Mortgage rates crept up to 6.22% this week—still near 2025 lows, but clearly not low enough to get Americans moving, with home turnover stuck at a 30-year low of just 28 sales per 1,000 homes.
Climate-conscious Floridians and Texans are staging their own “Great Migration,” fleeing flood zones faster than you can say “insurance premium.” Miami alone lost 67,000 residents—apparently tired of their annual underwater house tours.
Fed officials admit they’re flying blind during the government shutdown. Chicago Fed’s Goolsbee summed it up best: “When it’s foggy, let’s just slow down”—good advice for both monetary policy and flood-zone house hunting.
Commercial real estate’s having an identity crisis: retail’s on a sugar high with a 43% sales surge, multifamily’s steady, and offices are still stuck in their post-pandemic slump as delinquencies climb.
CRE lenders are finally feeling spry, with originations up 36%—though they’re praying the shutdown doesn’t ruin the momentum. And in NYC, the new mayor-elect’s progressive housing agenda has investors reaching for either antacids, calculators…or maybe something stronger.
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.
KEY TAKEAWAYS
- Mortgage rates tick up to 6.22% – Freddie Mac reports 30-year fixed rates averaged 6.22% this week, up from 6.17% last week but still near 2025 lows, with Fed Chair Powell signaling uncertainty about December rate cuts 1
- Climate migration accelerates from flood-prone areas – High-flood-risk counties saw 29,027 more people move out than in last year for the first time since 2019, driven by outflows from Miami (-67,418) and Houston (-31,165) 2
- Household debt reaches $18.59 trillion – New York Fed reports total household debt increased $197 billion in Q3 2025, with mortgage balances growing $137 billion to $13.07 trillion and delinquency rates stabilizing 3
- Investor activity remains steady at 10.8% – Real estate investors purchased 10.8% of homes in Q2 2025, with small investors reaching highest share since 2007 while large investor activity falls off 4
- Federal Reserve officials signal caution – Cleveland Fed President Hammack calls inflation “more pressing concern” while Chicago Fed’s Goolsbee urges caution on rate cuts amid gov shutdown data blackout 5
- Mortgage applications decline 1.9% – MBA data shows weekly mortgage applications fell despite rates remaining near yearly lows, with refinance activity still 151% higher than last year 6
- Commercial/multifamily borrowing surged 36% year-over-year in Q3 2025, with five straight quarters of growth led by office (181% increase), retail (100% increase), and hotel properties (66% increase) 1
- CRE lending demand turned positive for first time since early 2022, with Federal Reserve’s Q3 survey showing +10% demand for core commercial properties, up from -11.5% last quarter 2
- Retail CRE investment sales jumped 43% to $16.1B in Q3, marking the sector’s strongest quarter since 2022 as Sunbelt markets drive demand 3
- CMBS delinquency rates climbed again in October with office properties hitting new highs, continuing the sector’s distressed trajectory 4
- NYC Mayor-elect Zohran Mamdani’s progressive agenda creates uncertainty for CRE investors with planned rent freezes and tax hikes, though experts expect pragmatic governance 4
- Industrial market softens as vacancies rise and tax reforms reshape manufacturing, with construction remaining nearly 3x 2022 levels 5
RESIDENTIAL REAL ESTATE MARKETS
The residential market is experiencing a fundamental rebalancing as inventory surges to multi-year highs while climate migration patterns reshape regional demand. Housing turnover has hit 30-year lows, creating unprecedented market stagnation despite improved affordability conditions.
