Fed finally blinks, but what does a quarter-point cut mean for real estate?

The Federal Reserve cut interest rates this week for the first time in nine months, shaving a quarter point off its benchmark rate. 

For real estate, the move lands somewhere between relief and frustration. It signals that the central bank may finally be willing to loosen the screws on borrowing, but a quarter point isn’t going to unlock the floodgates on its own.

The cut follows months of mounting pressure from the industry, and from the White House. Developers and brokers alike have been clamoring for relief, as high borrowing costs have stalled projects and sidelined buyers. The move also comes against a backdrop of political drama, with President Donald Trump publicly attacking Chair Jerome Powell and even attempting to oust Fed Governor Lisa Cook over unsubstantiated mortgage fraud allegations.

Commercial real estate leaders welcomed the cut as a psychological boost, a signal that the market may be shifting into recovery mode. On the residential side, the timing is notable: mortgage rates posted their steepest weekly drop in over a year, settling at an average of 6.35 percent — down from more than 7 percent at the start of the year. The Mortgage Bankers Association reported a 22 percent jump in purchase applications year-over-year, suggesting some buyers are already inching off the sidelines.

But sentiment among consumers tells a different story. Fannie Mae’s most recent survey shows nearly three-quarters of respondents still think it’s a bad time to buy, even as conditions tilt slightly more toward buyers in many markets. High home prices, lingering affordability concerns and memories of the weakest spring sales season in more than a decade are keeping much of the demand bottled up, even as some buyers watch mortgage rates fall with cautious optimism.

Still, mortgage rates don’t move in lockstep with the Fed’s benchmark. They’re tethered more closely to the 10-year Treasury note, which briefly dipped below 4 percent this week. That’s helped rates ease, but whether they can push meaningfully below the psychological 6 percent threshold, which is the level many analysts say would truly revive demand, remains an open question.

Sentiment in the industry is pretty mixed overall. A recent Instagram poll of TRD followers showed 41 percent of voters cheering the move as a long-overdue step in the right direction, while 39 percent dismissed it as too little, too late. Of course plenty weren’t sure what to make of it yet, a snapshot that neatly captures the industry’s cautious, wait-and-see mood.

What is clear is that affordability is still a massive hurdle. Prices remain near record highs, and even with slightly cheaper financing, buyers face a tough equation. Developers, too, will need more than a quarter-point cut to justify restarting projects. But if the Fed follows through on its hints of additional cuts this year, momentum could start to build.

It was a busy week for real estate. Rithm Capital inked a $1.6 billion deal for Paramount, SL Green and Silverstein had their Manhattan casino hopes dashed and former Vornado exec Jared Solomon is accused of creating fake brokerages as part of his alleged fraud scheme.

Rithm Capital inks deal to buy Paramount for $1.6B

Rithm Capital is making a $1.6 billion bet on office real estate with its deal to acquire Paramount Group, one of New York and San Francisco’s biggest office landlords. The mortgage servicer agreed to buy Paramount’s outstanding shares for $6.60 apiece, valuing the firm at a steep 40 percent discount from pre-pandemic levels.

Former Vornado exec Jared Solomon created fake brokerages, burner accounts to steal millions

Federal prosecutors say former Vornado leasing executive Jared Solomon pulled off a 15-year fraud scheme that included fake brokerages and phony invoices to allegedly siphon more than $9 million from the REIT. Prosecutors claim Solomon copied a real executive’s signature from an old deal to make the sham companies, called Margoux Media and Cobalt Advisors, look legitimate.

Steve Witkoff sells stake in real estate firm for $120M

Steve Witkoff followed through on his plan to divest from his eponymous real estate firm as he pursues a diplomatic career in Donald Trump’s administration. The special envoy to both the Middle East and peace missions, sold a stake in his real estate company for $120 million

Game over for SL Green’s Times Square casino, Silverstein’s Avenir

Manhattan’s casino race narrowed this week after both SL Green Realty and Silverstein Properties saw their billion-dollar bids rejected by Community Advisory Committees. Silverstein’s $7 billion Avenir proposal on 41st Street and 11th Avenue met the same fate, leaving Soloviev Group’s $11 billion Freedom Plaza project on the East Side as the last Manhattan casino contender. SL Green’s $5.4 billion Times Square casino plan, backed by Caesars, Roc Nation and Live Nation, was voted down 4-2

Uncovered: Miami Beach officials’ texts suggest bias against Nikki Beach Club operator

Penrod Brothers, led by Lucia Penrod, widow of the firm’s late founder Jack Penrod, is seeking to overturn the awarding of a new contract for the property that is home to Nikki Beach Club in Miami Beach. Boucher Brothers, Penrod’s rival, won the city’s request for proposals, but dozens of texts by city staffers, recently released via the discovery process, could help Penrod bolster its case that Miami Beach officials showed bias in selecting a new operator.

South Side investor tied to indicted attorney Mark Nussbaum facing $10M in foreclosures

Eliazer Tauber is facing 16 real estate loan default complaints in Chicago after a new wave of foreclosure filings against several of his South Side multifamily properties. Among the latest batch of filings is a $1 million foreclosure of a 9-unit property that sheds new light on Tauber’s involvement with embattled attorney Mark Nussbaum.The pair secured a $1 million loan on the property even though it was worth just $400,000 three years ago.

Michael Shvo considers bulk sale at Mandarin Oriental Residences

Michael Shvo is weighing a bulk sale of unsold condos at the Mandarin Oriental Residences on Fifth Avenue, where fewer than a third of the 65 units have found buyers since sales launched in 2021. Shvo and partners Deutsche Finance America and German pension fund BVK hired Eastdil Secured to shop the remaining sponsor units, which once carried a projected sellout of $340 million.

Hundreds mourn Miami Beach real estate agent Darin Tansey at his celebration of life 

More than 400 agents, brokers and clients gathered at Miami Beach real estate agent Darin Tansey’s celebration of life on Wednesday morning, including Tansey’s closest friends and industry colleagues. Tansey, a top agent at Douglas Elliman with a huge reach, died unexpectedly last week of a heart attack at the age of 50.

Kilroy arrives in Beverly Hills on Tishman Speyer office sale

Kilroy Realty was the mystery buyer of Tishman Speyer’s Maple Plaza in Beverly Hills, paying $205.3 million for the about 300,000-square-foot property. The sale marks Kilroy Realty’s debut in Beverly Hills, where office vacancies are lower than downtown Los Angeles but higher than neighboring Century City.