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The Real Estate Question: 2025

by Andy Bates
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Investors Must Leverage the Data at Their Disposal by Andy Bates Not quite the dynamic environment seen in recent years since the pandemic, 2024 has maintained its own brand of tension for those involved in real estate. Throughout the year, uncertainty has been stoked through tight margins, unfavorable rates, and seemingly slow movement in the market. Such an environment has everyone from seasoned industry professionals to fledgling mom-and-pop investors asking, “Will the real estate market ever recover?” For the determined investor, there is much to consider rounding out the corner of the year into 2025. Maintaining an awareness of the climate in the market as well as relying on actionable data-points could mean the difference between those who are successful and those who only break even, or worse, are forced out of the market altogether. The following is a summary of recent trends and developments throughout the real estate industry with the aim of highlighting and interpreting several key factors. With the proper framework, these datapoints can be leveraged to help investors better understand not only what has happened in the space, but what may be to come. A Matter of Interest / Is Anyone Interested? For investors, no discussion of the potential state of the industry into 2025 would be complete without an examination of interest rates. This necessitates a conversation about the Federal Open Market Committee and its decisions. The September decision by the Fed to slash rates by 50 basis points has big implications for the space. Those 50 basis points represent a change to a new target Fed Fund rate of 4.75-5%. This, and other decisions of a seemingly dovish tendency, may herald the ending of a “higher-for-longer” rate environment. Core inflationary numbers have seen a .2 descent in percentage points in 2024 (down to 2.6%) per one assessment by JPMorgan. This is largely expected to taper to a low of 2% flat by 2026. Such movements in the fed fund rate portend for investors the potential for a shift towards a lesser cost to borrow. Lowered borrowing costs would provide investors with a greater opportunity for capital from private and commercial lending sources. The S&P CoreLogic Case-Shiller Home Price Index shows home cost appreciation has increased consistently in the vast majority of US markets throughout 2024. This lowered cost to capital will enable investors seeking non-conventional funding to remain not only active, but competitive in the space with overall greater access to funding and success with private lenders. Activity in the Space / What’s Happening Here? Beyond interest rates, there are several other factors of which investors should take note when attempting to analyze the market. These factors take into account housing market activity and understanding where these figures have been can help determine where they might be going. Housing starts have increased steadily month over month throughout 2024. This means that, whatever the rate comparison year over year, housing inventory is being steadily addressed. There is still not quite enough inventory in the space to sate demand, or stimy competition between primary-buyers and investors, and so home price appreciations remain relatively high. Keeping track of housing starts, and specifically taking note of these figures by location or area market, can help investors predict when inventory will become available and can help to source deals, even getting properties under contract, ahead of the competition. If housing starts can represent anticipated inventory in the space, completed projects are a valuable trend for following new inventory as it becomes readily available. Data provided by the United States Census Bureau released in late October show that completion rates on newly developed residential properties have increased month over month since Q4 of 2023. This represents hundreds of thousands more housing projects seeing their way to completion than even before the onset of the 2020 pandemic. In spite of the high costs of acquisition, housing demand has not slackened. Total home sales are a metric that often directly correlates to, and is representative of, housing demand. One report from Redfin.com shows home sales have increased as recently as Q4 of 2024. The report also highlights that this increase in home sales was likely driven by two primary factors; the first of which are the recent rate cuts issued by the Fed discussed earlier in this article and the second being the expectation of further interest rate cuts as outlined in a plan by the Federal Reserve. The combination of these factors — housing-starts, completions, and home sales — speaks to a trend toward normalcy and health in the housing market. It is worth noting that while prices across the real estate industry could stabilize, it may be a step too far to expect that they should drop to any significant degree. That being said, even with such tight margins between home prices and the power of investment capital, market activity should continue at an even course. Finding the Right Answers Even with the real estate markets’ diverse history fraught with hard years and shifting economies, it is fair to say that this year, in 2024, the real estate market has truly been tested. It is imperative, perhaps now more than ever, that investors leverage the data at their disposal. The question of where the industry is ultimately headed persists. In answer to these challenges one thing remains consistent: real estate investing maintains its status as a lucrative and worthwhile endeavor for those with a keen mind for the market and wherewithal to see their vision through.

