The housing market is cracking in ways we haven't seen since the financial crisis, with office building loan defaults now worse than 2009 and hitting a brutal 11.7% delinquency rate.
Meanwhile, thousands of zombie foreclosures are piling up across the Rust Belt, creating a backlog of abandoned properties stuck in legal limbo that's dragging down entire neighborhoods.
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But here's the twist—mortgage rates just plunged to 2025 lows after weak jobs data spooked the Fed, and that's happening right as some major players like BGO are discovering their AI underwriting systems completely missed local market risks.
All of this chaos is creating a perfect storm where distressed properties are about to flood the market just as borrowing costs dropped.
In this edition of the AltReports:
🏢 Office CMBS delinquencies shatter 2009 records at 11.7%
🏘️ Zombie foreclosures flood secondary markets in legal limbo
📉 Fix-and-flip profits collapse as mortgage rates kill demand
💸 Mortgage rates plunge to 2025 lows on weak labor signals
🤖 AI underwriting failures expose CRE valuation gaps at BGO
Video of the Week: LARGEST COVER-UP In Housing History Is About to IMPLODE
Chart of the Week: Data Discrepancies in Multifamily Construction
Podcast of the Week: Cloning the Deal Maker: How AI “Clones” Are Scaling Investor Outreach to 32,000 Customers
Office CMBS Delinquencies Top 2009 Highs, Multifamily Cracks
Office loans are blowing up, with delinquencies hitting a record 11.7%—worse than 2009.
Multifamily loans are cracking too, banks are pulling back, and forced fire-sales are gearing up.
💡 Investor Takeaway: Focus on 2019-2021 vintage loans in secondary markets where remote work hit hardest.
Zombie Foreclosures Surge in Q3 2025 Hotspots
The foreclosure pipeline’s broken and Q3 saw zombie properties in Illinois, Ohio, Michigan and Pennsylvania spike to multi-year highs.
That flood of abandoned homes stuck in legal limbo is dragging down values and clogging the market for legit sellers.
💡 Investor Takeaway: Target properties vacant 12+ months with clear title chains and under $75K in back taxes/liens."
Flips are Fizzling and Foreclosures are Stirring
Mortgage rates above 7% have smothered buyer demand and flipped home profits have cratered to decade lows.
Inventory is piling up as delinquencies tick higher and lenders dust off foreclosure pipelines.
💡 Investor Takeaway: Focus on pre-foreclosure properties in the $150-400K range where current flippers are stuck.
Mortgage Rates Hit New 2025 Low on Weak Job Openings
Mortgage rates have plunged to 2025 lows after a softer-than-expected jobs report exposed cracks in the labor market.
That drop is yanking yields lower and knocking the wind out of the Fed’s tightening power, so borrowing just got way cheaper.
💡 Investor Takeaway: Target markets with 6%+ unemployment where layoffs will force more distressed sales.
CRE AI Underwriting Flop Spells Discounts for Distressed Buyers
BGO's big AI underwriter just admitted it missed crucial local-market risk in its deal vetting, and they've been overvaluing their CRE assets.
Now they're scrambling to patch the model and haul analysts back in, which could torpedo their book values when real-world stress hits.
💡 Investor Takeaway: Research BGO's 2022-2024 acquisition portfolio focusing on suburban office parks and Class B multifamily