Strategic Real Estate Consulting
But TARGETED GTOs are still in force…
FinCEN issued a temporary order granting exemptive relief from the reporting requirements. In the interim, any Real Estate Geographic Targeting Orders will remain in effect.
| Intercontinental Exchange, Inc. reports that a drop to 6.04% mortgage rates pushed 4.8 million borrowers into refinance territory and lifted affordability to a four-year high, with payments down $164 year over year. Housing Affordability ● Housing affordability reached its best level since March 2022. ● The monthly principal and interest payment on the average-priced home fell to $2,091. ● Payments declined by $164 year over year, a -7% reduction. ● Households now need 27.8% of median income to afford the average-priced home. ● Fifteen major markets have returned to long-run affordability norms, including Cleveland, Memphis, Detroit, and Chicago. ● Nearly one in 10 large markets still require at least 10 percentage points more income than normal. ● Los Angeles requires 23 percentage points more income than its long-run norm. ● San Diego (+15 pp), New York (+13 pp), Providence (+13 pp), San Jose (+12 pp), Miami (+11 pp), and Seattle (+11 pp) remain highly stretched. Home Prices and Inventory ● U.S. home prices rose 0.6% in 2025, the weakest annual growth since 2011. ● Annual price growth slowed further to +0.5% in January 2026. ● Seasonally adjusted prices increased just +0.04% from December. ● More than one-third of major markets saw seasonally adjusted price declines in January. ● Single-family prices rose 0.8% year over year, while condo prices fell 2.0%. ● 97 of the 100 largest markets saw stronger single-family price performance than condos. ● Roughly 40% of markets have prices below year-ago levels. ● The strongest annual price gains are concentrated in the Northeast and Midwest. ● New Haven, CT led with +6.8% annual growth, while Cape Coral, FL posted a -6.4% annual decline. ● Austin home prices are down 22.3% from peak levels. Mortgage Lock-In and Listings ● At the start of 2025, 39.4 million homeowners had mortgage rates below 5%. ● By year-end, that figure declined only to 37.2 million, a 6% drop. ● About 12.1 million homeowners still have rates below 3%. ● Roughly two-thirds of all mortgages remain below 5%. ● More than 20% of borrowers now hold rates at or above current market levels, most originating within the past four years. ● National housing inventory remains meaningfully below 2017–2019 norms despite modest improvement. ● Inventory pullbacks in Austin, Denver, and San Jose helped stabilize pricing in those markets. Home Equity and Negative Equity ● Total mortgage debt rose 4% in 2025 to a record $14.8 trillion. ● Mortgage balances equal 46.6% of leveraged home values, nearly 11 percentage points below the 25-year average. ● Homeowners held $16.9 trillion in equity entering 2026. ● Just under $11 trillion of that equity is considered tappable while maintaining 20% equity. ● Negative equity rose to 1.1 million borrowers, representing 2.1% of mortgages. ● This is up from 696,000 borrowers (1.3%) at the start of 2025. ● Another 3.2 million borrowers (7.9%) have less than 10% equity. ● In eight major markets, more than 5% of mortgaged homes are underwater. ● Lakeland, FL has the highest negative equity rate at 10.8%. ● 9.6% of VA loans and 5.7% of FHA loans are underwater. ● Among 2024 originations, more than 25% of VA loans and nearly 17% of FHA loans are underwater. ● GSE and portfolio loans show much lower negative equity rates at 0.5% and 1.3%, respectively. Mortgage Performance and Delinquencies ● The national delinquency rate for first-lien mortgages fell 16 basis points in December to 3.68%. ● The December delinquency rate is 26 basis points below December 2019 pre-pandemic levels and 3 basis points lower than hurricane-affected levels from one year earlier. ● Early-stage delinquencies improved month over month, with 116,000 fewer borrowers one payment past due. ● Loans 90+ days past due but not yet in foreclosure increased by 30,000 and are at their highest level in nearly three years, 19,000 higher than one year ago. ● Including active foreclosures, 4.12% of mortgages were non-current in December, up 5 basis points year over year. ● VA loans posted the largest monthly improvement, with non-current rates declining by 28 basis points. ● FHA non-current rates remain elevated above 13%, more than triple the market average. ● More than 1 million FHA loans were past due, up 11% year over