Daily Dose of Real Estate

Daily Dose of Real Estate for November 6

Boomers Cash Out, Yields Break Out

Boomers are taking chips off the housing table, with nearly 1 in 5 now renting instead of owning. Treasury yields, meanwhile, are breaking out in the wrong direction—forming a “bull flag” that suggests rates could climb even higher. Mortgage applications slipped for the week ending October 31, 2025, as 30-year fixed rates nudged up to 6.31% from 6.30%, while jumbo loan rates saw a bigger jump.

Never a dull moment at the FHFA: the Trump administration just fired its Inspector General after she reportedly tried to share documents with federal prosecutors.

The not-so-special “K-shaped” economy rolls on—wealthy buyers keep winning bidding wars while middle- and lower-income families face shrinking choices and rising costs.

In corporate moves, Compass and Anywhere Real Estate inked a definitive all-stock merger to form the industry’s largest platform. And tech giants are bargain hunting: Apple snapped up a $365M office portfolio in Sunnyvale, while Nvidia scored an $83M Santa Clara building at 39% below its last valuation.

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

Mortgage applications declined 1.9% for the week ending October 31, with 30-year fixed rates holding steady at 6.31%, while refinance activity remained 151% higher than the same week last year 1
Home price growth continues to decelerate, with year-over-year increases slowing to just 1.2% in September 2025, marking the lowest growth rate since the 1990s 2
12 million baby boomers (18.6% of the generation) are renting their homes, with the highest concentrations in New York and Los Angeles where nearly 1 in 3 boomers rent 3
Treasury yields break through resistance levels, with the “chart of truth” signaling potential for much higher borrowing costs as fiscal deficits widen and debt monetization accelerates 4
Nearly 4 million renters could become mortgage-eligible when on-time rent payments are included in VantageScore 4.0 credit scoring, improving predictive performance by 11% 5
Trump administration fires FHFA inspector general Joe Allen, raising concerns about political interference in mortgage oversight and regulatory independence 6
CRE Investment Surges 15% – Q3 2025 commercial real estate investment reached $111.7B, marking six consecutive quarters of growth driven by office and retail sectors 1
Cap Rate Compression Intensifies – CRED iQ analysis reveals narrow 23 basis point spread between average cap rates (6.34%) and interest rates (6.57%) across $31.5B in Q3 issuances 2
CMBS Delinquencies Hit New Highs – Overall CMBS delinquency rate climbed to 7.23% in September, with office sector reaching record distress levels 3
Major Real Estate Merger Announced – Compass and Anywhere Real Estate signed definitive all-stock merger agreement, creating industry’s largest platform with combined market leadership 4

RESIDENTIAL REAL ESTATE MARKETS

The residential real estate market is experiencing a dramatic transformation with home price growth hitting multi-decade lows and inventory dynamics creating a two-tier market structure. Regional variations remain significant while overall market activity continues to be constrained by the “lock-in effect” of existing homeowners reluctant to sell.

HOME PRICE GROWTH HITS MULTI-DECADE LOWS

National home prices rose just 1.2% year-over-year in September 2025 – the slowest pace of appreciation since the 1990s, signaling a fundamental shift in market dynamics after years of rapid increases 2
Regional winners and losers emerge: Connecticut, New Jersey, Alaska, West Virginia, and Wyoming posted the highest year-over-year gains, while Washington D.C. and Florida experienced the steepest price declines 2
Housing turnover hits historic lows: Only 28 out of every 1,000 U.S. homes changed hands in the first nine months of 2025 – the lowest rate reported since the 1990s due to the “lock-in effect” of homeowners with low mortgage rates 7
20% of metro areas see price declines: The largest share of metropolitan areas experiencing annual price drops since June 2023, indicating widespread market cooling 8

EXISTING HOME SALES SHOW MODEST GAINS

September sales increased 1.5% monthly to an annual rate of 4.06 million homes, representing a 4.1% year-over-year gain despite challenging market conditions 7
Median single-family home price reached $420,700, up 2.3% from the previous year, while condominiums sold for a median of $370,000, reflecting a more modest 0.6% annual increase 7
Inventory grows but remains constrained: Available properties increased 14% year-over-year to 1.55 million homes, with properties staying on the market for an average of 33 days 7