The Future of Renting

by Sheri Young
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Transforming Single-Family Rentals with Smart Technology by Sheri Young As the single-family rental (SFR) market adapts to new challenges, the role of smart technology is evolving from a “nice-to-have” to a crucial component of modern property management. As 2025 approaches, the question is not whether to adopt smart technology, but how best to leverage it to improve property management and the rental experience. Here is a look at three key areas where smart technology is shaping the future of the industry. Enhanced Asset Protection Keeping properties secure and well-maintained is a growing priority for property managers and investors, especially given the recent surge in trespassing and theft incidents in metropolitan areas like Atlanta, Chicago, and Dallas. This trend has highlighted the need for more sophisticated and flexible ways to monitor vacant properties between tenancies. Smart monitoring solutions safeguard these assets more effectively and respond to potential issues quickly. For example, Swidget’s vacant property monitoring kits utilize discreet high-definition video cameras and AI-powered human detection to provide real-time alerts when unexpected activity occurs in a vacant property. The cameras also capture live audio and video of the activity in the property that helps staff and law enforcement better prepare themselves to enter a potentially unsafe situation. When a property is leased, the solution can easily be removed and redeployed to another vacant property. This portability not only maximizes the usefulness of the equipment but also minimizes long-term costs since equipment can be moved as needed, instead of repurchasing it. This proactive approach to asset protection allows for greater safety in potentially dangerous situations, helps to prevent trespassing and property damage, and gives property managers valuable peace of mind, allowing them to focus on other operational priorities. Improved Tenant Experience Today’s tenants are not just looking for a place to live. They want a home that aligns with their lifestyle and expectations. A recent survey by Rent.com found that 82% of renters want at least one smart device in their home, with many willing to pay a premium for properties equipped with smart home technology. In response, many property managers are exploring ways to offer smart-ready homes that give tenants both convenience and control. While smart thermostats and door locks are already popular, Swidget’s modular smart products take tenant customization to a new level. Once smart-ready outlets and switches are installed, tenants can select and swap different smart sensors (from air quality sensors and night lights to USB chargers and motion sensors) according to their unique needs. By offering flexible smart technology, tenants are empowered to make a space their own while ensuring core functions like safety and energy efficiency. With connected outlets and switches, tenants can also monitor and manage their energy usage in real time and set schedules or automation to turn off devices when they are not needed. This not only enhances convenience but also makes it easier for tenants to lower their energy bills — a compelling feature for eco-conscious renters. By incorporating these features, greater tenant satisfaction and even longer lease terms are achievable as tenants feel more at home in a customized space. Reduced Operational Costs and Maintenance Operational efficiency is a priority for property managers, especially as expenses like emergency maintenance continue to rise. Smart technology plays a critical role in reducing operational costs through early issue detection and remote monitoring capabilities. By integrating devices that monitor temperature, humidity, air quality, and water leaks, proactive steps can be taken to prevent damage and avoid costly repairs. Consider, for example, the impact of a water leak sensor installed near appliances like dishwashers or washing machines. When these sensors detect a leak, they cause the electrical device to automatically shut off the power to the subject appliance, limiting water damage and preventing mold growth. Similarly, air quality sensors can be connected to ventilation systems to manage moisture and prevent issues such as mold and dust mites. These preventive measures reduce emergency maintenance calls and minimize tenant disruptions. Smart energy management solutions also offer substantial savings. Rising energy costs can significantly impact net operating income, and smart outlets and switches can mitigate this by enabling remote control of lighting and appliances, and through smart schedules and automations. Remote monitoring capabilities are particularly useful for large portfolios, where daily on-site inspections are not feasible. Over time, these cost savings accumulate, and the data gathered from sensors helps to optimize maintenance schedules and predict repairs before problems arise, ultimately improving the bottom line. Embracing the Future of Single-Family Rentals As more SFR operators recognize the benefits of smart technology, we are likely to see an acceleration in adoption rates. The demand for remote management solutions, in particular, is growing as property managers seek ways to streamline operations across multiple properties. Technology that allows managers to control, monitor, and troubleshoot remotely not only enhances efficiency but also allows for quick adaption in response to tenant needs or market trends. Looking ahead, integrated smart systems that communicate with each other will likely become more prevalent. Imagine a future where a property’s smart thermostat, lighting, security cameras, and water sensors are all managed from a single platform, providing comprehensive data that helps managers make informed decisions. These systems will likely incorporate AI to predict maintenance needs, analyze security risks, and automate responses based on occupancy patterns. Such advancements could redefine the SFR market, where seamless, intelligent property management is essential for staying competitive. The shift toward tech-driven management is here, and early adopters stand to gain a competitive edge in the evolving SFR landscape. Integrating smart technology can future-proof assets, providing a high-quality rental experience that resonates with today’s tech-savvy renters.

