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According to Michael Kovalev, agency owner of Kovalev Insurance Agency in Newton, Massachusetts, insurance is often the second-largest operating expense for a property owner after debt service, making it a constant top-of-mind concern for rental property owners.
Michael Kovalev of Kovalev Insurance Agency cited the hard insurance market, increasing maintenance costs, recalled electrical panels, aging infrastructure, higher labor costs, COVID-19-era rent freezes, proposed rent control initiatives, and constantly increasing tenant expectations as factors that have all driven operating expenses significantly higher.
Michael Kovalev of Kovalev Insurance Agency said short-term rentals have gone from booming to being heavily restricted in many communities, a shift that affects insurance costs, insurance eligibility and long-term risk management strategies alongside elevated commercial vacancies.
Michael Kovalev said the long-term solution has to include loosening zoning restrictions, converting underutilized office space where it makes sense, and creating incentives for builders to increase the housing supply. Kovalev noted those conversations around housing supply, zoning restrictions, office vacancies and affordability are not going away anytime soon.
Michael Kovalev of Kovalev Insurance Agency said most of the landlords and investors he works with are not massive institutional owners but local business owners trying to maintain safe, well-run buildings while dealing with rising insurance costs, taxes, labor and maintenance expenses.
Both states allege First Street's property-level climate-risk scores are inaccurate, misleading and lack adequate uncertainty disclosures. Florida alleges First Street presents scores as accurate, transparent and scientifically validated when the models contain significant uncertainties. Nebraska alleges the scores are based on incomplete or incorrect property information and fail to account for homeowner mitigation measures.
First Street's climate risk data appears on real estate listing portals including Zillow, Redfin and Realtor.com, where consumers can view it alongside property listings. As of the Tuesday morning referenced in the article, all three portals were still displaying First Street data or links to First Street data with listings.
In December 2025, Zillow removed some First Street data after California Regional MLS questioned its accuracy. Redfin chose to continue displaying the data, with chief economist Daryl Fairweather writing on LinkedIn that homebuyers find climate risk scores valuable when making major financial decisions.
Florida Attorney General Uthmeier is seeking injunctive relief to permanently prevent First Street from making accuracy claims without disclosing uncertainty, equitable financial relief including consumer redress and disgorgement of allegedly ill-gotten gains, and civil penalties ranging from $10,000 to $15,000 per violation. The attorney general's office is also demanding a jury trial.
According to the Nebraska lawsuit, buyers are being 'spooked' by elevated risk scores, forcing some sellers to accept reduced offers and leaving others with longer marketing times or no sale at all. Nebraska Attorney General Mike Hilgers said First Street 'drives down home values and increases costs and frustrations for Nebraskans.'
First Street's analysis of 120 U.S. metro areas, drawing on 25 years of commercial performance data from the National Council of Real Estate Investment Fiduciaries, found that properties in high-natural-disaster-risk markets trade at a 16.9% discount to otherwise comparable assets in lower-risk areas. For multifamily specifically, the discount reaches 25%, according to First Street.
Premiums across multifamily, office, industrial, and retail assets grew 154% between 2017 and 2024, at a compound annual growth rate of 14.3%, according to First Street. That pace outran the prior 17-year average by more than three to one. Insurance consumed 4.1% of average CRE net operating income in 2024, up from 1.9% in 2017.
Commercial property rate growth decelerated from 5.6% in the fourth quarter of 2024 to 2.9% by the fourth quarter of 2025 following a relatively quiet 2025 hurricane season, according to Stephen Pantano, senior vice president of market transformation at the Urban Land Institute. Pantano cautioned that commercial insurance market cycles are short-lived and that the structural premium reset means even a soft period is unlikely to return to the prior floor.
James Stuart, corporate chief sales officer and practice leader for Hub International's North American real estate specialty, said lenders are now requiring minimum carrier financial-strength ratings, commissioning insurance-to-value studies, and in some cases mandating full excess coverage as a loan condition. Stuart said insurance has moved from a closing-checklist item to an active credit-committee topic.
