By Vertex Private Funding Corp

The real estate market is in a constant state of flux, and as 2025 draws to a close is shaping up to be a pivotal quarter for investors. After a period of uncertainty, the market is showing signs of a new cycle, driven by shifts in the economic landscape and evolving investor sentiment. For those looking to secure financing for their next project, staying ahead of the curve is crucial.

We’ve just published our latest market analysis, and the numbers tell an interesting story that every real estate investor needs to understand. Here are the key real estate financing trends to watch in the coming year.

The Market by the Numbers: What the Data Reveals

Before diving into the trends, let’s look at what the data is telling us about the current state of real estate financing:

✅ Commercial lending activity surged 90% year-over-year in Q1 2025 - This dramatic increase signals renewed confidence in the market and expanding opportunities for investors who can move quickly.

✅ $957 billion in loans are maturing this year - This creates significant refinancing opportunities across the market. Property owners will need to secure new financing, opening doors for investors with strong lender relationships.

✅ Private lenders now capture 56% of non-agency loan closings - More than half of all non-agency loans are now being originated by private lenders, reflecting a fundamental shift in how real estate deals are financed.

✅ Small balance commercial lending is gaining serious momentum - The 1-4 family investment property sector continues to attract capital, with private lenders filling the gap left by traditional banks.

These numbers paint a clear picture: the market is active, capital is flowing, and private funding has become the dominant force in real estate investment financing. Let’s explore what this means for your investment strategy.

The Normalization of the Market

After the whirlwind of the past few years, the real estate market is finally starting to normalize. While the post-pandemic disruption is abating, it’s not a return to the old normal. Instead, we’re seeing a new market dynamic emerge.

The Federal Reserve’s recent interest rate adjustments, for example, signal a cooling of inflation, which is a positive sign for borrowers. However, this also suggests a slowing economy, which could impact rental income and overall project profitability. The 90% surge in commercial lending activity demonstrates that despite economic headwinds, investors and lenders alike see opportunity in the current market.

As an investor, it’s important to be aware of these macroeconomic factors and how they might affect your financing strategy. The normalization we’re experiencing isn’t a return to 2019—it’s the emergence of a new equilibrium where speed, flexibility, and strong lender partnerships matter more than ever.

The Rise of Private Funding: A Market Transformation

One of the most significant trends in real estate financing is the growing dominance of private funding. The fact that private lenders now capture 56% of non-agency loan closings represents a fundamental shift in the market. This isn’t a temporary trend—it’s a structural change in how real estate investments are financed.

Why has private funding become so dominant? In today’s market, speed and flexibility are more important than ever, and private lenders are simply better positioned to provide both compared to traditional banks.

Loan Approval Speed: The Competitive Advantage

When it comes to loan approval speed, private funding can be a game-changer. Private lenders typically have a more streamlined due diligence process, allowing for much faster closing times—often 7-20 days compared to 30-60+ days for traditional banks. This can be a major advantage in a competitive market where deals can be won or lost in a matter of days.

With $957 billion in loans maturing this year, property owners facing refinancing deadlines need lenders who can move quickly. Traditional banks, with their lengthy and often bureaucratic approval processes, simply can’t compete when time is of the essence.

Flexibility in Loan Terms: Customized Solutions

Another key difference is flexibility in loan terms. Private lenders are often more willing to customize loan terms to fit the specific needs of a project. This can include things like interest-only periods, flexible repayment schedules, and higher loan-to-value ratios.

Traditional banks, on the other hand, tend to have more rigid lending criteria and are less likely to deviate from their standard loan products. For investors with unique or complex projects, the flexibility of private funding can be a major draw.

This flexibility is particularly valuable in the small balance commercial lending space, which is gaining serious momentum. Private lenders understand the unique needs of 1-4 family property investors and can structure loans that traditional banks won’t touch.

Ready to explore your private funding options? Learn more about our services and how we can help you achieve your real estate investment goals.

Spotlight on Niche Sectors

While the broader real estate market is stabilizing, certain niche sectors are experiencing significant growth. The 90% year-over-year surge in commercial lending activity isn’t evenly distributed—some sectors are seeing explosive growth.

Senior Housing: Demographic-Driven Opportunity

Senior housing is a rapidly expanding market, driven by the aging baby boomer population. This presents a unique opportunity for investors who can secure financing for senior living facilities. With demographic trends firmly in favor of this sector, lenders are increasingly comfortable financing these projects.

Fix-and-Flip: Speed Wins

For fix-and-flip investors, the market remains competitive, but there are still opportunities to be found. The key is to be strategic and to have a reliable source of funding. With private lenders now handling 56% of non-agency closings, investors who partner with specialized private lenders can access the speed and flexibility needed to succeed in this fast-paced market.

When you’re competing against cash buyers or facing tight deadlines, having a lender who can close in 7-20 days instead of 30-60+ days can be the difference between winning and losing a deal.

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What These Trends Mean for Your Investment Strategy

The data we’ve shared paints a clear picture of where the market is headed:

1. Speed Matters More Than Ever With commercial lending activity up 90% year-over-year, competition for deals is intensifying. Investors who can move quickly have a significant advantage.

2. Refinancing Opportunities Abound $957 billion in maturing loans means property owners across the country will be seeking new financing. This creates opportunities for investors to acquire properties from owners who can’t refinance, as well as opportunities to provide bridge financing solutions.

3. Private Funding is the New Normal With 56% of non-agency closings now going through private lenders, it’s clear that private funding isn’t an alternative—it’s the mainstream. Investors who haven’t established relationships with private lenders are at a competitive disadvantage.

4. Small Balance Commercial is Hot The momentum in small balance commercial lending reflects the strength of the small commercial investment property market. This sector continues to offer attractive risk-adjusted returns, and capital is flowing accordingly.

A Look Ahead: Positioning for Success in 2026

The real estate financing landscape is constantly evolving, and 2026 will be no exception. The trends we’re seeing—the surge in lending activity, the massive refinancing wave, the dominance of private funding, and the momentum in small balance commercial—all point to a market with significant opportunity for informed investors.

By staying informed about the latest trends and understanding the different financing options available, investors can position themselves for success in the year ahead. Whether you’re a seasoned pro or just starting out, having a trusted financing partner is essential.

At Vertex Private Funding Corp, we’re committed to helping our clients navigate the complexities of the market and achieve their investment goals. We understand the trends, we move quickly, and we structure loans that work for your specific project.

Ready to get started? Contact us today to discuss your project and learn how we can help you secure the funding you need.

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