WGA Releases New Housing Finance Outlook

Whalen Global Advisors LLC announced the release of their latest report in The IRA Outlook for Commercial & Residential Mortgage Finance. The comprehensive analysis covers both sectors' current situations and future projections.

The report detailed a significant reset in commercial real estate values, highlighting the shift caused by several factors, including interest rates and asset-specific conditions. Particularly impacted are multifamily properties in cities like New York, where previous rent moratoria have left many buildings financially impaired.

In contrast, the residential sector, valued at $13 trillion, appears stable, with low loss rates reported by banks. However, WGA anticipates a potential downward adjustment in home prices later this decade. They predict a temporary increase in home prices following the next Federal Open Market Committee's rate cut, which would soon be corrected back to pre-COVID levels.

The analysis points to future credit issues and suggests that commercial property prices are undergoing a double-digit correction. This shift is especially notable in the valuation processes where new mortgage loans consider higher capitalization rates, indicating an ongoing price deflation in the sector.