year. Foreclosure Activity ● Approximately 401,000 loans were referred to foreclosure in 2025, up 25% year over year and the highest annual total since 2019. ● December recorded 40,000 foreclosure starts, the third-highest monthly total of 2025. ● Foreclosure inventory increased by 47,000 loans (+25%) in 2025, reaching its highest level since 2023. ● FHA loans entering foreclosure rose 59% year over year. ● Foreclosure sales totaled 80,000 in 2025, up 17% year over year and the largest volume since 2019. ● December foreclosure sales totaled 2,100, up 41% from December 2024. ● Loans in active foreclosure remain 17% below 2019 levels despite recent increases. FHA-Specific Stress Indicators ● FHA loans 90+ days past due but not yet in foreclosure rose by 65,000 (+26%) in Q4, ending 2025 at just over 311,000. ● Active FHA foreclosures exceeded 100,000 for the first time since 2017, up nearly 60% (+38,000) year over year. ● 56% of 90+ day delinquent FHA loans are now in forbearance, the highest share in more than four years. ● The number of FHA loans in forbearance rose by more than 80,000 over the past three months. ● Underwater FHA loans that are also delinquent climbed above 200,000 in December, up 75% from 114,000 one year earlier. Interest Rates and Refinance Incentives ● Mortgage rates declined to 6.04% on January 9, the lowest level since early 2023. ● The 30-year mortgage to 10-year Treasury spread narrowed to 185 basis points, the tightest since January 2022. ● Spreads have remained near 190 basis points, offsetting rising Treasury yields. ● Even with 10-year Treasury yields near 4.25%, 30-year mortgage rates held in a 6.11%–6.18% range through late January. ● ICE futures implied the 30-year mortgage rate for June 2026 fell about 20 basis points following the MBS purchase announcement. ● As of January 22, ICE futures suggest mortgage rates trending toward roughly 6.0% by July 2026. Refinance Volume and Borrower Savings ● Roughly 4.8 million borrowers were “in the money” to refinance when rates hit 6.04%, a 20% increase (+845,000) almost overnight. ● The average refinance-eligible borrower could save approximately $370 per month. ● Aggregate potential monthly savings totaled roughly $1.7 billion. ● Nearly 1.3 million active mortgages carry rates between 6.875% and 6.99%. ● More than 500,000 of those loans were originated in 2025. ● Refinances accounted for 62% of mortgage applications in the week ending January 16, 2026. ● ICE estimates about two-thirds of refinance activity was rate-and-term rather than cash-out. ● Refinance activity reached a 17-week high but remained below mid-September levels when rates first dipped under 6.25%. Andy Walden, Head of Mortgage and Housing Market Research at ICE: “Even small reductions toward 6% rates can significantly boost affordability, particularly for homeowners who could refinance into a lower rate and monthly payments. When rates hit 6.04% on January 9, the number of homeowners in the money to refinance jumped by 20% and affordability hit its best level in four years. That said, affordability remains structurally challenged, with home prices still elevated relative to incomes and meaningful differences emerging across regions and borrower segments.” Bob Hart, President of ICE Mortgage Technology: “Today’s market is full of cross currents — borrowers responding quickly to rate shifts, affordability improving for some but not others, and pockets of rising credit stress. Our end-to-end mortgage platform helps servicers and lenders make sense of those moving parts and act on opportunity. It gives them a clearer view of who might benefit from refinancing, where portfolio risks are building, and how to engage customers with the right options at the right time — all while supporting timely follow-through.” |
| Apartment List reports rents down 0.2% month over month and 1.4% year over year, vacancies at a record 7.3%, and lease-up times hitting 41 days nationwide. Overall rent trends ● The national median rent fell 0.2% month over month in January and now stands at $1,353. ● January marked the sixth consecutive month of rent declines and the fourth straight winter with a pronounced seasonal dip. ● National rents are down 1.4% year over year, extending a stretch of slightly negative annual rent growth that has lasted more than two years. ● The national median rent has fallen 6.2% from its 2022 peak, reflecting a sustained correction following the pandemic-era surge. Monthly and annual rent changes ● Rent declines