COLUMBUS, Wis., Nov. 04, 2025 (GLOBE NEWSWIRE) -- In light of recent market developments, Michael Eisenga, CEO of First American Properties, felt compelled to issue a statement on his observations and concerns regarding liquidity conditions, central-bank policy shifts, and the implications for the housing market and broader economy.
On Friday, October 31, 2025, the Federal Reserve’s Standing Repo Facility (SRF) was tapped for a record $50.35 billion by eligible financial firms, and at the same time the Overnight Reverse-Repo (ON RRP) facility saw inflows of approximately $51.8 billion.
“These data points underscore a growing tension in short-term funding markets, institutions are both seeking cash and parking large amounts of cash overnight, signaling tight liquidity conditions,” Eisenga stated.
“From our vantage point in real estate finance, this is noteworthy because real estate markets are particularly sensitive to credit availability and general funding conditions. When money markets show signs of stress, the downstream effects such as higher borrowing costs, less lending, and more cautious risk appetite, inevitably reach mortgage finance, real-estate development and consumer housing demand,” Eisenga opined.
On October 29, the Fed formally announced it will end its balance-sheet reduction program (Quantitative Tightening) effective December 1, 2025.
Key operational changes include:
- Rolling over all principal payments from maturing Treasury securities beginning December 1, 2025
- Reinvesting principal payments from agency debt and agency mortgage-backed securities (MBS) above $35 billion/month into Treasury securities now, moving to full reinvestment into Treasury bills beginning December.
This policy pivot is highly significant: the Fed is signaling that the era of steadily shrinking its balance sheet is over for now, in response to mounting liquidity pressures. While the decision may calm some funding strains, it also reflects that the Fed deems the system more fragile than previously appreciated.
The latest Institute for Supply Management (ISM) Manufacturing PMI for October fell to 48.7, down from 49.1 in September, marking the eighth month of contraction in the manufacturing sector.
Sub-indexes such as Production (48.2) and Employment (46.0) remain weak.
In our industry, the slower manufacturing backdrop has real implications: it suggests the broader business-cycle engines are running cooler, which in turn may suppress wage pressure, reduce construction and development demand, delay replacement housing, and raise risk-aversion among lenders and cause additional jobs to be lost from the economy.
Of critical interest to our sector is how the Fed is directing its reinvestment strategy. By choosing to reinvest agency MBS proceeds into Treasury bills — rather than expanding holdings of agency paper — the Fed appears to be prioritizing lower government-borrowing costs over direct support for mortgage-finance channels and the housing sector.
In simpler terms, this means the Fed is saying: “We will absorb Treasuries from the market and thereby help maintain lower sovereign yields,” but it is not offering strengthened operational support to agency-paper markets (which more directly influence mortgage spreads, housing-finance liquidity and the cost of housing development). For the housing industry, that is a meaningful signal.
There are three takeaway points for stakeholders in housing and real-estate finance stand out:
- Liquidity weakness is real: The record SRF/ON RRP draw underscores that even large institutions are experiencing day-to-day funding stress. That is a risk for credit-sensitive sectors like housing.
- The Fed is shifting gears: The end of QT and the reinvestment policy mean the system is entering a new phase of policy where “stay the course” is not adequate. Funding conditions will be a key monitor.
- Housing markets must pay attention: The Fed’s preference for Treasuries over agency securities suggests housing-finance gets lower priority. Builders, lenders and real-estate investors need to factor in the possibility of tighter credit conditions or higher spreads ahead.
“Investors should continue to monitor these developments closely,” warned Eisenga. “I believe prudence is warranted given the evolving macro and liquidity landscape.”
Media Contact:
First American Properties
Michael Eisenga, CEO
meisenga@firstamericanusa.com
(920) 350-5754
About First American Properties
First American Properties is a privately held investment and real estate management firm headquartered in Columbus, Wisconsin. The firm specializes in strategic asset acquisition, development, and portfolio management across diverse sectors of the U.S. economy.
Disclaimer: This press release is for informational purposes only and does not constitute investment advice. Forward-looking statements are subject to risks and uncertainties.