Miami and Fort Lauderdale are the two most insurance-burdened office markets in First Street's data, with premiums consuming roughly 5% of office net operating income in each, versus 1.4% in Nashville. Fort Lauderdale office values fell 17% between 2020 and 2024 as insurance costs doubled, according to First Street. Miami office buildings traded at a 2025 average of $360 per square foot, nearly double the national average of $190 per square foot, according to Yardi Matrix.
Brian Burke said he is not convinced the multifamily market has reached its bottom. Burke pointed to rent concessions being plentiful, negative lease trade-outs where new renters are paying less than previous renters, and cap rates that have not expanded enough as evidence that more pain is ahead.
Brian Burke said the 10-year bond rate, which sets long-term debt rates, has risen alongside short-term rates. Burke said owners who were hoping to escape expensive floating-rate debt by refinancing into long-term debt are now finding that long-term debt is more expensive than it was, leaving them stuck with no solution.
Brian Burke described a second wave driven by rising 10-year bond rates making long-term refinancing prohibitively expensive. Burke said the first wave was triggered by the Fed raising overnight borrowing rates, which increased SOFR and hurt floating-rate debt holders, and the second wave follows from long-term debt becoming equally costly.
Brian Burke said that when a property's cap rate is lower than the interest rate on the debt used to buy it, that is negative leverage, meaning the investor loses money on the spread. Burke said you cannot sell real estate at 4% and 5% cap rates in a 5.25% treasury market because the numbers do not work.
Newmark identified $179 billion in low-rate commercial real estate debt maturing through 2028 as exposed to refinancing risk. Most of those loans were underwritten when the cost of debt was near historic lows and valuations were high, and they now face refinancing into a significantly higher rate environment.
Newmark analysts wrote that lenders are moving away from the extend-and-pretend approach that has dominated the past four years. The analysts noted that the market largely expects rates to stay elevated, which makes loan extensions a less viable strategy for both borrowers and lenders.
Yields on the 10-year Treasury have soared past 5% over the last month, according to the source. Newmark found that roughly 78% of fixed-rate securitized commercial real estate debt maturing through 2028 carries an interest rate below that benchmark, meaning most maturing loans face materially higher refinancing costs.
Newmark research highlights that multifamily stress is climbing as apartment operators with loans extended from before the pandemic or relying on bridge financing face impending maturity dates and rate resets at significantly higher costs. CMBS delinquency data from Trepp showed multifamily delinquencies increased or were flat in September.
FHFA Director Bill Pulte said on September 18 that Fannie Mae and Freddie Mac were 'beginning to buy even more, large quantities, as we speak,' according to Scotsman Guide. However, Fannie Mae's and Freddie Mac's own monthly filings show combined holdings peaked in April and have declined since, with net buying of roughly $39 billion over eight months—about one-fifth of the $200 billion White House directive.
Total federal debt rose from $23.41 trillion on February 28, 2020, to $40.31 trillion on October 8, 2026—an increase of $16.9 trillion or 72%, according to the U.S. Treasury. Greater Treasury supply may force investors to demand higher yields on the 10-year, pushing up mortgage rates, while a retreating government mortgage buyer leaves fewer hands for mortgage bonds and widens the spread.
The mortgage spread widened to 2.12 percentage points from 1.98 the week before, according to HousingWire. The historical spread has run about 1.6 to 1.8 percentage points. On a $400,000 loan at 7.48%, every 20 basis points of spread adds about $55 a month, or roughly $19,800 over 30 years, according to The Skeptical Investor Newsletter's calculations.
The 30-year mortgage rate stood at 7.48% as of the article's publication, down 0.09% from the prior week, according to Mortgage News Daily. The economy added just 29,000 jobs in September, unemployment ticked up to 4.2%, and July and August payrolls were revised down a combined 60,000, according to the Bureau of Labor Statistics.
Marty McDaniel of The Northstar Companies said the risks that get obscured include management depth, labor efficiency, revenue execution, franchise obligations and capital timing. McDaniel said weak leadership, poor revenue strategy, labor inefficiency, deferred maintenance and a capital plan that exists only in a spreadsheet can alter the return profile quickly even when the underlying property and market look sound.