continued but moderated compared to prior months. ○ Month-over-month comparison: ■ January 2026: -0.2% ■ January 2025: -0.1% ○ Year-over-year comparison: ■ January 2026: -1.4% ● The -1.4% annual reading is the weakest year-over-year rent growth since August 2023. ● Despite recent declines, rents remain elevated over the longer term. ○ Current rents are 18% higher than at the end of 2020. National rent levels in dollar terms ● The national median rent is $1,353, down $20 compared to January 2025. ● Since peaking in mid-2022, median rents have declined by: ○ 5.9% nationally ○ $89 per month in dollar terms Seasonal shifts in rent growth ● Seasonal patterns have shifted compared to the pre-pandemic norm. ○ Historically, May was the peak month for rent growth. ○ Over the past three years, March has become the peak month. ● Rent declines are now beginning earlier in the year. ○ Prices now tend to start falling in August instead of September. ● Winter slowdowns have been deeper since 2022 due to elevated multifamily suppl Multifamily vacancy rate ● The national multifamily vacancy rate now sits at 7.3%. ● This is the highest vacancy rate recorded by Apartment List since tracking began in 2017. ● Vacancy pressure reflects a collision between new supply and sluggish demand. ○ Multifamily construction peaked recently but remains elevated relative to historical norms. Multifamily construction pipeline ● New supply remains historically high, even as the construction wave begins to crest. ○ 2024 deliveries: over 600,000 new multifamily units, the highest annual total since 1986. ○ 2025 deliveries: approximately 500,000 units. ○ 2026 outlook: fewer units than 2025, but still slightly above the long-run average. ● Elevated supply continues to limit landlords’ pricing power as the market absorbs new inventory. Time on market (list-to-lease) ● Units now take an average of 41 days to lease after being listed. ● This represents a new record high for the index. ○ Year-over-year comparison: ■ January 2026: 41 days ■ January 2025: 37 days ● Time on market has more than doubled since summer 2021. ○ Summer 2021 average: 18 days ● Longer lease-up times align with higher vacancies and negative rent growth. Geographic rent trends ● Rent declines are concentrated primarily in the Sun Belt. ○ Of 54 large metros with populations over 1 million: ■ 39 saw month-over-month rent declines. ■ 32 saw year-over-year rent declines. ● Southern and Mountain West markets account for most annual rent drops. ● Many Northeast, Midwest, and select West Coast metros continue to post positive annual growth. Metro-level highlights ● Austin, TX shows the softest rental conditions among large metros. ○ Year-over-year rent change: -6.3% ○ Decline from 2022 peak: more than -20% ○ Austin also leads large metros in new-home permitting, underscoring the impact of supply. ● Other metros with steep declines often overlap with high permitting activity. ○ Examples include Denver, Phoenix, San Antonio, Tampa, and Raleigh. ● The strongest rent growth is occurring in fewer, more supply-constrained markets. ○ Virginia Beach, VA: +5% year over year, the fastest growth nationally. ○ San Jose, CA and San Francisco, CA also rank in the top three, supported by AI-driven tech hiring. ○ Midwest metros such as Chicago, St. Louis, and Minneapolis continue to post steady positive growth. Market outlook ● Multifamily conditions remain soft entering 2026. ● Negative year-over-year rent growth persists alongside rising vacancies and longer lease-up times. ● While the construction wave is slowing, demand-side risks remain. ○ Labor market weakness and broader economic uncertainty could prolong absorption of new units. ● A meaningful shift in rental conditions will depend on whether demand strengthens as supply growth cools. |
New real estate terminology: “imputed equity”
Homeowner “feels” their property is still worth more than what a market buyer will pay
Real estate sales are at the lowest level in decades. There is an impasse between prices sellers are listing their properties and what bona fide qualified buyers are willing to pay. There is major frustration in both camps. Some sellers are resisting making their homes more saleable through repairs, paint, decluttering. etc. Buyers are asking for concessions on top of discounted purchase offers.
Just remember, as a buyer, LOCATION should be your major criteria, since this cannot be changed. A great property location is always salable no matter the market conditions.