On the Cutting Edge of Efficiency

Fordham Enterprises is Taking 3D Printing Technology Mainstream by Carole VanSickle Ellis When the COVID-19 pandemic hit in early 2020, Justin Fordham, founder and CEO of Fordham Enterprises, had to take a step back from his latest project of 20 three-unit residential homes, and reevaluate the situation. In New Jersey, where the project was located, most development contracts were pulled or frozen early in the pandemic, leaving investors and developers struggling to determine how they would complete projects or reenter the market. Fordham, however, did anything but flounder. He assessed the situation and ultimately decided cutting-edge technology and innovation would be the key to his market reentry. He founded Fordham Enterprises, a company that would take investors “from tech to title, helping to make homeownership a reality.” Fordham Enterprises describes itself as “a cutting-edge investment firm that combines 3D concrete printing technology and real estate development that is leading the way when it comes to bringing new methods of construction into the mainstream.” In addition to development and lending, the firm is the only private lender in the country dedicated solely to the 3DCP [3D concrete printing] industry. Fordham said, “Our commitment to innovation and social responsibility [3DCP residences are more affordable, faster to erect, and typically more energy efficient] fuels our relentless pursuit of creating sustainable communities.” Because 3DCP technology enables developers to “print” assets in layers, stopping only for the insertion of plumbing, electric, or other mechanical services, the timeframe for these projects is typically far more expedited than in traditional construction. “One of the problems we were having on the development side even before the pandemic was time,” Fordham said. He added, “The money was an issue as well because the cost of capital was already rising.” In early 2020, Fordham leveraged his time to research strategies for building and cutting margins without cutting the quality of the end product. He encountered all the “usual” solutions, but then, he encountered something even better: 3D printing. A developer himself, Fordham talked to the leading 3DCP manufacturers, lenders, and developers in this emerging space and developed partnerships with them. “They taught me about the process and how to implement it on a mainstream basis, and I, in turn, showed lenders how they can in most cases triple their ground-up funding by working with 3DCP developers,” Fordham said. Just four years later, Fordham Enterprises proudly states it is “the pioneering private lender dedicated to the 3DCP industry offering an unprecedented advantage with expedited ground-up funding for 3DCP projects.” Fordham noted, “Little did I know there were companies doing this type of development since the 1940s, but it is only just starting to be commercialized, disrupting the $10 trillion concrete industry in the process. Fordham Enterprises exists to help bring this technology and the affordable, high-quality housing it facilitates into today’s market.” A Long & Quiet History Concrete printing made a quiet debut nearly a century ago when inventor William Urschel used his “wall-building machine” to construct the first 3D concrete-printed building in history. That building, a basic structure composed of simple, concrete walls, was located behind a warehouse in Indiana. Since that time both concrete and 3D printing have come a long way; in 1998, high-strength concrete was used in the construction of high-rise buildings like Two Union Square in Seattle, and in 2006, “self-healing” concrete began to appear in construction. Self-healing concrete includes a “bacterial stimulant” that secretes limestone, enabling it to reseal cracks and minor damage. Today, 3DCP builds are weatherproof, fireproof, pest retardant and energy efficient. In 2020, the real estate space was ripe for the introduction of larger-scale developments and projects like Fordham’s due to housing scarcity and a national need for affordable residential options. “What we are really doing is pretty simple,” Fordham said. “We are utilizing A.I. and new machinery to help expedite the build process.” Fordham Enterprises is currently working not only on traditional single-family structures, but also larger buildings, including a four-story 3D-printed structure in New Jersey that will be the first of its kind when completed. “This building will have 21,000 square feet and 17 units,” Fordham said proudly. The mixed-use building is the largest 3DCP project in the country at this time and represents huge potential for expanding 3D printing opportunities in the multifamily, commercial, and industrial spaces. “U.S. inventory is behind by about 4 million homes,” Fordham said. “The only way we are going to make that up is if we transition how we build. We need to offload the work for humans and put the heavy work on machines so we can think better and work a little less.” He continued, “I love telling people to take a look at their six-to-eight-month process; I can do that same job in six to eight weeks.” 