Company: BHM
Filing Date: 2025-04-07
Form Type: POS AM
Source: 0001104659-25-032524
Chunk: 157

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-04-07
Form: POS AM
Chunk 157
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 are similar to those of the pool of loan investments, the investment is removed from the CECL collective (pool) analysis described above.

Preferred Equity Investments

We perform an individual
assessment of expected credit losses for our preferred equity investments, which are accounted for as AFS debt securities, that have
an unrealized loss recorded at the reporting date. If it is determined that the borrower is experiencing financial difficulty, or a foreclosure
is probable, or we expect repayment through the sale of the collateral, we calculate expected credit losses based on the value of the
underlying collateral as of the reporting date. During this review process, if we determine that it is probable that we will not be able
to collect all amounts due for both principal and interest according to the contractual terms of an investment, that preferred equity
investment is not considered fully recoverable and a provision for credit loss is recorded.

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New Accounting Pronouncements

See Note 2, “Basis
of Presentation and Summary of Significant Accounting Policies,” to our Notes to the Consolidated Financial Statements appearing
in our Annual Report on Form 10-K for the year ended December 31, 2024, which is incorporated herein by reference, for a description
of accounting pronouncements. We do not believe these new pronouncements will have a significant impact on our Consolidated Financial
Statements, cash flows or results of operations.

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OUR INDUSTRY AND MARKET OPPORTUNITY</div>

Market and Investment Opportunity

The residential rental industry
has historically been more resilient to economic downturns than other commercial real estate sectors and is currently benefiting from
significant industry tailwinds that began during the COVID-19 pandemic. Rental market fundamentals are strong and demographic trends support
further strengthening, particularly from rental-biased and debt-burdened millennials now reaching peak household-formation and homeownership
age. We believe that a continued upswing in the propensity to rent, coupled with the limited and depleting supply for the middle-income
range, signals significant opportunity. Specifically:

| · | Renting currently represents a significant cost saving to homeownership, and the recent increases in both housing prices and mortgage rates have exacerbated the difference. The median cost to rent versus owning a home is near the widest gap on record, reaching approximately $1,300 per month, with only 27% of United States households able to qualify for a standard Freddie Mac loan on a median priced home. (Source: Marcus