Daily Dose of Real Estate

Daily Dose of Real Estate for October 2

“That’s a nice brokerage company. Be a shame if something bad happened to it.” NY AG sues Zillow & Redfin on antitrust claims. Mortgage demand ain’t what it used to be – a week ago I mean – down 13%. 75% of prospective buyers are waiting for prices to drop & rates to fall before buying, which helps explain signs of a cooling housing market across multiple indexes. Fed officials reluctantly acknowledge that inflation is going in the wrong direction. And Major tax risks are being exposed from the “Big Beautiful Bill” for CRE investors who walk away from troubled properties. Let’s get you caught up and out the door in 3 minutes. Tim

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Table of Contents

KEY TAKEAWAYS

Mortgage applications plummeted 12.7% last week as rates hit a three-week high of 6.46%, with refinance demand collapsing 21% as the brief refinancing window closes 1 2
House prices showed mixed signals with FHFA reporting a 0.1% monthly decline in July but 2.3% annual growth, while starter home sales surged 4% as buyers flock to affordable options 3 4
New York Attorney General sues Zillow and Redfin for $100 million scheme to eliminate competition in apartment advertising, potentially harming renters and property owners 5
Government shutdown creates housing uncertainty with the National Flood Insurance Program suspended, potentially delaying home sales in flood zones and disrupting key economic data releases 6
Federal Reserve officials express growing concern about persistent inflation, with Chicago Fed President Goolsbee warning that rising prices are “going the wrong way” and could complicate future rate decisions 7
Top-tier commercial real estate prices climbed for the second consecutive month, with high-value transactions rising 1.3% in August, signaling early recovery signs while smaller deals continue to face pressure 1
Private CRE fundraising is surging toward $129 billion in 2025, with $85 billion already raised in the first eight months as investor confidence returns amid easing borrowing costs 2
Commercial market fundamentals are holding up across key sectors despite elevated interest rates, with multifamily properties serving as a relatively safe harbor and national rent increases of approximately 1.5% in 2025 5
Distress sales remain historically low at just 2.7% of transactions, suggesting the market has avoided widespread distress despite pockets of stress emerging in specific sectors and geographies 1

RESIDENTIAL REAL ESTATE MARKETS

The residential market is showing clear cooling signs with the first monthly price decline of 2025, though regional variations remain stark. Starter homes continue outperforming higher-priced segments as affordability constraints reshape buyer behavior.

HOUSING MARKET SHOWS SIGNS OF COOLING

Monthly price decline: FHFA reported U.S. house prices fell 0.1% in July, the first monthly decline of 2025 3
Annual growth slowing: Year-over-year appreciation at 2.3%, down from 4.1% in January 8
Case-Shiller confirms trend: National index rose just 1.7% annually in July, showing broad deceleration 9
Regional disparities: Middle Atlantic division fell -1.2% monthly while East North Central gained +0.3% 3
AEI Housing Center analysis: Confirms broad-based cooling with particular weakness in previously hot markets 10

STARTER HOME MARKET DEFIES BROADER TRENDS

Sales surge: Starter home sales increased 4% year-over-year in August despite broader market weakness 4
Record prices: Median starter home price reached $260,508, reflecting continued demand pressure 4
Inventory growth: Active starter home listings increased 16.4% year-over-year, providing more options 4
Segment divergence: Mid-price homes fell 0.6% and high-price homes declined 1.2% in sales 4
Geographic shift: Midwestern and Northeastern markets now leading growth, reversing Sun Belt dominance 11

BUYER SENTIMENT REACHES CRITICAL LEVELS

Unprecedented hesitancy: 75% of prospective buyers waiting for prices and rates to fall, according to Bank of America 12
Three-year high uncertainty: Buyer uncertainty reaches highest level since 2022, creating transaction volume concerns 12
Generation Z adaptation: Younger buyers increasingly using sibling partnerships and multiple income sources for qualification 12
Market timing concerns: Widespread belief that current conditions are unfavorable for purchasing decisions 12

MORTGAGE MARKETS

Mortgage markets experienced dramatic volatility with applications collapsing as rates surged, effectively ending the brief refinancing boom. Purchase markets showed relative resilience despite affordability headwinds.

