above Fed’s 2% target with tariff-affected goods contributing 3
Tariff pass-through warning: Cook warns tariff pass-through to consumer prices not yet complete, with firms running down lower-priced inventories before implementing increases 3

BANKING SECTOR LENDING STANDARDS AND DEMAND TRENDS

Residential mortgage demand: Banks report basically unchanged lending standards but stronger demand on balance for residential mortgages and home equity lines 14
GSE-eligible strength: Moderate net shares report stronger demand for government-sponsored enterprise-eligible, government, and qualified mortgage non-jumbo, non-GSE-eligible residential mortgages 14
Commercial lending tightening: Modest net shares report tighter lending standards for C&I loans to firms of all sizes due to less favorable economic outlook 14
Risk tolerance reduction: Banks cite increased concerns about legislative changes, supervisory actions, worsening industry problems, and reduced risk tolerance for tightening 14

HOUSING AGENCY RESTRUCTURING AND POLICY SHIFTS

FHFA strategic pivot: Agency seeks public input on 2026-2030 strategic plan signaling shift away from DEI initiatives toward deregulation and efficiency 15
Fannie Mae layoffs: Over 62 employees in DEI and ESG roles laid off as agency prepares for potential public offering under new regulatory philosophy 15
Inspector General removal: Trump administration ousts FHFA inspector general, raising concerns about political interference in mortgage oversight and regulatory independence 16
Criminal referrals increase: Under director Bill Pulte, FHFA adopts combative stance launching criminal referrals against several administration critics 16

INDUSTRY STANDARDS AND TECHNOLOGY INITIATIVES

MISMO documentation standards: Organization seeks public comment on SMART Doc V3 Power of Attorney specification to standardize and digitize mortgage documentation processes 17
Transaction streamlining: Initiative represents ongoing efforts to reduce processing times and improve efficiency in mortgage documentation and closing processes 17

ECONOMIC NEWS

Economic indicators reveal persistent inflation pressures and manufacturing weakness while government shutdown disrupts critical data releases. Labor market shows signs of cyclical weakness, and Social Security adjustments provide modest consumer relief amid broader economic uncertainties.

INFLATION PRESSURES AND GOVERNMENT SHUTDOWN IMPACT

Above-target inflation: Treasury Department reports inflation continues “above target” at 2.8% in September 2025, significantly above Fed’s 2% goal
Tariff price effects: Inflation propped up by tariff-affected goods prices with Treasury officials noting pass-through effects not yet complete
Data release disruption: Two-month government shutdown severely disrupts critical economic data including GDP figures and employment reports
Labor market headwinds: Declining government employment may create fourth quarter headwinds with delayed October jobs report potentially showing contraction

MANUFACTURING SECTOR CONTINUES CONTRACTION

PMI weakness: Institute for Supply Management Manufacturing PMI registers 48.7% in October 2025, marking eighth consecutive month of contraction 18
Production decline: Production Index contracts to 48.2%, down 2.8 percentage points from September’s 51% reading, indicating significant output slowdown 18
Broad-based weakness: Twelve sectors report decreased production in October with only Transportation Equipment among six largest sectors showing increased production 18
Multiple headwinds: Persistent weakness reflects tariff uncertainties, supply chain disruptions, and weakening global demand affecting investment and employment 18

LABOR MARKET SHOWING SIGNS OF CYCLICAL WEAKNESS

Part-time employment stress: San Francisco Fed analysis indicates potential cyclical weakness with involuntary part-time workers facing increasing transition challenges 19
Historical pattern departure: Fewer workers successfully moving from part-time to full-time employment, representing departure from historical patterns 19
Underlying vulnerabilities: Trend suggests broader economic vulnerabilities despite seemingly low unemployment rates, signaling potential labor market stress 19