HOUSING INVENTORY SURGES WHILE PRICES FLATTEN
- Active inventory climbed to highest level since 2019, providing buyers with substantially more choices while putting downward pressure on home prices 7
- Inventory grew 14% year-over-year, with the amount of active inventory growing faster than new listings, indicating homes are sitting on the market longer 7
- Median time on market increased to 63 days, returning to near pre-pandemic levels as buyer demand moderates relative to supply 7
- Regional performance varies dramatically – Northeast continues defying national slowdown with high single-digit price growth, while Washington D.C. and Florida experienced the most significant price declines 8
CLIMATE MIGRATION DRIVES HISTORIC OUTFLOWS FROM FLOOD-PRONE AREAS
- High-flood-risk counties saw 29,027 more people move out than in last year, marking the first net outflow since 2019 as climate concerns drive relocation decisions 2
- Miami-Dade County leads exodus with 67,418 net outflow, the largest among 310 high-flood-risk counties analyzed, where over one-third of homes face high flood risk 2
- Harris County, Texas saw 31,165 net outflow, the second-largest acceleration among high-flood-risk counties, with nearly 1 in 3 homes facing high flood risk plus extreme heat exposure 2
- Insurance costs driving departures – Miami agent reports homeowner’s insurance rising to $6,700 annually from under $2,000 two years ago, with flood insurance climbing to $1,250 from $400 2
- “Boomerang” migrants returning home – Many who moved to flood-prone areas during pandemic are now leaving due to high costs, climate risk, and political factors 2
- Low-flood-risk counties gained 35,941 residents, the largest gain since 2019, with Montgomery County, TX (north of Houston) seeing 23,919 net inflow as residents flee flood zones 2
HOUSING TURNOVER HITS 30-YEAR LOW
- Just 28 out of every 1,000 U.S. homes changed hands in the first nine months of 2025, representing the lowest housing turnover rate reported since the 1990s 9
- First-time homebuyer participation has fallen to new lows, creating additional headwinds for market activity as affordability challenges price out entry-level buyers 10
- Early October sales down 2.8% year-over-year, a sharp reversal from September’s 7.4% year-over-year increase despite lower mortgage rates 11
- Existing homeowners remain reluctant to sell due to their locked-in low mortgage rates from previous years, contributing to market stagnation 9
MORTGAGE MARKETS
Mortgage rates edged higher this week despite remaining near 2025 lows, while household debt reached record levels and application activity softened amid ongoing market uncertainty. The New York Fed reports steady debt growth with stabilizing delinquency rates.
RATES EDGE HIGHER DESPITE FED ACCOMMODATION
- 30-year fixed-rate mortgages climbed to 6.22% this week, up from last week’s 6.17% but remaining near 2025 lows and significantly below year-ago levels of 6.79% 1
- 15-year fixed-rate mortgage averaged 5.50%, up from 5.41% the previous week, reflecting broader market uncertainty following Fed policy signals 1
- Median-priced home buyers could save thousands annually compared to earlier this year, showing that affordability is slowly improving despite weekly rate volatility 1
HOUSEHOLD DEBT REACHES RECORD $18.59 TRILLION
- Total household debt increased $197 billion in Q3 2025 to $18.59 trillion, with mortgage balances growing $137 billion to $13.07 trillion, according to New York Fed data 3
- Mortgage originations increased to $512 billion newly originated in Q3 2025, showing uptick in lending activity despite elevated rates 3
- Credit card balances rose $24 billion to $1.23 trillion, while auto loan balances held steady at $1.66 trillion and student loans increased $15 billion to $1.65 trillion 3
- Delinquency rates stabilizing at 4.5% of outstanding debt in some stage of delinquency, with mortgage delinquencies remaining relatively low due to housing market resilience 3
- Student loan delinquencies elevated at 9.4% of aggregate debt reported as 90+ days delinquent, as missed federal payments from 2020-2024 now appear in credit reports 3
MORTGAGE APPLICATION ACTIVITY SOFTENS
- Mortgage applications decreased 1.9% from one week earlier, with the Market Composite Index falling 1.9% on a seasonally adjusted basis 6
- Refinance applications declined 3% from the previous week but remained 151% higher than the same week one year ago, demonstrating continued strong demand from borrowers seeking lower payments 6
- Purchase applications decreased 1% from one week earlier but were 26% higher than the same week one year ago, with slight increase in FHA applications as buyers seek affordable loan options 6
- Refinance share decreased to 57.0% of total applications from 57.1% the previous week, while ARM share decreased to 8.7% of total applications 6
- Government-backed loans showed mixed activity – FHA share decreased to 18.5% from 20.5%, VA share increased to 14.9% from 13.4%, and USDA share increased to 0.3% from 0.2% 6
REGULATORY DEVELOPMENTS IN REAL ESTATE
Federal housing agencies face significant pushback on proposed policy changes while implementing new supervisory frameworks. The FHFA’s housing goals proposal has drawn widespread opposition, while other agencies advance strategic planning initiatives.
