MARKET & TRENDS
The Market Has Shifted. Have You? WITH TIGHTER MARGINS AND HIGHER RATES, HERE’S HOW INVESTORS ARE PIVOTING.
JEFF ROTH
D eals are not penciling. Prices are falling in more markets. Agents and mortgage brokers are getting skinnier and skinnier. Bottom line? The markets are changing, and not always in the way investors expected. At the start of the year, many anticipated that mortgage interest rates would finally begin to fall. Instead, rates
have stayed higher for longer than forecast, putting continued pressure on borrowing costs. This has been compounded by the Federal Reserve’s decision to hold off on cutting the federal funds rate due to persistent inflation, keeping floating rate debt expensive. Home prices, meanwhile, are starting to soften in more markets. But even with that dip, housing remains unaffordable
for many prospective buyers, tempering demand. For investors, this creates a difficult environment: not only is it harder to find properties that cash flow well, but rising costs across the board—from materials to labor—are squeezing already tight margins. Concurrently, cap rates remain lower than sellers would like, making it tougher to justify pricing in today’s
22 | think realty magazine :: july - august 2025
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