SOCIAL SECURITY AND CONSUMER IMPACT

COLA adjustment: Social Security Administration announces 2.8% cost-of-living adjustment for 2026, providing modest relief but potentially insufficient for rising costs 20
Healthcare cost concerns: COLA increase may be overshadowed by rising Medicare premiums and other healthcare costs affecting beneficiary purchasing power 20
Calculation challenges: COLA determination complicated by government shutdown disrupting Bureau of Labor Statistics operations, requiring partial resumption for September inflation data 20

COMMERCIAL REAL ESTATE MARKETS (INCLUDING MULTIFAMILY)

Commercial markets showed mixed signals with office properties hitting distress records while multifamily faced oversupply concerns. Investment activity rebounded in Q3 despite rising delinquency rates.

OFFICE SECTOR DISTRESS PEAKS

Record CMBS Delinquency: Office sector hit all-time high delinquency of 11.76% in October, jumping 63 basis points from September. 1
Brookfield Foreclosure: Five suburban Maryland office properties stripped from Brookfield in foreclosure auction. Only one building sold to outside bidder for $17.9 million. 2

MULTIFAMILY MARKET SIGNALS

Phoenix Activity: Millburn & Co. acquired 215-unit Echo Biltmore for $71.3 million. Metro Phoenix recorded $3.7 billion in sales YTD through October. 3
Delinquency Spike: Multifamily CMBS delinquency rose to 7.12%, first time above 7% in nearly a decade. 1
Miami Caution: Short-term oversupply introducing caution in previously resilient Miami multifamily market. 4

COMMERCIAL FINANCING MARKETS

Financing markets showed pressure with tight cap rate spreads creating refinancing challenges, though Fed rate cuts and Q3 investment rebounds provided relief.

RATE PRESSURES AND RELIEF

Narrow Spreads: Just 23 basis points between average cap rates (6.34%) and interest rates (6.57%) in Q3 2025 issuances, creating refinancing risk. 5
Fed Rate Cut: 25 basis points cut on October 29 offering relief for developers and potentially stimulating Q4 activity. 6

INVESTMENT REBOUND

Q3 Surge: CRE investment rose sharply, with office volume up 38% year-over-year. Manhattan led with $7.1 billion in trades. 7
Core Funds: Returns slowed to 0.73% in Q3 with negative $1.9 billion net cash flows, though contributions jumped 97.2%. 8

COMMERCIAL SERVICING MARKETS

Servicing markets faced mounting pressure with CMBS delinquencies climbing and foreclosure activity increasing. The debt maturity wall pushed to 2026 through loan extensions.

RISING DELINQUENCIES

Overall CMBS: Delinquency rate rose to 7.46% in October, driven by $1.1 billion increase in delinquent balances totaling $44.6 billion. 1

DISTRESSED ASSETS

Foreclosure Pressure: Brookfield portfolio seizure highlights vulnerability of legacy suburban office assets with CMBS financing in high-interest, hybrid-work environment. 2
Maturity Wall: Debt maturity wall pushed from 2024 to 2026 through widespread extensions, creating future pressure points. 1

INDUSTRY NEWS

Major real estate consolidation accelerates with record-breaking quarterly results, while commercial real estate investment surges despite credit market stress. Technology innovations and personnel changes reflect industry adaptation to evolving market conditions.

MAJOR REAL ESTATE CONSOLIDATION MOVES FORWARD

Compass-Anywhere Merger: Definitive agreement signed for all-stock transaction closing H2 2026. Cost synergies raised to “more than $300 million.” 9
Compass Record: Record revenue of $1.85 billion (up 23.6% YoY) and adjusted EBITDA of $93.6 million (up 80%). Recruited record 851 principal agents. 10
Anywhere Real Estate performance: Reports revenue of $1.6 billion, increase of $91 million year-over-year, while achieving progress toward $100 million cost savings target 7
Cost savings acceleration: Realizes $28 million in Q3 cost savings alone with additional temporary controls generating $6 million, demonstrating operational efficiency 7
Agent growth momentum: Compass adds record 851 principal agents organically during quarter while maintaining 97.3% quarterly retention rate 6
Merger timeline: Proposed Compass-Anywhere merger expected to close second half 2026, with integration targeted for late 2026 creating formidable platform 21

