Real Estate January 16, 2026

Market Overview

Commercial real estate transaction activity slowed again in November, with multifamily accounting for the largest share of deals, followed by office and industrial, signaling selective demand and liquidity constraints across property types [1]. At the same time, distress indicators are rising: U.S. foreclosure filings increased 14% in 2025 to 367,460 properties, with particular state-level pressure such as Ohio's elevated foreclosure incidence that has prompted policymakers to consider senior protections [6][4]. The Federal Reserve's Beige Book also reports softer home sales, slower construction and reduced lending activity across districts, reinforcing a broader cooling in housing-related markets [11].

Key Developments

1) Transaction mix and deal flow: November deal counts were concentrated in multifamily (20 transactions), with office (11) and industrial (8) trailing — a pattern that suggests investors remain relatively focused on housing-oriented cash flows even as overall deal velocity slows [1].

2) Rising distressed supply and policy response: National foreclosure filings are rising year-over-year, and FHA borrowers are flagged as facing greater risk, which could translate into elevated REO inventories or forced selling in specific markets if trends continue [6]. Ohio’s legislative push for senior foreclosure protections highlights localized social and political responses to distress that can affect market dynamics and servicing practices [4].

3) Regulatory and code risk to supply: California is debating whether to allow single-stair multifamily models — a seemingly technical building-code decision that has outsized implications for housing costs, construction feasibility and capital deployment for mid-rise multifamily projects across the state [7]. The Fire Marshal’s imminent report could influence developer economics and the pipeline of supply in a high-demand market [7].

4) Brokerage and distribution shifts: REMAX’s acquisition of two major Toronto brokerages brings 1,200 agents and 17 offices into its fold, a sign of continued consolidation at the broker level that can alter local agent productivity, referral flow and market share dynamics [5]. Leadership moves—such as Kim Harris Campbell’s appointment as CEO of Century 21 New Millennium—underscore ongoing talent migration and strategic repositioning within brokerage brands [3].

5) Market functioning and headwinds: Litigation over NAR/MLS rules saw a magistrate recommend denying an injunction, easing near-term regulatory uncertainty for broker compensation and MLS operations, which matter for transaction efficiency and listing exposure [10]. Meanwhile, wildfire recovery in Los Angeles is being delayed by insurance and regulatory frictions, slowing rehabs and reoccupations in affected neighborhoods and stressing local housing supply and insurance markets [9].

6) Consumer demand cues: Survey evidence points to persistent homeownership aspirations among younger cohorts, which supports long-term demand for entry-level housing even amid short-term affordability pressures [16].

Financial Impact

- Transaction volumes: Prolonged slowdown in deal-making will pressure fee income for brokerages and reduce fee-bearing M&A opportunities for capital providers; pricing may compress as buyers demand higher yields for liquidity risk [1][11]. - Valuations and cap rates: Rising foreclosures and weaker lending suggest higher risk premia for non-core assets; multifamily remains relatively favored but could face localized cap-rate widening if financing stress or policy shifts (e.g., code changes in CA) raise redevelopment costs [6][7]. - Lenders and servicers: FHA borrower stress increases potential for higher loss severities and servicing burdens; state-level protections (e.g., Ohio) could complicate loss mitigation timelines and cash flow recovery [4][6]. - Broker economics: Consolidation and leadership turnover may accelerate platform investments (tech, lead gen partnerships like HomeAdvantage) and scale-driven margin improvements for winning national brands [5][3][8].

Market Outlook

Near term (6–12 months): Expect cautious capital deployment with preference for stabilized multifamily and industrial logistics (where fundamentals permit), continued pressure on office liquidity, and incremental increases in distressed listings in vulnerable mortgage cohorts [1][6][11]. Watch California building-code outcomes closely — adoption of single-stair allowances would materially lower per-unit construction costs and unlock projects; rejection would constrain supply and push up rents and redevelopment economics in the state [7].

Medium term (12–36 months): If foreclosure trends persist and lending remains tight, expect selective buying opportunities for well-capitalized investors and potential market bifurcation: higher-quality assets and markets with strong demographics will outperform secondary markets facing credit stress. Monitor broker consolidation and tech partnerships for distribution advantages, and track wildfire insurance/regulatory fixes that will influence rebuild timelines and insurability in high-risk geographies [5][8][9].

Actionable signals for portfolio managers: favor multifamily exposure with stringent underwriting on financing risk; de-emphasize office assets without clear repositioning plans; hedge portfolios for localized foreclosure/insurance disruption and monitor policy/code developments (CA stair rule, state foreclosure protections) that can alter supply and valuation trajectories [1][6][7][4][9].