BABY BOOMERS INCREASINGLY CHOOSE RENTING

12 million baby boomers (18.6% of the generation) rent their homes – far lower than Gen Z (48.6%), millennials (41.1%) and Gen X (26.1%), but representing a significant shift in housing preferences for older Americans 3
New York and Los Angeles lead boomer rental rates: Nearly 1 in 3 boomers (32.3%) rent in these metros, followed by Las Vegas at 26.5%, driven by high home prices and property taxes 3
Boomer rental rates declining nationally: The share fell 8.9% from 20.5% in 2018 to 18.6% in 2023, with experts attributing this to pandemic-era low mortgage rates and excess cash spurring home purchases 3
Women outnumber men among boomer renters: 55.2% of boomer renters are women, with 56.4% living alone, reflecting changing household dynamics and downsizing preferences 3

K-SHAPED RECOVERY CREATES TWO-TIER MARKET

High-earning buyers maintain advantages: Wealthy purchasers continue to make competitive offers and secure properties while middle and lower-income participants face shrinking options and rising costs 9
Northeast markets show resilience: Cities like Newark, Allentown, Albany, and Omaha posted monthly price increases of approximately 1% in September, attributed to diversified local job markets attracting high-earning professionals 8
First-time buyers struggle with affordability: This segment now represents the smallest portion of the market since tracking began, with the median age reaching 40 years old 10

MORTGAGE MARKETS

Mortgage markets are showing mixed signals with application volumes declining despite relatively stable interest rates. Refinance activity remains elevated compared to last year, while purchase applications demonstrate underlying strength in homebuying demand, particularly for government-backed loan programs. Meanwhile, breakthrough research shows millions of renters could qualify for mortgages with improved credit scoring.

APPLICATIONS DECLINE DESPITE RATE STABILITY

Weekly applications fell 1.9% for the week ending October 31, 2025, with the Market Composite Index declining on both seasonally adjusted and unadjusted bases 1
30-year fixed rates inch higher to 6.31% from 6.30% the previous week, while jumbo loan rates increased more significantly to 6.43% from 6.38% 1
Refinance activity remains elevated: Applications are 151% higher than the same week last year, indicating continued demand from borrowers seeking to capitalize on rates near their lowest levels in over a year 1
ARM share decreases to 8.7% of total applications, reflecting borrower preference for fixed-rate products in the current environment 1

PURCHASE ACTIVITY SHOWS RESILIENCE

Purchase applications declined modestly by 1% for the week but remained 26% higher than the same week one year ago, demonstrating underlying strength in homebuying demand 1
FHA purchase applications increased slightly as prospective homebuyers continue seeking loan options to manage challenging affordability conditions 1
Government-backed loans gain market share: VA share increased to 14.9% from 13.4%, and USDA share rose to 0.3% from 0.2%, indicating continued strong demand for government-backed loan programs 1
Refinance share holds steady at 57.0% of total applications, while FHA share decreased to 18.5% from 20.5% the previous week 1

BREAKTHROUGH IN RENTAL PAYMENT CREDIT SCORING

Nearly 4 million renters could become mortgage-eligible when on-time rent payments are included in VantageScore 4.0 credit scoring, potentially reaching the 620 credit score threshold required for GSE mortgages 5
Predictive performance improves by 11% when positive rental data is added to VantageScore 4.0, identifying more defaults and providing lenders with better risk assessment capabilities 5
Only 13% of renters currently benefit from positive rental reporting in their credit reports, as landlords typically only report negative information to collection agencies while positive payment history goes unreported 5
State legislation expanding rapidly: California, Colorado and New York enacted rent reporting programs in 2025, while Missouri, New Hampshire, Nevada, Maine, New Jersey, Hawaii, Georgia, Pennsylvania and Washington are evaluating similar legislation 5

REGULATORY DEVELOPMENTS IN REAL ESTATE

Significant regulatory upheaval is occurring at the FHFA with the dismissal of the inspector general raising concerns about political interference. Meanwhile, housing advocates are pushing back against proposed reductions to affordable housing goals that could impact access to GSE-backed mortgages for low-income families.