3DCP is largely impervious to weather conditions, making it ideal for areas with long rainy seasons. “We are able to tent the entire property and the machine itself, so rain and snow do not impede our development,” Fordham said. As 3DCP becomes more mainstream, Fordham said a misconception about the process has emerged around the idea that automating construction jobs will hurt employment in the industry. According to a 2019 study conducted by Oxford Economics, it is likely that systems like 3DCP and other manufacturing platforms could replace roughly twenty million jobs by 2030. However, according to the same study, automation and robotics also tend to increase demand for workers because these systems make more product available. In the case of 3DCP residential properties, that hypothesis holds true, Fordham said. He explained that historically, many people have expressed concerns about 3D printing putting developers and contractors out of business. In reality, he said, “It is actually the inverse. New technology coming to market opens up more jobs and opportunities because we can build more, build faster and build with better efficiency. We need to train more people, improve the relationship between lenders and developers, and educate investors to make the entire process easier.

Seizing the Single-Family Rental Tailwinds (Finally)

by Luis Vergara
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What Lessons Have Been Learned Over the Last Two Years by Luis Vergara We are entering a relatively unfamiliar yet anxiously anticipated period in our industry. For the better part of the last eight quarters (since Q4 2022), the atmosphere in the single-family rental (SFR) market can be described as risk-prone, transactionally dormant, and bereft of liquidity. During this timeframe, higher interest rates and financing costs and moderating rental rates tempered investors’ appetite for acquisitions and new development projects and shifted their priorities. THE AWAKENING Now, with the election over — and that element of uncertainty behind us — and the likely prospect of additional Federal Reserve interest rate cuts ahead, SFR tailwinds are finally beginning to emerge. That should assist in unlocking additional inventory to meet housing demand and spurring more new construction build-to-rent products while also reducing financing costs for leveraged investors. Moreover, the resilience in rents will be buoyed by the prevailing dearth of housing supply even in the face of inventory increases. These fundamentals are appealing to buy-and-hold, new build, and fix-and flip investors, as well as to their financing partners alike. This outlook also bodes well for the return of institutional capital to the private-label securitization market, thereby facilitating greater primary market liquidity. LINGERING REGULATORY RISK However, a cloud has surfaced over SFR in the form of proposed regulations that, if successful, could threaten to cause market disruption. Over the last year, a series of bills at both the federal and state level have been introduced with the intent to meaningfully restrict institutional investors’ ability to buy single-family homes. The two federal legislations, identified as End Hedge Fund Control of American Homes Act and Stop Predatory Investing Act, effectively aim to i) inhibit the number of homes that an investor can own and the associated tax deduction benefits and ii) introduce consequences for those exceeding those limits (exceptions do apply). The state level proposed laws have included efforts to curb investor ownership in California, Nebraska, North Carolina, and Minnesota. How credible is that threat? It is too early to tell where the new Congress and state legislatures will shake out on this topic and degree to which it will demand their attention. While the prevailing opinion is that the current federal legislation is unlikely to pass, a more reasonable alternative may garner support. At the state level, it would not be shocking to see select states embrace investor ownership curbing efforts. Nevertheless, any legislation passed will not be immediate and it will not inhibit SFR demand and investor interest. No decision will be made that causes mass displacement of tenants, destabilizes communities and markets, and inhibits the progress and efforts made to augment much needed housing supply. WHAT’S NEXT & WHO WILL BENEFIT? As the wind takes us in a new direction, what lessons have been learned over the last two years to ensure that we adjust our sails to capitalize on the tailwinds ahead? The respite in transactional activity and new acquisition opportunities led investors to spend more time evaluating their existing portfolios and internal processes to identify ways to their operations and optimize returns. Efforts to correct gaps and standardize processes that boost higher occupancy and collections rates while focusing on the tenant experience lead to increased renewals and reduce the vacancy and construction expense when a tenant decides to move. Investments in technology and data infrastructure to