FHFA FACES STRONG OPPOSITION ON HOUSING GOALS REDUCTION
- Consumer Federation of America leads coalition of 28 organizations opposing FHFA’s proposed changes to 2026-2028 Enterprise Housing Goals, warning up to 177,000 families may lose GSE mortgage access 12
- Proposed changes would collapse separate subgoals for “Low-Income Census Tracts” and “Minority Census Tracts” into one overarching subgoal, potentially reducing mortgage access in communities of color 12
- Coalition argues changes defy Congressional directive for Fannie Mae and Freddie Mac to “lead the industry in making mortgage credit available” and would deepen racial and socioeconomic disparities 12
FEDERAL HOME LOAN BANKS SUPPORT FHFA STRATEGIC PLAN
- Council of Federal Home Loan Banks submitted supportive comments on FHFA’s draft Strategic Plan for Fiscal Years 2026-2030, commending recent steps to rescind outdated guidance 13
- Council proposes incorporating goal of reducing regulatory burdens across the FHLBank System’s supervisory framework to support housing finance and community development 13
FEDERAL RESERVE FINALIZES BANK SUPERVISORY CHANGES
- Fed finalized changes to supervisory rating framework for large bank holding companies, with revisions that more accurately reflect individual bank strength and better align with rating systems used for other banking organizations 14
- Framework includes three components evaluated on four-point scale – capital, liquidity, and governance/controls, each rated as “broadly meets expectations,” “conditionally meets expectations,” “deficient-1,” or “deficient-2” 14
- “Well managed” designation now allows one deficient-1 rating, while firms with any deficient-2 rating remain “not well managed” and face limitations on activities and acquisitions, with changes taking effect 60 days after Federal Register publication 14
FREDDIE MAC ANNOUNCES 2026 FUNDING CALENDAR
- Freddie Mac posted 2026 funding calendar with optional announcement dates for Reference Notes securities and weekly Reference Bills auctions on Monday mornings 15
- All auctions close at 9:45 a.m. Eastern time unless otherwise stated, providing market participants with clear scheduling for debt securities 15
ECONOMIC NEWS
Federal Reserve officials are signaling increased caution about future rate cuts amid persistent inflation concerns and data limitations from the government shutdown. Labor market and consumer debt indicators show mixed signals as the economy navigates competing pressures.
