Real Estate Market Update: Passive Investing Risks, Home Price Shifts, and Builder Sentiment in 2025

The real estate market is in transition. Crowdfunding platforms are showing losses, home prices are finally correcting in hot metros, and home builders are pulling back. For investors, these headlines aren’t just news — they represent real risks and opportunities.

At DeRosa Group, we believe knowledge is the key to making smart investment decisions. Here’s what co-founder Matt Faircloth sees in today’s market, and how passive and active investors can prepare.

The Risks of Passive Investing on Crowdfunding Platforms

Platforms like YieldStreet and Fundrise promised to democratize real estate by giving everyday investors access to private deals. While many investors assumed deals listed on these portals were vetted and safe, recent reports tell a different story.

According to CNBC, investors on YieldStreet have taken significant losses in real estate offerings. Even large operators with big portfolios are feeling the pain.

This is not about one platform’s failure — it’s a reflection of a broader market correction. Big deals and small deals alike are under pressure.

What passive investors should ask before committing capital:

1. How is the deal structured? Favorable “waterfall” structures should give investors priority returns before operators take larger profits.

2. What downside protection exists? Look for at least three exit strategies that allow profitability even if market conditions worsen.

3. What happens if values drop 10–15%? Stress-test the deal. Rental income can often carry properties through downturns, but only if debt is fixed and revenues remain steady.

   
   

Matt saw this firsthand in 2008–2010. Property values plummeted, but steady rent checks kept projects afloat. Deals without that stability are vulnerable.

Key takeaway: Crowdfunding platforms are useful tools, but they’re not guarantees. Always vet the operator directly. If you can’t speak with the sponsor, that’s a red flag.

Home Prices Are Finally Correcting

For the first time in years, hot real estate markets like Austin, Miami, and Los Angeles are showing price declines of 10–20%. These corrections didn’t happen immediately when interest rates rose. Instead, they’re a delayed effect, working through the system like a “hand grenade.”

But the correction isn’t nationwide.

• Spiking markets (Austin, Miami, Phoenix) are falling the fastest.

• Stable markets (Northeast, Midwest) are holding steady or even rising 10–25% over the last three years.

What this means for investors:

• Opportunistic buyers may find deals in over-correcting markets that still have strong job growth fundamentals.

• Conservative investors may prefer slow-and-steady markets in the Northeast and Midwest, which offer cash-flow stability without dramatic swings.

Matt’s Advice: Sometimes the best time to buy is when others are running away.

Builders Are Pulling Back — What That Means for Rentals

Home builders are often the “first domino” in the housing supply chain. Today, builder sentiment has dropped 32%, the lowest level in years. Many are cutting prices or offering incentives like mortgage rate buy-downs just to move inventory.

Why this matters to investors: fewer homes being built means less supply. And when supply goes down while demand remains steady, pressure shifts toward rentals.

This sets the stage for what Matt calls a “rental boom.” If fewer Americans can buy, more will rent longer. For investors holding quality rental assets, this is good news.

Investor strategies to consider now:

• Explore land or stalled developments that could pivot from for-sale housing into rentals.

• For fix-and-flippers, consider offering interest rate buy-downs, just like big builders do, to attract end buyers.

• Position yourself in markets with strong fundamentals where demand will only grow.

Bottom Line: The Market Isn’t Crashing — It’s Shifting

From crowdfunding losses to falling home prices to builders pulling back, the signs all point to change. But change also creates opportunity.

For passive investors, this is the time to double down on due diligence. For active investors, it’s the time to prepare for a potential surge in rental demand.

Want to position yourself for today’s shifting market? Download our free Market Hunter Tool to identify strong markets and use our free Top 21 Questions To Ask a Syndicator to vet the right operators.