warehouse critical information and to build reporting tools have allowed for better communication flow and decision-making. Investors who have done the tough yet critical work to recognize their deficiencies and improve internally or to establish partnerships with service providers who can fill their internal voids and improve efficiencies will be best positioned to maximize returns and capitalize from the looming aperture in investor appetite for new acquisition and new construction opportunities. SOLUTIONS TO SUPPORT SFR At Guardian Asset Management (Guardian), we’re collaborating with lenders as well as institutional and smaller-scale investors to complement their internal operations and provide our infrastructure and comprehensive suite of secure and SOC 2-compliant core solutions to create efficiencies, optimize decision-making, provide market optionality, reduce costs, and enhance transparency and returns. We disrupt industry challenges by identifying workflow gaps and implementing solutions that leverage our technology stack, established network of partnerships, machine learning, and detailed analytics to determine optimal strategies both at the asset and portfolio level. Our ecosystem of integrated service verticals allows clients to track properties throughout the investment life cycle to ensure best execution at critical decision points. The following are key services and solutions that Guardian provides to the industry: Property Preservation & Inspection // Our nationwide network of 6,000+ fully vetted and constantly score carded vendors provide ongoing property preservation and maintenance services that include a full suite of inspection products, construction draw management, pool and lawn maintenance, HOA management and oversight, utility activation and management, among others—all integrated with Guardian’s service pillars. Construction Management // Across both coasts, our team of full service and licensed general contractors oversee, direct, and execute every aspect of construction, from the initial blueprint to the final touches. Our meticulous scoping process and quality control measures guarantee a detailed understanding of project needs and adherence to industry-leading standards. Efficient renovation and turn management, 24-hour maintenance, occupancy and permit management, eviction management, and insurance claim management are additional services at client’s disposal. Quality, efficiency, and reliability come included. Title & Closing // Our in-house team of experts offer a comprehensive suite of nationwide title services that facilitate the process of transferring ownership of a property and remove complexity and opacity to provide a clear understanding of risks and to facilitate efficient and smooth closings. Property Management // 24/7 maintenance, competitive management fees, rental consulting services, rent price analysis, tenant management, rent collection, applicant screening, attractive resident benefit packages, and marketing of vacant properties encompass our property management offering. Valuations & Innovative Adjusted Repair Value (ARV) Estimates // Guardian’s team of experienced and certified valuation professionals provide accurate, federal and state

What’s Next for Real Estate Investors in 2025

Data-Driven Insights for a Dynamic Market by Jeremy Sicklick As we look ahead to 2025, it’s clear that real estate investing is changing fast. Market dynamics are shifting in ways we haven’t seen in decades—inventory is fluctuating, buyer demand is evolving, pricing trends are becoming less predictable, and artificial intelligence (AI) is finding applications in our daily lives, including real estate investing. For real estate investors, this means data is more than just helpful; it is absolutely essential. At HouseCanary, we are in a unique position to help investors navigate this evolving market, thanks to our role as a nationwide brokerage with access to the majority of multiple listing services (MLS) across the U.S. and our leading innovations in AI. Every week, we analyze 100 metrics for single-family homes nationwide, providing our clients with insights from our Market Insights product. This level of detail allows us to track trends as they emerge, helping investors make timely, data-driven decisions. As we move into 2025, data-driven insights will be key to navigating new challenges and seizing opportunities. Here is a look at the major trends shaping real estate. Key Trends for Real Estate Investors in 2025 Finding High-Potential Markets in a Fragmented Landscape One of the most significant shifts we are seeing is the increasing fragmentation within the real estate market. While total inventory has increased 6% over the past year, October 2024 saw a 4.9% decline in new listings year-over-year. The 2025 market will reward investors who look beyond the usual hotspots to identify opportunities in steady-growth regions. For instance, Metropolitan Statistical Areas (MSAs) like Washington-Arlington-Alexandria, DC-VA-MD-WV; Louisville-Jefferson County, KY-IN; Cincinnati, OH-KY-IN; and Akron, OH, have shown steady price growth