The Walker Webcast: In-Depth with Stephen Scherr and Willy Walker

Podcast: The Walker Webcast
Host: Willy Walker, CEO of Walker & Dunlop
Guest: Stephen Scherr, Co-President of Pretium
Date: October 23, 2025

Overview

In this episode of The Walker Webcast, host Willy Walker sits down with Stephen Scherr, Co-President of Pretium, for a candid, data-rich discussion about the U.S. real estate market, interest rates, housing policy, multifamily and single-family trends, and the political landscape’s influence on future outcomes. They provide timely market insights, debunk myths, and unpack major trends shaping the present and future of housing investment in America.

Key Discussion Points and Insights

1. The Importance and Dynamics of Interest Rates

• Immediate context: The Fed just announced a 25bps rate cut.

• Rates have a major influence on real estate borrowing, especially the 5-, 7-, and 10-year rates for commercial deals.

• “The bottom line is interest rates obviously are extremely important to commercial real estate.” — Willy Walker [01:51]

• Borrowers are favoring five-year loans for flexibility—but spreads between five- and ten-year loans have compressed, a nuance many miss.

  “The difference in borrowing costs between a five year loan and a 10 year loan right now is about 15 basis points, not 50.”
  — Willy Walker [04:17]

2. Distress, Refinancing, and the Banking Sector

• Despite predictions, distress has been muted; this is attributed less to debt stock, more to debt expense.

• Banks chose “extend and pretend”—providing lifelines instead of writing off loans—helped by avoiding contagion after SVB.

  “Throughout the banking system, SVB... made it so that banks have been very accommodative... They're not pretending the asset is not impaired, but they're saying, ‘I’m going to give you a lifeline.’”
  — Willy Walker [05:01]

• The office lending market has shifted: “Today you say, I got an office building in Manhattan, there are 10, 15 lenders who are lining up.” [06:15]

3. Market Dispersion and Locally Driven Real Estate

• Recovery and opportunity are highly localized; even within a city, outcomes diverge (e.g. San Francisco’s turnaround attributed to AI investment versus chronic trouble spots in other markets).
• “Real estate is exceptionally local... Show me the asset, the operator and what's going on and I'll tell you whether we like it or don't like it.” — Willy Walker [08:18]

4. U.S. Housing Paradoxes and Policy

• Contradictions: Excess homebuilder inventory vs. affordability crisis; high home equity vs. rising defaults; low birthrates yet a housing shortage.
• Discussion on the Trump administration’s push for federal incentives (carrots & sticks) to force localities to accelerate entitlements for affordable housing.
• Manufactured and modular housing named as the fastest way to boost supply (if policy aligns).
• “We've got to get single family manufacturers down to $300–400,000 a home to meet demand.” — Willy Walker [11:48]

5. Investment Outlook: Multifamily vs. Single Family (SFR/BTR)

• SFR is “good, not great.” Multifamily absorption has outperformed expectations due to single-family unaffordability—725,000 units absorbed over the past 12 months [13:44].

• On the timing of investment: Greater reward likely in growth markets with job creation, even if current conditions (like Austin’s low occupancy) aren’t ideal short-term.

  “Are you buying for this year? Are you buying for ten years from now?... If you've got that kind of a horizon, you're definitely going with where the jobs are.”
  — Willy Walker [15:15]

6. Affordability & Changing the Ownership Dream

• The “American Dream” of homeownership may be evolving to normalize lifelong renting for some, provided wealth accumulation can be achieved by other means.

• “Shouldn't someone feel as if they've had a successful life if they lived in multifamily their entire life and never owned a single family home? Sure, as long as they have the wealth to retire upon.” — Willy Walker [21:45]

• Renting may now allow access to better neighborhoods and schools than buying in a less-affluent area, a shift in how people think about quality of life [21:54–22:37].

