Q3 2025 Market Report - LendingOne

The past few years have been some of the more challenging in recent memory for real estate investors. Mortgage rates rose to levels we hadn’t seen in two decades, sales volumes hit decade lows, and investor confidence was tested due to the lack of inventory. Many landlords and flippers shifted into “wait-and-see” mode, holding cash on the sidelines as uncertainty loomed.

Now, as we move through Q3 2025, the landscape is starting to shift. Mortgage rates have pulled back from their highs, falling into the 6s. That has broken through a key psychological barrier and is beginning to coax some buyers back into the market.

Inventory is rising in some markets, and opportunities are opening up in select regions. Builders are increasingly leaning on investors to help move homes. This is neither the free-for-all market of 2021 nor the fully frozen market of 2023. We’re in a middle ground—a transitional phase where disciplined investors can find real advantages.

For those willing to do the work on underwriting, financing, and market selection, the next 12 months will present some of the best opportunities in years. At LendingOne, we have a front-row seat to these shifts, working with thousands of active investors across the U.S. Here are the key dynamics I see shaping today’s housing market and what they mean for your investment strategy.

Deal Flow Is Picking Up Again

One of the clearest signals this quarter is that activity is rebounding with consumers.. Purchase and refinance applications have risen as mortgage rates slipped back into the low 6s. That small shift matters: buyers who had been sidelined in frustration are starting to re-engage.

For investors, this means more chances to find motivated sellers—and in some cases, buyers willing to transact at reasonable terms. While transaction volume remains below pre-2020 levels, the bottoming out appears to be behind us.

Regional Divergence Remains Wide

Not all markets are moving in lockstep. Florida, especially parts of Southwest Florida, continues to experience more pronounced weakness. Inventory levels there are heavier, and sellers are facing more pressure to cut prices.

Meanwhile, the Midwest and Northeast remain relatively stable, offering steadier rent and occupancy trends. Out West, deeper suburban areas of Phoenix, Dallas, and Austin still face builder pullbacks and higher unsold inventory, creating both risk and opportunity depending on an investor’s entry point.

The lesson is simple: market selection matters more than ever.

Builders Are an Increasing Source of Opportunity

Homebuilders are recalibrating strategies, and investors are directly benefiting. From bulk deals on finished homes to marketplaces like Lennar’s new investor platform, we’re seeing more opportunities to acquire product straight from the builder.

This trend isn’t limited to institutional players. Even smaller investors can benefit by building relationships with local and regional builders who may be motivated to move inventory before year-end. For flippers and landlords alike, builder channels could become one of the more compelling ways to source deals in the coming quarters.

Financing Conditions Offer Some Breathing Room

While capital is not as low as it was during the Covid era, it is more predictable than it was a year ago. The Federal Reserve’s recent decision to lower interest rates and outline a clear path forward has provided buyers with significantly more confidence in both rates and the overall market. Rates in the 6s have changed the mindset for both buyers and sellers. At LendingOne, we’re seeing stronger loan demand as investors move off the sidelines.

Rental Market Dynamics Still Favor Long-Term Holders

Despite the noise around the for-sale housing market, rental demand has remained resilient. Rising household formations and affordability constraints continue to funnel renters toward single-family homes. Build-to-rent remains a strong segment, although much of the new supply is concentrated in specific metropolitan areas.

For investors focused on buy-and-hold strategies, the fundamentals still look supportive. Rent growth has cooled from peak levels, but occupancy and tenant demand are holding firm—particularly in markets with steady job growth and less overbuilding.

Positioning for 2026

Increasing supply and reduced rates will create openings for disciplined investors. The winners will be those who stay patient, keep capital flexible, and lean into opportunities created by regional imbalances and motivated sellers, particularly at the end of the year.

At LendingOne, our focus remains on helping investors move with confidence. Whether it’s financing a flip, a rental portfolio, or a new acquisition strategy, we’re here to provide the capital and partnership needed to execute in this environment.

The past few years have reminded us that cycles always turn. As we head into 2026, I believe those who stay active today—selectively and strategically—will be best positioned to benefit from the next upswing.