TRUMP ADMINISTRATION REMOVES FHFA INSPECTOR GENERAL

Joe Allen terminated as acting inspector general at the Federal Housing Finance Agency after attempting to share documents with federal prosecutors in Virginia, raising alarm about political interference in mortgage oversight 6
FHFA under Bill Pulte takes combative stance: The agency has launched criminal referrals against several of the president’s critics and dismissed dozens of Fannie Mae staff as part of internal restructuring 6
Inspector general position now vacant: Creates potential operational vulnerabilities and raises concerns about unchecked misconduct within the agency overseeing the $13 trillion mortgage market 6
“DEI is DEAD at Fannie Mae!” proclaimed by director Pulte on social media following the layoffs of ethics officials 6

COALITION OPPOSES FHFA’S AFFORDABLE HOUSING GOALS REDUCTION

28 organizations submit opposition letter to FHFA expressing severe concerns about proposed changes to the 2026-2028 Enterprise Housing Goals that could impact up to 177,000 families 11
Proposed changes would lower income targets: FHFA seeks to reduce low-income and very-low income home purchase goals, potentially limiting GSE-backed mortgage access for vulnerable populations 11
Subgoal consolidation raises concerns: FHFA wants to collapse the separate “Low-Income Census Tracts” and “Minority Census Tracts” subgoals into one, which could reduce mortgage access in communities of color 11
Critics cite Congressional mandate: The Affordable Housing Goals were established by Congress in the 1992 Safety and Soundness Act to require GSEs to “lead the industry in making mortgage credit available” 11

FREDDIE MAC ANNOUNCES 2026 FUNDING CALENDAR

2026 funding calendar posted with optional announcement dates for Reference Notes securities and announcement dates for Reference Bills securities 12
Reference Bills auctions weekly on Mondays: Optional auctions each week at 9:45 a.m. Eastern time, with issuances varying based on funding needs and market demands 12
$4.9 million in non-performing loans sold: 25 deeply delinquent residential first lien loans sold to Revolve Capital LLC through the Extended Timeline Pool Offering (EXPO) program 13

ECONOMIC NEWS

The Federal Reserve maintains a cautious stance on further rate cuts despite cutting rates by 0.25% in October. Economic data shows resilience with strong GDP growth, but concerns persist about inflation remaining above target and potential labor market deterioration despite currently robust employment conditions. Meanwhile, Treasury yields are breaking through key resistance levels, signaling potential turbulence ahead.

FEDERAL RESERVE MAINTAINS CAUTIOUS STANCE

Fed cuts rates by 0.25% to 3.75%-4.0% range at October meeting, marking the second rate reduction of 2025, but Chairman Powell suggests December cut “not a foregone conclusion” 7
Inflation remains stubbornly high at 3.0% year-over-year according to latest CPI data, well above the Fed’s 2% target and complicating monetary policy decisions 7
GDP growth robust at 3.9% annualized rate in Q3 2025 according to Atlanta Fed’s GDPNow model, making inflation reduction efforts more challenging 7
Holiday spending forecast up 3.5% in dollar terms over last year, keeping pace with inflation despite lower consumer confidence levels 7

TREASURY YIELDS BREAK THROUGH RESISTANCE LEVELS

“Chart of truth” signals potential turbulence: Long-term 10-year Treasury yields have broken through decades-old resistance levels, with technical analysis suggesting bond yields could head much higher 4
Fiscal deficits driving yield increases: Federal deficit of $2.1 trillion in 2025 compared to pre-pandemic average of $135 billion annually, with post-pandemic average deficit increases nearly double historical norms 4
Debt monetization concerns escalate: Interest payments on federal debt exceed $1 trillion in 2025 – roughly equivalent to defense spending – as the Fed continues printing money to buy Treasury assets 4
Mortgage rates face upward pressure: Rising long-term bond yields create inflationary pressure that translates directly into higher borrowing costs for consumers, as mortgage rates benchmark to Treasury yields 4

LABOR MARKET SHOWS MIXED SIGNALS

Unemployment at 4.3% with strong fundamentals: Wage gains outpacing inflation and over 7.2 million job openings as of August, but economists express concern about potential rapid deterioration 7
Private payrolls rose 42,000 in October according to ADP report, more than expected and countering labor market fears, though government shutdown has delayed official employment data 14
Fed officials prioritize employment concerns: Some members suggest labor market has overtaken inflation as the central bank’s primary focus, influencing recent rate reduction decisions 14
Corporate layoff announcements increase: Several large corporations announced upcoming layoffs in October, heightening fears about labor market softening despite current strength 7