FEDERAL RESERVE OFFICIALS SIGNAL CAUTIOUS APPROACH
- Cleveland Fed President Hammack describes dual mandate as “walking a tightrope”, stating monetary policy is “barely restrictive, if at all” and questioning need for further accommodation 5
- Hammack emphasizes inflation as “more pressing concern”, noting inflation has run above 2% objective for four and a half years and is “trending in the wrong direction” 5
- Chicago Fed’s Goolsbee urges caution during government shutdown, telling CNBC he’s “cautious about further rate cuts” due to lack of key economic data, referencing Powell’s “driving in fog” analogy 16
LABOR MARKET SHOWS MIXED SIGNALS
- Private payrolls rose 42,000 in October, according to ADP data, more than expected and helping counter some labor market fears about weakening employment conditions 17
- San Francisco Fed research shows labor supply and demand slowing in tandem, suggesting more nuanced employment picture than headline numbers indicate 18
- Layoffs soared in October to highest level for the month in 22 years, according to Challenger, Gray & Christmas, signaling shift from previous “low hire, low fire” era 19
- NABE forecasts unemployment rate will rise from 4.3% in August to 4.5% in 2026, reflecting expected labor market softening 19
SERVICES SECTOR SHOWS RESILIENCE WITH INFLATION PRESSURES
- ISM Services PMI increased to 52.4% in October, up from 50.0% the previous month, indicating expansion in services sector for eighth time in 2025 20
- Employment index remained in contraction at 48.2% for fifth consecutive month, despite improving from 47.2% in September 21
- Prices Index registered 70% in October, first time at or above that threshold since October 2022, indicating significant inflationary pressures in services sector 21
- Price index has exceeded 60% for 11 straight months, reflecting persistent cost pressures across service industries 21
CONSUMER DEBT REACHES RECORD HIGH
- Total U.S. consumer debt reached $18.03 trillion in September, up from $17.91 trillion in August, according to Equifax National Market Pulse data 22
- Delinquency rates on total consumer debt inched up to 1.562% in September, slight increase from 1.517% at end of second quarter, showing stabilization trend 22
- Non-mortgage debt reached $4.70 trillion, showing 0.4% month-over-month increase and 0.2% year-over-year growth with moderate expansion in auto and student loans 22
- Newer auto loans show concerning delinquency trends, with more pronounced rises in delinquency rates for loans taken in the last 24 months 22
COMMERCIAL REAL ESTATE MARKETS (INCLUDING MULTIFAMILY)
The commercial real estate markets showed mixed signals in early November, with retail leading a strong recovery while office properties continue facing headwinds. Transaction volumes increased across most sectors, driven by improved investor sentiment and stabilizing property values.
RETAIL SECTOR LEADS RECOVERY
- Investment sales soared 43% year-over-year to $16.1 billion in Q3 2025, marking retail CRE’s strongest quarterly performance in three years 1
- Total capital markets activity reached $45.8 billion, reflecting a 29% annual gain as investor optimism builds momentum 1
- Property values posted 3.5% year-over-year increase through September, outpacing all other major asset classes 1
- Sunbelt markets dominated leasing demand with Dallas, Houston, Phoenix, Orlando, and San Antonio leading large-market absorption 1
- Cap rates averaged 6.84% in Q3, down from 7.15% a year ago, with the spread between lending and cap rates narrowing to 62 basis points 1
OFFICE MARKET SHOWS MIXED SIGNALS
- Office loan originations increased 181% year-over-year in Q3 2025, showing surprising resilience in certain markets 2
- Blackstone achieved rare Boston office win, selling a Back Bay building for $125 million—one of the city’s only major office trades this year 5
- AI startup Sierra nears 300,000 SF lease at San Francisco’s China Basin, marking its third major office deal and highlighting continued tech demand 3
- South Florida office distress persists with foreclosure activity continuing across key markets, reflecting ongoing sector challenges 3
MULTIFAMILY MAINTAINS MOMENTUM
- Multifamily loan originations rose 27% year-over-year and 12% quarterly in Q3 2025, showing continued sector strength 2
- Pacific Transwest acquired Tucson community for $32 million, while Hillridge JV purchased Charlotte property for $94 million 6 7
- Greystone provided $115 million loan for NYC affordable housing portfolio, reflecting continued institutional interest 8
- Phoenix community sold at sharp discount, highlighting pricing pressures in oversupplied markets despite overall sector strength 9
INDUSTRIAL SECTOR FACES HEADWINDS
- Industrial market softening with rising vacancies and cooling rents as tax reforms reshape U.S. manufacturing 4
- Tax reforms restore bonus depreciation and R&D expensing, fueling reshoring trend while threatening green tech growth 4
- Construction remains nearly 3x 2022 levels as firms rethink supply chain strategies amid changing market conditions 4
- Major transactions included Morgan Stanley’s $143 million acquisition of two California industrial assets and W.P. Carey’s Dallas-area warehouse purchase 3
COMMERCIAL FINANCING MARKETS
Commercial real estate financing markets experienced a significant rebound in Q3 2025, with lending activity surging across most property types and capital sources. The improvement signals a potential market inflection point as credit availability expands.
