April 28 2025

Reef Daily

Reef Daily | April 28 2025

Housing Market Update

Latest Market Data (April 28, 2025)
Existing home sales declined by 5.9% in March, while the median sales price rose 2.7% year-over-year to $403,700, reflecting persistent affordability challenges and limited inventory. Discussions among real estate professionals highlight growing concerns about properties purchased between 2022 and 2025, with many owners unable to refinance or sell due to stagnant market conditions and elevated interest rates. New construction activity remains subdued, as the number of unsold completed single-family homes reached its highest level since summer 2009.

Construction Activity
Builders continue to grapple with excess inventory, particularly in suburban markets, where vacancy rates for Class-B and C offices rose to 32.2% in Q1 2025. Large-scale projects like the $30M renovation of 200 S. Wacker Drive in Chicago aim to attract tenants through premium amenities, though demand remains concentrated in top-tier urban assets.

Mortgage Rates

Type	Today's Rate	Last Week's Rate
30-year fixed	6.86%	6.89%
15-year fixed	6.08%	6.12%
5/1 ARM	6.09%	6.15%

Rates eased slightly amid volatility in bond markets, though upward pressure persists due to inflationary risks from recent tariff announcements. The 30-year fixed rate declined by 3 basis points week-over-week, while the 15-year fixed rate fell 4 basis points.

Future Forecasts
Economists anticipate rates to fluctuate between 6.5% and 7% through 2025, with potential spikes if tariffs reignite inflation. Fannie Mae projects a gradual decline to 6.3% by Q4, though near-term stability is expected as markets await clarity on Federal Reserve policy.

Notable Transactions

Commercial Highlights

A portfolio of three adjacent Gulf-front properties in Port Royal, Florida, sold for a combined $225M, marking one of the largest residential transactions in U.S. history.
In Chicago, Woodcrest Capital acquired the 800K SF 4 Overlook Park office complex for $6.2M ($7/SF), planning to offer tenants five years of free rent to revitalize the asset.

Regional Activity

Midwest: Suburban Chicago offices saw record discounts, with the Lincolnshire office park selling at a 96% discount from its 2013 price.
South: Florida’s luxury market remains robust, driven by high-net-worth buyers seeking waterfront estates.

Market Indicators

Inventory Trends
A growing divergence between MLS listings and actual inventory has emerged, with agents increasingly relying on off-market “pocket listings” to avoid oversupply perceptions. This trend complicates transparency, particularly in markets like Phoenix and Austin, where unlisted properties account for 15–20% of transactions.

Economic Outlook
U.S. bankruptcy filings surged to 6,276 in Q2 2024, the highest since 2017, with Chapter 11 reorganizations exceeding 2,400 cases. Rising credit stress and corporate defaults signal potential headwinds for commercial real estate, particularly in sectors tied to consumer discretionary spending.

Regional Developments

Northeast: Manhattan’s office vacancy rate held steady at 23.4%, though leasing activity slowed ahead of key economic data releases.
West: Tech-driven markets like San Francisco reported a 12% quarterly drop in condo prices, reflecting renewed affordability pressures.

Sources

This newsletter is for informational purposes only and should not be considered as financial advice.