MORTGAGE APPLICATIONS COLLAPSE AS RATES SURGE

Total applications: Fell 12.7% as interest rates climbed to three-week highs 1
Refinance crash: Applications plummeted 21% from previous week, ending brief refinancing boom 2
Rate increase: 30-year fixed rates rose to 6.46% from 6.34%, with points increasing to 0.61 1
Refinance share: Decreased to 55% from 60.2% of total activity 1
Loan size impact: Average refinance loan size dropped to $380,100 from $461,300 two weeks prior 1

PURCHASE MARKET SHOWS RESILIENCE

Modest decline: Purchase applications fell just 1% for the week after three consecutive gains 1
Year-over-year strength: Purchase applications 16% higher than same week last year 1
FHA share increase: Rose to 16.8% from 15.7% of total applications 1
VA share decline: Decreased to 16.2% from 17.5% of applications 1
ARM hesitancy: Adjustable-rate mortgage share declined to 8.4% despite lower initial rates 1

REGULATORY DEVELOPMENTS IN REAL ESTATE

Major antitrust action against Zillow and Redfin dominates regulatory news, while government shutdown creates widespread disruptions across housing programs and flood insurance availability.

NYC AG SUES ZILLOW AND REDFIN FOR ANTITRUST VIOLATIONS

$100 million scheme: Zillow paid Redfin to shut down apartment advertising business and eliminate competition 5
Market concentration: Three companies (Zillow, Redfin, CoStar) control 85% of online apartment advertising revenue 5
Employee impact: Redfin fired approximately 450 employees associated with multifamily rental advertising 5
Nine-year non-compete: Redfin agreed to stay out of multifamily advertising market for up to nine years 5
Bipartisan coalition: Arizona, Connecticut, Washington, and Virginia joined New York in the lawsuit 5

CRITICAL FLOOD INSURANCE GUIDANCE

Joint regulatory guidance: Five federal agencies remind lenders they can continue making loans despite NFIP suspension 13
Safety and soundness: Agencies stress lenders must “evaluate safety and soundness and legal risks” during lapse period 13
Private insurance alternative: Guidance addresses availability and use of private flood insurance during federal program suspension 13
Transaction delays: NAHB warns NFIP suspension “could lead to significant uncertainty” and sales cancellations 6
Special Flood Hazard Areas: Properties with federally-backed mortgages particularly vulnerable to delays 6

SHUTDOWN CREATES WIDESPREAD HOUSING DISRUPTIONS

FHA processing: Single-family loans continue in near term but delays expected in processing and closing 6
Rural housing halt: USDA suspended new rural housing loans, grants, and loan guarantees 6
SBA suspension: Small Business Administration halted new loan guarantees 6
E-Verify unavailable: Employers cannot verify worker eligibility during shutdown 6
Data blackout: Monthly jobs report, housing starts, and new home sales data indefinitely postponed 6

GSE ACTIONS SIGNAL INCREASED OVERSIGHT

Fannie/Freddie intervention: GSEs blocked sale of unsafe South Florida condominium complex citing conservatorship status 14
FHFA consent required: Legal filing argues agency approval needed before any sale can proceed 14
Safety standards: Action demonstrates GSEs’ active role in protecting interests and ensuring compliance 14
$20.5 million bid: Integra Real Estate offer complicated by federal oversight requirements 14

ECONOMIC NEWS

Federal Reserve officials express growing alarm about inflation trajectory while labor market softening adds policy complexity. Conflicting economic projections from major institutions create additional uncertainty for market participants.

FED OFFICIALS EXPRESS GROWING INFLATION CONCERNS

“Going the wrong way”: Chicago Fed President Goolsbee warns inflation rising after months of progress toward 2% target 7
Stagflation fears: Goolsbee nervous about both inflation and unemployment rising simultaneously 7
Dual mandate challenge: “If they both start going wrong at the same time, now it’s not obvious what you do” 7
Tariff concerns: Intermediate goods tariffs “getting out of its lane” and raising production costs 7
Services inflation: Trending higher as warning sign that tariff impacts spreading beyond imports 7

LABOR MARKET SOFTENING

Boston Fed caution: President Collins acknowledges rate cuts appropriate but warns of “highly uncertain environment” 15
ADP surprise: Private sector lost 32,000 jobs in September, defying expectations of 120,000 gains 16
JOLTS slowdown: Job openings and quits declining, suggesting Fed rate hikes having intended cooling effect 16
Vice Chair Jefferson: Warns job market slowdown could shape future rate moves amid policy uncertainty 17
Tariff impact: Jefferson flags tariffs as inflation risk though impact less severe than some forecasts 17

CONFLICTING ECONOMIC PROJECTIONS

Divergent forecasts: Federal Reserve, CBO, and Trump administration release conflicting four-year projections 18
Consumer confidence decline: Conference Board index falls to lowest level since April amid job availability concerns 19
Shutdown impact: Government closure disrupts key economic data releases markets rely on for decision-making 19
Policy uncertainty: High degree of uncertainty surrounding economic policy impacts across all forecasting models 18

COMMERCIAL REAL ESTATE NEWS (INCLUDING MULTIFAMILY)