CONSUMER DEBT REACHES NEW HIGHS

Total consumer debt surpasses $18 trillion according to Equifax data, with mortgage debt accounting for $13.3 trillion and non-mortgage debt reaching $4.7 trillion in September 2025 15
Delinquency rates stabilize despite record debt levels, though concerns persist about household financial health as interest rates remain elevated 15
Services sector continues expansion: ISM Services PMI reached 52.4% in October, with business activity returning to expansion at 54.3%, up 4.4 percentage points from September 16

COMMERCIAL REAL ESTATE MARKETS (INCLUDING MULTIFAMILY)

Commercial real estate investment activity surged 15% in Q3 2025 to $111.7 billion, driven by remarkable recoveries in office and retail sectors. The multifamily market showed signs of stabilization despite oversupply concerns, while industrial properties maintained steady momentum with selective investor interest.

OFFICE MARKET RECOVERY ACCELERATES

Manhattan leads office revival – $7.1B in Q3 trades, nearly double Q3 2024 volume, with overall office investment up 38% year-over-year 1
Tech giants capitalize on discounts – Apple acquired $365M office portfolio in Sunnyvale; Nvidia bought $83M Santa Clara building at 39% below previous valuations 5
Pricing gains emerge – Office values increased over 7% annually as flight-to-quality trend accelerates in prime markets 1
Top performing metros – Dallas, San Jose, Los Angeles, and Houston joined Manhattan in driving office investment growth 1

RETAIL SECTOR POSTS STRONGEST QUARTER

Investment volume surges 24% – Retail reached $16.3B in Q3, with shopping centers accounting for nearly half of all activity 1
Open-air retail attracts major buyers – Nuveen, Tanger, InvenTrust Properties and MCB Real Estate invested nearly $500M in strip centers with restaurants 5
Pricing leads all sectors – Retail values increased 5.5%, the highest among all property types 1
Geographic concentration – Los Angeles topped activity, followed by Manhattan and Dallas, with Seattle and Portland hitting record levels 1

MULTIFAMILY MARKET STABILIZATION BEGINS

National vacancy rises modestly – Vacancy increased to 4.6% in Q3 but remains 100 basis points below year-ago levels 6
Investment volume grows 13% – Multifamily sales reached $43.8B, remaining the most heavily traded property type 1
Regional performance varies – Chicago, Cleveland, and San Francisco saw rents rise over 5%, while Austin, Dallas-Fort Worth, and Phoenix face oversupply pressures 6
New construction commands premiums – Institutional investors and REITs increasingly dominate purchases of newly built apartments even in oversupplied markets 7

INDUSTRIAL ASSETS MAINTAIN STEADY GROWTH

Investment increases 8% – Industrial properties attracted $26.5B, with individual asset sales up 25% while portfolio deals lagged 1
Secondary markets shine – Nashville and Fort Lauderdale hit new transaction highs alongside Dallas market leadership 1
Emerging challenges – Rising vacancies and tax policy shifts begin to reshape manufacturing investment patterns 1

COMMERCIAL FINANCING MARKETS

Commercial real estate financing markets face increasing pressure as cap rates converge dangerously close to interest rates, creating income coverage concerns. Despite challenges, CMBS issuance remains robust while core real estate funds show mixed performance with continued investor outflows.

CAP RATE COMPRESSION REACHES CRITICAL LEVELS

Narrow spread signals stress – Average cap rates (6.34%) vs. interest rates (6.57%) show only 23 basis point spread across $31.5B in Q3 issuances 2
Sector-specific variations – Hospitality maintains widest spread at 106 bps; Industrial shows tightest at 35 bps; Self Storage offers lowest rates 2
Income coverage concerns – Narrow margins leave little room for rate volatility, particularly in sectors with soft fundamentals 2

CMBS ISSUANCE MAINTAINS STRENGTH

Q3 volume reaches $30.7B – Private-label CMBS transactions remained robust despite market headwinds 3
Year-to-date at $92.48B – Market on track to exceed $123B annually, highest since 2007 3
Quarterly decline signals caution – Q3 activity dropped 9% in deals, 18% in balances, and 50% in loans compared to Q2 3

CORE REAL ESTATE FUND PERFORMANCE SOFTENS

Q3 returns slow to 0.73% – NFI-ODCE index shows weaker appreciation trends despite positive performance 8
Annual returns strengthen – 12-month gross total return of 4.04% marks strongest performance since Q4 2022 8
Investor outflows continue – Quarterly net cash flows of negative $1.9B despite 97.2% year-over-year jump in contributions 8

COMMERCIAL SERVICING MARKETS

Commercial mortgage servicing markets face mounting distress with CMBS delinquencies climbing to 7.23% in September. Office sector distress continues to drive special servicing volumes higher, while workout activity increases across multiple property types.