LENDING ACTIVITY SURGES ACROSS SECTORS
- Commercial/multifamily loan originations jumped 36% year-over-year in Q3 2025, marking the fifth consecutive quarter of growth 2
- Office properties led growth with 181% increase, followed by retail (100% increase) and hotel properties (66% increase) 2
- Investor-driven lenders saw 83% year-over-year increase, while depository lenders posted 52% growth and GSEs increased 40% 2
- Quarterly originations increased 18% from Q2 2025, w/retail properties leading at 141% quarterly growth 2
CAPITAL MARKETS ACTIVITY REBOUNDS
- CRE investment surged 15% in Q3 to $111.7 billion, with office and retail leading growth and single-asset deals driving momentum 10
- Current lending backdrop draws comparisons to post-GFC recovery in 2010-2011, when improving credit availability spurred real estate pricing rebound 10
- Property prices diverging as big investors return, with institutional-grade deals driving transaction volume increases despite declining repeat sales 11
- 2026 may mark start of more durable recovery in commercial real estate if current lending trends continue 10
BANKING SECTOR SHIFTS RISK PROFILE
- Big banks avoiding CRE trouble with diversified loan books, while smaller lenders face rising risks from maturing loans and higher rates 12
- Community lenders positioning themselves to fund market transitions as commercial real estate risks shift away from major financial institutions 12
- Borrowing costs easing with spread between lending and cap rates narrowing, improving investment case for many buyers 1
COMMERCIAL SERVICING MARKETS
The commercial servicing sector continues to face challenges with rising delinquencies, particularly in office properties, while distressed asset activity persists across key markets. CMBS delinquency rates reached new highs in October, reflecting ongoing sector stress.
CMBS DELINQUENCIES CONTINUE CLIMBING
- CMBS delinquency rates climbed again in October with office properties hitting new highs, continuing the sector’s troubled trajectory 3
- Office sector delinquencies reflect ongoing challenges as hybrid work patterns and economic uncertainty weigh on property performance 3
- Class C multifamily delinquencies showed fractional uptick, though experts consider this statistical noise rather than warning sign 4
DISTRESSED ASSET ACTIVITY
- South Florida office foreclosure activity persists with continued distress across key markets reflecting sector-wide challenges 3
- Office Properties Income Trust ordered into mediation by bankruptcy judge with feuding creditors over $400 million in debt 3
- Proceedings reflect broader challenges facing office-focused investment vehicles amid sector distress 3
WORKOUT ACTIVITY
- Refinancing activity increased as loans reaching maturity were refinanced, reflecting improving sentiment as property values stabilized 2
- Healthy retention rates between 75% and 94% in retail sector indicate strong tenant demand for quality space despite obsolescence challenges 1
INDUSTRY NEWS
Major real estate transactions and strategic initiatives dominated industry activity, with significant merger talks, acquisition announcements, and technology-driven expansion across multiple sectors. Investor activity remains steady despite market cooling.
