The Walker Webcast Stephen Scherr, Co-President of Pretium
Oct 23, 2025
Stephen Scherr, Co-President of Pretium and seasoned real estate investor, delves into the complexities of housing affordability and the interconnectedness of lending markets. He discusses the implications of recent Fed rate cuts and their potential to unlock housing supply. The conversation touches on innovative solutions like modular housing, the resurgence in the office market, and the political landscape influencing Fannie and Freddie's reforms. Scherr also highlights the unique pressures on the middle class amid these evolving economic conditions.
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Short-End Cuts Don’t Guarantee Lower Long Rates
- Short-term Fed cuts don't always lower long-term rates; long bonds move only in recessionary cuts.
- Borrowers now prefer five-year loans for flexibility and cost, changing historic 10-year borrowing patterns.
Five- Vs Ten-Year Cost Gap Is Misread
- Spread compression has narrowed the real cost gap between five- and ten-year agency loans to ~15 bps, not the Treasury spread.
- Borrowers often misread Treasury five-ten spreads and miss that lender spreads shifted materially.
Bank Health Recharged Lender Appetite
- Banking stability after SVB avoided broader contagion and allowed lenders to be accommodative rather than call loans.
- Stronger bank balance sheets may shift them from extend-and-pretend to taking lumps and enforcing payoffs.