CMBS Delinquencies Spike: What Appraisers Need to Know
In this issue:
- CMBS delinquencies rose to 6.65% in March 2025, marking a sharp reversal after two months of improvement, with multifamily properties seeing the largest delinquency spike—now at 5.44%, up 360 basis points year-over-year.
- SRA Designated Member Advantage campaign launches, promoting member services before real estate attorneys, users of residential appraisal services nationwide.
- Legislative Day is just around the corner, register for free to give voice to your concerns before appraisal policymakers.
Insights
CMBS Delinquency Rate Increases Again: Market Analysis Crucial for Appraisers
The commercial mortgage-backed securities (CMBS) delinquency rate rose sharply in March 2025, reversing two months of declines, according to Trepp’s latest report. For real estate appraisers, the report underscores the need for careful market analysis when assessing property risk and value in today’s shifting environment.
The overall CMBS delinquency rate climbed 35 basis points to 6.65%, with the delinquent loan balance increasing from $36.0 billion in February to $39.3 billion in March. The rate is now approaching a four-year high, highlighting persistent instability across key commercial property types.
Multifamily properties recorded the most notable increase, with the delinquency rate jumping 98 basis points to 5.44%. Over the past year, multifamily delinquencies have surged 360 basis points—from 1.84% to current levels—signaling new risks even in sectors traditionally viewed as resilient. Appraisers valuing multifamily assets should take recent trends into account, particularly in underwriting rental assumptions, vacancy rates, and investor sentiment.
The lodging sector saw its delinquency rate rise 76 basis points to 7.19%, while industrial and retail properties experienced moderate increases of 26 and 33 basis points, respectively. These movements point to sector-specific risks that should be carefully analyzed during market research and comparable property selection.
In contrast, the office sector—which remains under significant pressure—showed a slight improvement, with delinquencies declining by 2 basis points to 9.76%. This marks the third consecutive monthly decrease. Appraisers working in the office segment should continue monitoring absorption rates, leasing trends, and property repositioning efforts as part of thorough highest and best use analyses.
Trepp also highlighted a major newly delinquent loan: a large multifamily portfolio with an outstanding balance nearing $1 billion—another signal that larger asset classes are not immune to current market stress.
When loans that have matured but remain current on interest payments are included, the overall delinquency rate would rise to 8.37%, up 19 basis points from February. Meanwhile, the share of loans 30 days delinquent improved slightly to 0.33%, suggesting early-stage distress has not yet accelerated significantly.
Key Takeaway for Appraisers:
As delinquency rates shift across property types, it is critical for appraisers to conduct thorough and current market analyses. Understanding sector-specific risks, rent trends, vacancy rates, and market behaviors will be essential to developing credible valuations that reflect today’s dynamic conditions. Deep dives into market data—not just historical comparisons—will be key to producing reliable appraisals in 2025. Courses like the Appraisal Institute's Advanced Market Analysis and Highest and Best Use serve as solid underpinnings in MAI Designation training and as refreshers in volatile markets.
Your Benefits
SRA Designated Member Advantage Campaign Launches
The Appraisal Institute is excited to announce the launch of the SRA Designated Member Advantage campaign, created to raise the visibility of SRA Designated Members among residential users of appraisal services nationwide.
A centerpiece of the launch are new professional video advertisements showcasing SRA Designated Members at work, highlighting their expertise professionalism, and critical role in complex residential real estate. The first phase of the campaign will target real estate attorneys through LinkedIn advertising and key industry conferences, positioning SRA Designated Members as trusted partners for legal professionals managing trusts, estates, property disputes, and other complex matters. Subsequent phases will target mortgage lenders and government agencies involved in residential property matters. This initiative reinforces the Appraisal Institute’s commitment to promoting SRA Designated Members to industries that rely on the highest standards of quality and credibility in valuation services.