INVESTOR ACTIVITY REMAINS STEADY IN COOLING MARKET
- Investors purchased 10.8% of homes in Q2 2025, up slightly from 10.7% in Q2 2024 but below the Q2 2022 peak of 12.1%, as elevated mortgage rates kept many buyers sidelined 4
- Small investors reached highest share since 2007, accounting for 62.5% of investor purchases in Q2 2025, while large investor activity fell to 20.1% of investor purchases 4
- Investor selling activity cooled significantly, falling 4.1% in Q2 after surging 10% year-over-year in early 2024, as stable rent streams make holding properties more attractive 4
- Investors target affordable markets – Missouri (18.9%), Mississippi (17.1%), and Nevada (15.4%) saw highest investor buyer share, focusing on states with strong rental demand and lower entry costs 4
- Geographic strategy variations – Investors in Michigan, Maryland, and Virginia buy homes 40-53% below median prices (the price point – not a 40-53% discount), while Montana, Utah, and California investors pay 23-35% premiums for high-demand markets 4
MAJOR REAL ESTATE TRANSACTIONS AND DEVELOPMENTS
- Pacific Transwest acquired Tucson multifamily community for $32 million, while Stockdale Capital completed all-cash acquisition of Phoenix-area asset in active southwestern market 23
- Blackstone expanded affordable housing preservation program and CIM Group with Bryant Group Ventures launched $1 billion affordable housing fund, demonstrating continued institutional focus on affordable housing 24
- JLL reported strong Q3 2025 financial results with aggregate equity earnings of $26.6 million, primarily from Proptech investments of $17.2 million, up significantly from $2.2 million equity losses in 2024 25
MERGER AND ACQUISITION ACTIVITY
- CapitaLand and Mapletree in early merger talks that could create $150 billion real estate powerhouse, representing one of largest consolidations in Asian real estate market 26
- Sonida Senior Living set to acquire CNL Healthcare for $1.8 billion in cash-and-stock deal, creating 8th-largest senior housing firm in United States 27
- CBRE acquiring Pearce Services for $1.2 billion to boost digital and power infrastructure footprint amid growing data center demand 27
TECHNOLOGY AND INNOVATION
- AI companies fueling record-low data center vacancies as demand for high-density, high-power infrastructure surges beyond available capacity across major markets 27
- AI startup Sierra nearing 300,000 square foot lease at San Francisco’s China Basin, marking third major office deal and highlighting continued AI-related real estate expansion 27
- Simon Property Group raised 2025 FFO forecast after strong leasing demand boosted occupancy, rents, and third-quarter earnings, demonstrating retail real estate resilience
MAJOR MERGERS & ACQUISITIONS
- Kimberly-Clark buying Tylenol maker Kenvue for $48.7 billion, with the deal set to close in late 2026 3
- Singapore’s CapitaLand and Mapletree in early merger talks, potentially creating $150 billion real estate powerhouse to compete globally 4
- MCB Real Estate raised all-cash buyout offer for Whitestone REIT to 21% premium, reigniting takeover push after year of rejections 3
EARNINGS & FINANCIAL RESULTS
- Simon Property Group raised 2025 FFO forecast after strong leasing demand boosted occupancy, rents, and third-quarter earnings 3
- Simon breaking ground on Sagefield, a 100-acre mixed-use Nashville project featuring luxury retail, dining, and hotel 3
- FTSE Nareit All Equity REITs Index remains up 2.2% YTD despite 2.2% drop in October driven by earnings concerns and rate uncertainty 3
- Marriott leaning on strong international demand and high-end travelers to drive growth, even as U.S. markets and select-service brands lag 3
GOVERNMENT & REGULATORY DEVELOPMENTS
- Record-breaking federal shutdown continues impacting CRE deals, delaying HUD activity and shaking investor confidence across key markets 3
- HUD layoffs ended inspections nationwide, disrupting development timelines and putting low-income renters at risk 3
- Supreme Court ruling on Trump’s tariffs could bring major clarity—or more chaos—to CRE, especially in construction and pricing 3
- New York voters approved ballot measures to expedite affordable housing development, curb council power, and streamline approvals 3
CORPORATE DEVELOPMENTS
- CIM Group and Bryant Group Ventures launched $1 billion affordable housing fund, highlighting continued institutional interest in affordable housing investments 13
- Blackstone expanded affordable housing preservation program, demonstrating growing focus on this sector 14
- Car wash sales soaring in net lease market as investors rush to capture 100% bonus depreciation benefits 3