COMMERCIAL REAL ESTATE MARKETS

Top-Tier Properties Show Recovery Signs

High-value CRE prices climbed 1.3% in August, marking the second consecutive month of gains after a prolonged slump since 2022 1
Repeat-sale volume surged 28% year-over-year to $133.9B, with August alone reaching $10.7B 1
Distress sales remained low at just 2.7% of repeat transactions—well below past downturn levels 1

Industrial Market Stabilization

National industrial rents rose to $8.66 PSF in August, up 6.1% year-over-year, though growth has slowed in key markets 2
Vacancy rates ticked down to 8.7% nationally, though still 200 basis points higher than last year 2
Industrial Outdoor Storage (IOS) rents surged 123% since 2020, attracting over $900M in institutional investment 2

Property Type Performance Divergence

Commercial nonresidential properties gained 3.5% over three months, while multifamily prices dropped for the sixth straight month 1
Lower-priced transactions continued declining, with equal-weighted index falling 0.1% as investors remain cautious on smaller deals 1

Major Transaction Activity

IKEA purchased 529 Broadway in SoHo for $213 million, acquiring the 44,200-square-foot retail property from Jeff Sutton’s Wharton Properties 3
Lincoln Square penthouse sold for $18 million, down from $19.7 million nearly a decade ago 3

COMMERCIAL FINANCING MARKETS

Capital Formation Rebounds Strongly

Private CRE funds raised $85B in first eight months of 2025, on track to hit $129B by year-end—a 38% increase over 2024 4
Mega-funds closing big deals: Brookfield’s $16B Strategic Real Estate Partners V and Carlyle’s $9B Realty Partners X mark largest-ever closes 4
Debt funds especially hot, already pulling in $20B this year as investors position for looming maturities 4

REIT Activity Increases

REITs ease back into fundraising after sitting out most of the rate-hike era 4
Bond issuance picked up sharply with $48B in unsecured offerings over last 12 months—back to pre-pandemic averages 4
Equity issuance trending upward, marking highest volume in nearly three years 4

COMMERCIAL SERVICING MARKETS

Tax Complications in Distressed Assets

“Big Beautiful Bill” creating major tax risks for CRE investors through depreciation recapture on distressed dispositions 5
Sponsors facing large federal tax bills when walking away from troubled properties, even on paper losses 5
New modeling frameworks needed to integrate recapture tax exposure into disposition models 5

Foreclosure Activity

Veritas Investments faces foreclosure on 66 buildings after defaulting on over $652M in loans, once SF’s largest private landlord 4
Houston apartment sales rebounding, but Class-C assets remain deeply troubled as foreclosures mount 4

Federal Data on Delinquencies

Federal Reserve released updated data on charge-off and delinquency rates at commercial banks 6
Rising property insurance costs impacting pass-through to rents for apartment buildings 6

INDUSTRY NEWS

Major real estate transactions signal continued market activity despite broader uncertainties, while commercial real estate fundraising shows remarkable recovery and organizational changes reflect industry evolution.

MAJOR REAL ESTATE TRANSACTIONS SIGNAL MARKET ACTIVITY

Gaming sector expansion: Gaming and Leisure Properties acquired Sunland Park Racetrack and Casino real estate assets 20
AI integration: Mitesco Inc. expanded AI-based sales automation platform to include mortgage insurance integration 21
Technology adoption: Vero Beach-based company capitalizing on real estate industry’s digital transformation needs 21
Specialized REIT focus: Gaming and Leisure continues expansion strategy in specialized gaming real estate sector 20

COMMERCIAL REAL ESTATE FUNDRAISING REBOUNDS STRONGLY

$129 billion pace: Private CRE funds on track for strongest year since 2022 after raising $85 billion through Q3 22
Strategic shift: Institutional capital moving toward debt and opportunistic investments for market dislocations 22
Industrial outdoor storage: Specialized sector seeing 123% rent increases since 2020 due to limited supply 23
Price recovery: Top-tier CRE prices climbed second consecutive month with repeat-sale volume up 28% 24
Low distress: Distress sales remained at just 2.7% of transactions, well below historical downturn levels 24

ORGANIZATIONAL CHANGES SIGNAL INDUSTRY EVOLUTION

MBA leadership: Chief Operating Officer Marcia Davies retiring December 31, 2025, after creating mPower platform 25
Diversity initiatives: Davies instrumental in fostering industry diversity and inclusion programs 25
Executive transitions: MBA simultaneously announced promotions and additions to senior management team 25
Crypto integration: Caliber appointed Blake Janover to Crypto Advisory Board, reflecting digital asset intersection 26

CORPORATE ACTIONS

Brandywine Realty Trust slashed dividend 47% from $0.15 to $0.08 per share to retain $50M in cash 8
Plans to repay $245M secured loan backed by seven properties to unencumber core portfolio of 120 assets 8
Move expected to boost free cash flow by $45M annually despite $12M-$14M upfront cost 8