The Brick Breakdown

💸 Tariffs drive rates up, cloud Fed outlook

New 104% tariffs on Chinese goods took effect today, fueling bond market volatility and pushing the 10-year yield to 4.3% while mortgage rates climbed to 6.85%. With inflation pressures rising, Fed officials like Mary Daly signaled there’s no rush to cut rates, as affordability worsens across the housing market.

🤖 Real estate tech accelerates with AI push

Google Cloud and UWM are partnering to modernize mortgage lending through AI-driven tools, while Zillow expands its Showcase platform to HomeServices agents, signaling a broader tech arms race. Proptech startup Adaptis also raised $4 million to expand its AI-based carbon tracking, reflecting continued VC interest in real estate innovation.

🏘️ Affordability strains deepen amid policy and pricing shifts

Nearly half of renters in major metros are now cost-burdened, spending over 30% of their income on rent, while four times as many households qualify for vouchers than there are vouchers available. At the same time, insurance costs are expected to rise 8% in 2025 as tariffs drive up prices for construction materials, adding further pressure to homeowners.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.85% (+10 bps)
10Y Treasury Yield: 4.41% (+26 bps)
FTSE NAREIT Index: 686.39 (-2.55%)
30-day SOFR Average: 4.34%

Market Pulse

Markets reacted to 104% China tariffs with falling Treasuries, rising mortgage rates, and a sharp drop in small business optimism, as Fed officials signaled caution amid growing inflation concerns

104% tariffs on China take effect today – U.S. futures and Asian markets dropped, as Trump defended tariffs during a dinner with House Republicans (WSJ)

US Treasuries fall as weak demand in $58bn auction pushes yields to 4.3% – Mortgage rates follow bond market volatility, rising to 6.85%, impacting homebuyer affordability (FT & CNBC)

Small business optimism drops 3.3 points to 97.4 in March – Largest decline since June 2022, following a near-record high of 105.1 in December (NFIB)

Fed’s Mary Daly sees time to tread slowly – Daly says there's no rush to cut rates as economy stays solid, though concerns over inflation rise from Trump's tariffs (Reuters)

Policy & Industry Shifts

HUD targets deregulation to spur homebuilding – Secretary Turner calls for reducing federal and local regulations to lower construction costs and tackle housing affordability (NationalMortgageNews)

Residential

Affordability pressures continue to mount as renters face growing cost burdens, buyers increasingly turn to stock portfolios for down payments, and tariffs push up insurance costs—even as build-to-rent supply hits a record high

1 in 5 prospective homebuyers plan to sell stocks for a down payment – Stock market volatility could dampen homebuying demand as prices rise and confidence falters (Redfin)

Rent-burdened households continue to grow – Nearly half of U.S. renters in major metro areas spend over 30% of their income on rent, with four times as many severely cost-burdened households as available vouchers (Zillow)

CPI shelter growth forecast steady – Zillow expects 3.47% growth for owner’s equivalent rent and 3.10% for primary residences, with a sharper slowdown by late 2025 (Zillow)

Build-to-rent homes hit record high in 2024 – 39K single-family rental homes completed, a 15.5% increase from the previous year, with no slowdown in sight (Inman)

Tariffs to drive up home insurance rates – Extreme weather, combined with tariffs on building materials, expected to raise insurance costs by 8% in 2025, reaching $3,520 for a $400K home (Bloomberg)

Office

Hybrid work dominates as 68% of companies offer flexibility – Office vacancy rates stay high at 18.9%, despite some increase in attendance (GlobeSt)

Miami office leasing up 26.5% YoY in Q1 – Smaller spaces lead demand, accounting for 85% of deals; rents rise 3.5%, while vacancy ticks up to 15% (GlobeSt)

Industrial

Tariff pressures are weighing on the industrial sector, with Prologis shares hitting a five-year low after a downgrade, as rising costs and softening fundamentals drive expectations of higher vacancy rates

Prologis downgraded by Scotiabank amid tariff turmoil – Shares fell to five-year low as tariffs on China, Mexico, and Canada worsen industrial fundamentals, with vacancy rates expected to rise (Bisnow)

Market Mix

Mall foot traffic showed modest recovery in March, but broader retail sector struggles continued in Q1, with rising vacancies, weak absorption, and limited new development signaling persistent headwinds

Mall visits rebound in March 2025 – Indoor malls show strongest YoY growth at 1.8%, but visitation remains below pre-pandemic levels, with shorter visit durations across all formats (Placer.ai)

Retail sector struggles in Q1 – Negative net absorption and rising vacancies, with modest rent growth amid store closures and limited development (GlobeSt)

Financings

G.H. Palmer Associates refinances Park Sierra with $168M Freddie Mac loan – Replaces $117M CMBS loan with a five-year, fixed-rate loan (MultiHousingNews)

M&A

Building & Portfolio M&A

Prologis acquires two New Jersey industrial properties for $197.4M – Logistics giant adds 600K square foot facility in Monroe Township, expanding its Garden State portfolio (CoStar)

Clarion Partners buys Pepsi-leased industrial complex near Baltimore for $85.5M – City Logistics complex features 301K square feet (CommercialObserver)

Carlyle Group buys Brooklyn East Flatbush warehouse for $50M – Acquires self-storage facility at 1-19 Remsen Avenue, adding to its growing NYC portfolio (CommercialObserver)

Institutional Fundraising

JPMorgan’s Campbell Global raises $2.3B for timber investments – $1.5B for Forest Climate Solutions Fund II, focusing on sustainable timber in OECD countries (Bloomberg)

Distress Watch

$260M CMBS loan secured by Pembroke Pines, FL mall sent to special servicing – Loan downgraded twice due to cash flow concerns and a maturity default (CommercialObserver) 

Paramount seeks sale of $187.5M loan – Debt tied to KPMG Building in San Francisco listed after loan write-down and upcoming tenant exits (TheRealDeal)

Proptech & Innovation

AI-driven innovation is reshaping real estate, with new partnerships between Zillow, Google Cloud, and UWM streamlining listings and lending, while startups like Adaptis attract funding to tackle carbon management in buildings

Google Cloud and UWM partner to modernize mortgage lending – AI and cloud tech streamline underwriting and client support (BusinessWire)

Proptech startup Adaptis raises $4M seed round – AI-powered platform for carbon management in buildings plans to expand in the U.S. and Canada (CommercialObserver)

HomeServices partners with Zillow – Agents gain access to Zillow's AI-powered Showcase tools for enhanced listings (HousingWire)