CMBS DELINQUENCIES CLIMB TO NEW HIGHS

Overall rate reaches 7.23% – September CMBS delinquency rate represents continued upward trend in market distress 3
Office sector drives distress – Office delinquency rates hit record highs as borrowers face limited refinancing options 3
Special servicing volumes increase – Balance of loans in special servicing grew further during Q3 as workout activity intensifies 3

HIGH-PROFILE DISTRESSED TRANSACTIONS

BGO surrenders Midtown tower – 26-story office building at 757 Third Avenue transferred to New York Life via deed-in-lieu of foreclosure 7
Brookfield loses D.C. portfolio – Five suburban office buildings taken over by CMBS lenders at auction 7
Office Properties Income Trust bankruptcy – Chapter 11 filing follows collapsing cash flow across 17M square foot portfolio 7

INDUSTRY NEWS

Major real estate companies are reporting mixed earnings results while pursuing strategic mergers and acquisitions. The sector continues to see significant capital deployment in affordable housing initiatives and commercial real estate transactions despite broader market challenges.

LANDMARK MERGER CREATES INDUSTRY GIANT

Compass-Anywhere all-stock deal – Definitive merger agreement combines technology platform with extensive franchise network including Coldwell Banker, Century 21, and Sotheby’s 4
Expected closing H2 2026 – Transaction creates premier real estate platform with combined market leadership 4
$300M+ cost synergies – Half expected in first year after closing, with Christie’s International serving as integration blueprint 9

RECORD Q3 EARNINGS PERFORMANCE

Compass delivers record results – Revenue grew 23.6% YoY to $1.85B, with Q3 Adjusted EBITDA of $93.6M (up 80% from $52M in Q3 2024) 4
Free cash flow milestone – Generated $73.6M in Q3, marking 7th consecutive quarter of positive free cash flow 4
Agent growth accelerates – Record 851 principal agents joined organically in Q3, representing all-time high 4
Anywhere Real Estate strength – Q3 revenue of $1.6B (up $91M YoY) with luxury brands outperforming market by 12% YoY 10

COMMERCIAL REAL ESTATE ACTIVITY

Pacific Transwest acquires Tucson community for $32 million, while Stockdale Capital completed all-cash acquisition of Phoenix-area multifamily asset, demonstrating continued investor appetite for Southwestern markets 20
Eastern and Kane secure $97 million financing for New Hampshire development, indicating strong capital availability for new construction projects despite market challenges 20
NexPoint Real Estate Finance launches $200 million offering: 8.00% Series C Cumulative Redeemable Preferred Stock offering reflects continued capital raising activity in the REIT sector 21

AFFORDABLE HOUSING INITIATIVES

Blackstone expands affordable housing preservation program: Reflects growing institutional focus on addressing housing affordability challenges as Florida faces potential loss of 6,512 income-restricted units within three years 22
CIM Group and Bryant Group Ventures launch $1 billion fund: Demonstrates significant private capital commitment to addressing the nation’s affordable housing crisis 22

MAJOR MULTIFAMILY TRANSACTIONS

Pacific Transwest Tucson acquisition – $32M purchase adds to Arizona’s active investment market 11
Eastern Kane secures $97M – New Hampshire development financing demonstrates continued construction capital availability 12
Stockdale Capital Phoenix deal – All-cash acquisition capitalizes on opportunities in oversupplied metros 13

REIT PERFORMANCE HIGHLIGHTS

Boardwalk REIT maintains stability – Q3 stabilized cap rate of 5.12% steady from Q2, with 97.67% occupancy and average monthly rent increasing to $1,547 from $1,472 14
Strategic lease renewal approach – Vertically-integrated operating platform helps maintain performance in balanced market conditions