7. Supply Constraints and What Might Change It

• Lock-in effect: 60%+ of mortgage holders have rates below 4%, reducing inventory as few want to sell/refinance at higher rates.
• "There will almost never be less existing inventory on the market than is today. Which says it's a market made for the single family home builders—and they're not increasing production." — Willy Walker [28:23]
• Build-to-rent (BTR) is an outgrowth of these supply constraints: enabling builders to maintain velocity and manage supply risk [29:11].

8. Fundraising and Forced Selling in Private Equity

• Fundraising for real estate PE has "fallen off a cliff", forcing some to liquidate to meet obligations and raise future funds, leading to increased asset sales.

  “They've been holding on for hope for two to three years... and now there's sort of this capitulation happening in the market.”
  — Willy Walker [33:42]

Policy, GSE Reform, and the Political Outlook

9. The Future of Fannie & Freddie

• GSEs are under renewed focus. The Trump administration and newly appointed agency heads want to maximize shareholder returns and maintain strong government guarantees.
• “There’s no way you do that if you don’t have a strong guarantee behind Fannie and Freddie, period.” — Willy Walker [35:25–35:32]
• ROE (Return on Equity) problems persist for GSEs due to risk transfer (CRT) structures.

“They’re not holding the risk that they used to get paid for... That’s great. I don’t think they reverse that. So then the question would be then how do you get the ROE up?”
— Willy Walker [39:26]

• Likely, footprint will broaden in both single-family and multi, boosting activity rather than shrinking it.

“He [Director Pulte] is getting Fannie and Freddie ready for privatization and has got the management teams at both focused on top and bottom line growth. And that's, that's, that's welcome to those of us who work with them all the time.”
— Willy Walker [40:24]

• Timeline: Some see privatization by 2026 as plausible, though difficult [41:02].

10. Housing Stratification and Middle Class Squeeze

• Boomer wealth transfer ($90 trillion in the next 10–15 years) and trillions in money market funds could impact the landscape, especially via down payments and long-term yields [42:07–43:16].
• The middle class faces the most acute housing squeeze—wealthy and low-income are comparatively better served by current programs.

Notable Quotes and Memorable Moments

• On policy levers for affordability:
  “They're going to say, ‘You want this federal transportation funding? Change this. You don’t want that federal transportation funding? You ain’t getting it.’” — Willy Walker [10:44]

• On structural changes in the market:
  “The carnage that happened in the single family space in the GFC... the big have gotten bigger... Investors will stick with them. They've got a really nice market.” — Willy Walker [29:53–30:17]

• On the multifamily investment cycle:
  “If you can actively bid on that quarter [of investable product] and do well, great time to be in.” — Willy Walker [25:43]

• Humorous moment, market predictions:
  “I said I'll kiss your feet if [the Fed does] three rate cuts... And they sure enough did three rate cuts. And I had to kiss Peter's feet.” — Willy Walker [18:25]

Timestamps for Key Segments

• [01:51] — The centrality of interest rates on real estate financing
• [05:01] — Banking sector adjustments after SVB, extend and pretend
• [08:18] — Localized nature of real estate
• [09:32] — Reconciling contradictory housing indicators
• [11:48] — The case for manufactured/modular housing and affordability
• [13:44] — Multifamily absorption and investment logic
• [21:45] — The evolving American Dream, homeownership versus renting
• [28:23] — Lock-in effect and single-family builder opportunity
• [33:42] — Private equity fundraising slump and forced sales
• [35:25] — GSE future: strong guarantees, maximizing shareholder return
• [42:07] — Generational wealth transfer and housing impacts

Conclusion

This episode offers a nuanced, data-rich dialogue between two industry insiders, blending real-time market intelligence with policy speculation. The core message: While market headwinds abound, policy shifts and deep macro trends are creating new opportunities and resetting expectations for investors, developers, and policymakers alike.

Whether you’re a real estate investor, market watcher, or policymaker, this conversation delivers the sharp insights and context you need to understand what’s next in the American housing market.