This initiative reinforces the Appraisal Institute’s commitment to promoting SRA Designated Members to industries that rely on the highest standards of quality and credibility in valuation services.
Help us spread the word at the link below:
When expertise matters most, choose an SRA Designated Member.
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Sign up for our next free webinar
Appraising the Profession: Chief Appraisers on Trends, Performance, and the Road Ahead
Thursday, May 22, 2025
11:00 AM - 12:00 PM (CT)
Join us for a candid conversation with two leading chief appraisers—one in commercial real estate and one in residential—as they share what they’re seeing across the profession today.
In this exclusive webinar, you’ll gain insight into the trends shaping the valuation landscape, how chief appraisers are evaluating appraiser performance, and the guidance they’re offering to help appraisers thrive in a changing environment. Whether you specialize in residential or commercial work, this session will offer practical takeaways and thought-provoking commentary from two voices at the center of the industry.
Panelists:
- Tom Boyle, MAI, Chief Appraiser, US Bank
- Michelle Rogers, SRA, Chief Valuation Officer, New American Funding
Advocacy Updates
Pennsylvania Bill Seeks Changes to Appraisal Practices in Name of Fairness
On April 28, Representative La’Tasha Mayes introduced legislation (HB 1297) in the Pennsylvania House of Representatives to “restore fairness to the home appraisal process,” asserting that “every homeowner deserves to get out what they put into their home.” While the Appraisal Institute supports efforts to address systemic valuation inequities, it strongly opposes legislation that unjustly targets appraisers with duplicative mandates, disproportionate penalties, and impractical requirements that do little to advance meaningful reform.
HB 1297 would require the State Board of Certified Real Estate Appraisers (BCREA), in coordination with the Pennsylvania Human Relations Commission, to develop new bias training that far exceeds federal standards. Unlike the coursework mandated by the Appraiser Qualifications Board beginning in 2026, this training would compel appraisers to study topics such as “the role of the appraisal industry in establishing and perpetuating discrimination and segregation”—language that shifts blame to individual practitioners rather than addressing systemic issues.
Despite existing federal and state prohibitions against bias in appraisal, the bill imposes harsh new penalties: mandatory license suspension, compulsory retraining, and fines starting at $10,000, escalating to $50,000 for repeat offenses. Appraisers would also be required to provide notices to homeowners—regardless of contact—about their right to report suspected bias. BCREA would be tasked with creating a formal complaint process specific to appraisal discrimination.
The bill also mandates a one-year disparate impact study examining barriers to entry into the profession, bias in automated tools, and potential legislative reforms. While these are important topics, most have already been studied extensively by state and federal task forces, raising concerns about the bill’s scope, objectivity, and policy intent.
The Appraisal Institute supports data-driven reforms and accountability in support of fair housing. However, it will vigorously oppose legislation that scapegoats appraisers, duplicates existing protections, and imposes punitive measures without clear evidence of effectiveness.
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Join Us for the First Annual Appraisal Institute Legislative Day!
May 14–15, 2025 | Washington, D.C.
Held in conjunction with LDAC
We’re excited to launch the first-ever Appraisal Institute Legislative Day—a powerful opportunity for appraisers to shape the future of the profession through direct grassroots advocacy on Capitol Hill.
Your Voice. Your Advocacy. Your Impact.
This landmark event will feature remarks from Matt Jones of the Federal Housing Administration (FHA) and US Representative Mike Flood, chairman of the House Financial Services Subcommittee on Housing and Insurance.
Legislative Day will include a dynamic day and a half of policy education, advocacy training, and unparalleled networking. Participants will:
- Engage with Capitol Hill staff on pressing public policy issues, including appraisal waivers, hybrid appraisals, property data collectors, appraisal management companies, and more.
- Advocate for meaningful change that supports and strengthens the appraisal profession.
- Network with peers from across the country and build lasting professional connections.
Don’t miss this chance to be part of a pivotal moment for the appraisal profession.