with moderate increases in rental inventory. By expanding focus to such areas, investors can find growth potential even as other markets cool, making targeted investments that match regional dynamics. Adapting to New Buyer Patterns and Acquisition Strategies Despite broader signs of cooling, buyer activity in higher price tiers remains strong. Properties priced above $400,000 have shown resilience, with contract volume in this segment up more than 20% year-over-year. In particular, we are seeing the $400k-$600k, $600k-$1m, and $1m+ price brackets driving growth in this category. This trend indicates that opportunity lies in higher-end markets where buyers, including investors, are less impacted by interest rate hikes. In 2025, aligning acquisition strategies to meet this demand in mid- to high-end properties, particularly for fix-and-flip investments, can lead to stronger returns and greater portfolio stability. Precision in Underwriting Amid Regional Market Complexity Market conditions vary widely by region, making precise underwriting essential. Even slight inaccuracies in valuation can significantly affect profitability. Recent data points to stabilizing price trends, with single-family home listing prices down 1.1% month-over-month in October, but up 3.4% compared to last year. In 2025, data-driven underwriting will be critical to managing these shifts effectively. Investors will need accurate valuations and predictive analytics to make informed decisions about property potential. Expanding Transactions Nationwide as Regional Markets Decentralize Geographic diversification is increasingly a focus, with contract volumes rising 15.9% year-over-year nationwide. This increase suggests that cross-regional transactions are on the rise. However, each market has its own regulations, demand patterns, and pricing structures, which adds layers of complexity. Investors who can efficiently navigate these differences in 2025—expanding into regions with lower barriers and higher growth potential—will have a competitive edge in building resilient portfolios. Optimizing Rental Income as Demand for Single-Family Rentals Grows Demand for single-family rentals remains strong, with rental prices up 0.4% year-over-year to $2,535 per month. However, with rental inventory rising 20.5% from last year, competition among landlords is intensifying. In 2025, maximizing rental income will require a more strategic approach to rent-setting, aligned with regional trends. Using data to set rents competitively, tracking nearby properties, and minimizing vacancies will be crucial to maintaining cash flow. Proactive Asset Management for Long-Term Success Managing a portfolio is about more than just acquisitions; it’s about knowing when to hold, adjust, or even exit a property. Key indicators, like days on market—up 15% to an average of 46 days—and a 16.7% increase in price cuts, reflect cooling buyer enthusiasm in some areas. Moving into 2025, a proactive approach to portfolio management—such as tracking performance metrics, staying alert to market changes, and adjusting strategies based on emerging trends—will be essential for investors to sustain returns and reduce vacancy risk. Navigating the Trends Navigating these trends requires more than just data; it takes actionable, timely insights. Many investors face challenges related to: Fragmented Data Sources // Real estate data can be inconsistent and difficult to consolidate. Unifying critical data—market trends, property insights, and rental comparisons—has proven difficult. Data Overload // With today’s fast-paced market, having too much data can be as challenging as not having enough. Broker Dependency // Expanding into new markets traditionally required a reliable network of local brokers, complicating the process. That is why we created the HouseCanary Platform — an end-to-end solution built to tackle these challenges. At HouseCanary, we have always believed in the transformative power of AI. In fact, our entire platform is powered by CanaryAI, a first-of-its-kind GenAI real estate assistant. CanaryAI democratizes real estate data and analytics by providing instant answers derived from our massive 136-million property dataset and industry-leading analytics. With machine learning at its core, CanaryAI continually improves its predictions, giving investors the edge they need to make timely, informed decisions. What was formerly reserved for large institutional investors is now accessible to investors of any scale. How to Leverage AI and Data The unpredictable market dynamics of 2025 highlight the importance of leveraging AI and robust data at every investment stage. HouseCanary’s AI-powered platform supports investors through the entire investment lifecycle: Analyze Markets // Access property data on over 136 million properties across 200 MSAs and 14,000 ZIP codes. Source and Transact on Properties // Real-time listings, enriched with proprietary valuations and forecasts, simplify sourcing and decision-making. Enhance Underwriting // Benefit from forecasted sale and rental values, high-similarity comparables, and as-repaired values to