Buyers can still get “climate info” on properties through 1st Street and Redfin to make sure they’re aware of all the possible risks of a particular property before even considering it for purchase. Buyers are well advised to get confirmation of their potential insurance costs before submitting a purchase offer.
What is the CMT Paradox & Why Should Sellers Care? Clutter, Money & Time. Think of it this way: Almost everything is junk & will end up in a landfill at some point. How can you live better right now? If your home is being sold, do you really want to move everything? Clearing it out so your potential buyers can “move themselves in” and imagine how they would live in the property gives you “first impression” advantages that are subliminal as soon as a potential buyer walks in!
Think utility more than status when purchasing a home. How will you live in the home? Connection, comfort & convenience may need to become your top homeownership priorities.
Oh, and remember, in either Arizona or Florida, you can eat outside in the winter!
Florida Senate Bill 4D enacted May 26, 2022 on Building Safety called for MIs (mandated inspections) & SIRS (Structural Integrity Reserve Studies) for condo buildings and the disclosures of those results. Link below is the DBPR’s online database of those condos who have submitted their SIRS.
Condo buildings in Florida that were more than 30 years old (in 2022) faced a December 31, 2024 deadline for a mandatory “milestone inspection.” For condo buildings turning 30 years old between 2022 & 2024, the deadline was December 31, 2025.
https://dbpr-publicrecords.myfloridalicense.com/qpr/single/?appid=14f1ed21-7b21-4272-af14-9eaad7911440&sheet=mcprvJW&opt=ctxmenu&select=clearall
So, as of January 1, 2026, the inspection & reserve study deadline has passed. It required FULL RSERVE FUNDING. There was a 365 day Phase 2 repair clock for any immediate repairs required by Milestone Inspections. That is a non-negotiable. The Florida Legislature has not enacted any further extensions for compliance. These condo associations must now pay for their immediate repairs, as well as future reserves (as indicated by their SIRS.)
If a condo building is out of compliance, the local building officials are now in charge. This is a substantial issue. If a condo building is out of compliance, the local building officials may declare the building as an “UNSAFE STRUCTURE” (“unsafe and unfit for occupation”) which is an IMMEDIATE SAFETY EVACUATION that gives occupants “NOTICE TO VACATE” orders. That means the unit is uninhabitable almost overnight. (House Bill 913.) This can be done without any court proceedings. It’s not like a foreclosure situation where you have time to figure it out. The local building officials can “red tag” a building.
If this happens to your condo building you will have trouble securing insurance for the building. If you do not have insurance, any owners with mortgages will be in default technically. Carriers are refusing to renew policies where they deem there has been no repairs progress on the milestone reports. If your association thought they could buy some time, they were wrong.
If you’re shopping for a condo now, be sure you are using an agent who understands these issues to advise you.
A condo may already be in violation. Associations with 25+ units MUST post their milestone reports online,
We send a notice to anyone who wants to utilize our services to sell their property BEFORE we will even consider an employment agreement, particularly for sales of vacant land. These policies have become necessary in a global economy, where scammers can be located anywhere on the planet. Out of our legal jurisdiction. So you’d get an e-mail that looks like this:
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Dear [Customer Name]:
We are looking forward to working with you to sell your property.
As part of our company policies (in accordance with licensing law & regulations duties) we ask you to review our policies listed below and reply to to this communication with the statement, “I agree.”
We are unable to list any property unless you first agree to these terms:
We will be conducting an exhaustive title search to confirm the rightful ownership of the property at the cost of the seller.
We require a copy of the seller’s latest property tax bill and the most recent proof of payment.
We require an in-person meeting or video conference with all sellers.
A “For Sale” sign with our contact information must be posted on every property we list, including the name of our listing agent and a phone number where we can be reached (unless prohibited by law or HOA or Condo Assn.)
We require all clients use one of our approved notaries public. If you are located out of our immediate area, we will provide a list of approved Notaries Public to you.
All transactions are subject to a minimum 48 hour hold before funds will be released. If the 48-hour period ends during a holiday or weekend, funds will be released on the next business day.
Sincerely,
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