COMMERCIAL REAL ESTATE INVESTMENT SURGE

Q3 investment boom: Total CRE investment reaches $111.7 billion, marking 15% year-over-year increase demonstrating renewed confidence across property sectors 22
Sector performance: Office and retail properties show particular strength while multifamily and industrial assets maintain market dominance, hospitality faces ongoing challenges 22
CMBS stress continues: Delinquency rates climb again in October with office sector hitting new highs, creating divergence between investment activity and credit performance 23

TECHNOLOGY AND INNOVATION DEVELOPMENTS

AI document review: Crexi introduces AI-powered document review capabilities through Crexi Vault, designed to automate deal processes and reduce transaction timelines 23
Digital transformation: Technological advancement represents ongoing digitization of commercial real estate operations, potentially transforming deal structuring and execution 23

ELECTION RESULTS: NY, VA, AND NJ

Historic election results reshape political landscape with Virginia electing first female governor, competitive races in New Jersey and New York City signaling party direction, and California’s redistricting measure testing partisan strategies.

VIRGINIA MAKES HISTORY WITH FIRST FEMALE GOVERNOR

Historic victory: Democrat Abigail Spanberger defeats Republican Lieutenant Governor Winsome Earle-Sears to become Virginia’s first female governor 8
Federal workforce impact: Campaign focused heavily on affordability issues and criticism of federal cuts affecting Virginia’s large federal workforce during two-month shutdown 8
Economic messaging: Exit polls show most Virginia voters report federal government cuts affected family finances, with one in five significantly affected 8
Campaign contrasts: Spanberger successfully links economic impacts to Trump policies while Earle-Sears focuses on immigration and transgender issues 8

NEW JERSEY GOVERNOR’S RACE REMAINS COMPETITIVE

Tight contest: Democratic Representative Mikie Sherrill faces Republican Jack Ciattarelli in highly competitive race focused on cost of living concerns 8
Affordability focus: Ciattarelli campaigns on “Make New Jersey Affordable Again” platform while Sherrill promotes “Affordability Agenda” targeting property taxes and utilities 8
Key voter concerns: Exit polling shows taxes and economy top issues with most voters reporting property taxes and electricity costs as significant community problems 8
Trump factor test: Race tests whether Trump’s unexpected 2024 gains in traditionally blue state translate to Republican success at state level 8

NYC MAYORAL RACE SIGNALS DEMOCRATIC PARTY DIRECTION

Progressive vs. establishment: Democratic nominee Zohran Mamdani faces independent candidate Andrew Cuomo in race viewed as indicator of Democratic Party’s future direction heading into midterms 8
Policy contrasts: 34-year-old democratic socialist Mamdani campaigns on progressive policies including rent freezes and free public transportation, while Cuomo positions as experienced moderate alternative 8
Record early voting: Over 735,000 New Yorkers cast ballots before Election Day, with exit polling showing three-quarters consider housing costs major problem 8
Trump endorsement controversy: Cuomo receives controversial endorsement from President Trump, adding complexity to race dynamics and Democratic Party messaging 8

CALIFORNIA’S REDISTRICTING GAMBIT

Proposition 50 significance: Measure would allow state legislators to temporarily bypass independent redistricting commission and adopt new congressional maps potentially adding five Democratic House seats 8
Gerrymandering response: Direct response to Republican-led gerrymandering efforts in states like Texas, designed to counter GOP’s narrow House majority ahead of 2026 midterms 8
Newsom campaign support: Governor Gavin Newsom actively campaigns for proposition, framing as necessary to combat Republican gerrymandering nationwide 8
Anti-Trump motivation: Exit polling indicates opposition to Trump administration primary motivating factor among Proposition 50 supporters, viewing measure as resistance to federal policies 8