JLL reported $24 billion of US hotel transaction volume in 2025, up 17.5 percent year-over-year. JLL also reported approximately $88 billion of hotel loans scheduled to mature through 2027. Marty McDaniel of The Northstar Companies said refinancing pressure, capex needs and ownership transitions will create opportunities, but some will simply be undercapitalized operating businesses wearing attractive real estate.
Marty McDaniel of The Northstar Companies said buyers should establish: who is accountable for revenue strategy; whether labor is scheduled to demand or to habit; the real condition of the building behind the engineering log; what brand obligations or property-improvement requirements are coming; and whether the management team can explain in plain English how the property will produce the underwritten cash flow.
Marty McDaniel of The Northstar Companies said a family office with patient capital does not have to force a three-year exit and can fund a sensible renovation or repositioning without manufacturing short-term performance. However, McDaniel said patient capital still requires impatient operating discipline, and the longer the intended hold, the more important it becomes to know whether management is protecting the physical asset, the brand, the team and the cash flow simultaneously.
Marty McDaniel of The Northstar Companies said the best hotel investments he observed were governed well rather than micromanaged. According to McDaniel, effective ownership knew which decisions belonged to the operator, monitored a small set of leading indicators rather than only the prior month's profit-and-loss statement, made capital decisions before the building forced them, and treated management depth as part of the asset rather than an HR issue.
The memo 'Sounding the Alarm,' from Inside Track, a UK nonprofit, alleges that catastrophe modelers and actuaries at some insurers are being pressed to give forward-looking climate estimates a 'haircut' or to 'manage down the numbers.' The memo states that where higher physical-risk estimates could hurt profitability or market share, model adjustments are often constrained by commercial considerations.
According to the National Association of Insurance Commissioners, insurers initiated just over 2 million non-renewals in 2024, about 61% more than the year before. Between 2018 and 2024, company-initiated non-renewal rates rose in every NAIC region by between 96% and 216%. The West more than tripled in just two years, and the Southeast saw the sharpest overall increase.
The memo warns that if cover is restricted or withdrawn at scale, the result could precede a financial crash, drawing a parallel to sub-prime lending before 2008. A study highlighted by NYU Stern found a one-percentage-point rise in non-renewals was associated with an 8.3% fall in average single-family home values, rising to 16.5% for lower-value homes, and a 0.91-point increase in the foreclosure rate.
According to the article, much of the reinsurance capacity behind US carriers comes from European groups. Munich Re and Swiss Re alone accounted for around a quarter of reinsurance premiums written by the world's 50 largest reinsurance groups in 2022, according to AM Best. The memo names North America among the regions where the impact of trimmed models and reduced capacity will be felt.
The memo names coastal, mountain and flood-prone communities as the most exposed to insurer withdrawal. The NAIC found the Southeast saw the sharpest increase in non-renewal rates between 2018 and 2024, and the West more than tripled in just two years. The Midwest is also exposed, as the NAIC found it was the only region where operating profits declined almost every year from 2018, driven largely by severe convective storms since 2021.
The known purchase or sale prices of four British SDB properties total approximately £110 million, nearly NIS 440 million at current exchange rates, or approaching half a billion shekels at the exchange rates prevailing when the properties were purchased. These figures represent property transaction values, not the amount lost by investors, and full current values and total capital at risk are not publicly available, according to Calcalist.
The U.S. Federal Reserve's benchmark rate rose from 0%–0.25% in early 2022 to 5.25%–5.5% within roughly a year and a half, while the Bank of England's rate rose from 0.1% at end-2021 to 5.25% by August 2023. Calcalist attributed the distress to properties acquired during cheap-money conditions, high leverage, a sharp rise in interest rates and difficulty refinancing debt.
SDB co-CEOs Shrulik Hanoch and Dan Liberman said, according to Calcalist, 'We will continue to act with all means at our disposal to protect the interest of the investors.' Calcalist also reported that SDB offered some clients the option of waiving certain claims in exchange for the right to participate in profits from other projects, and that many clients agreed, while some investors who suffered losses are seeking to organize through legal proceedings.
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