The $3.5T commercial real estate market is a mess.
By Daniel at 28 June, 2009, 1:55 pm
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“After” the housing bust. It seems that some are trying to make the problem worse - or at least drag on. Didn’t we just get a report showing that housing starts jumped 17%?? The permits were for more homes that apartments. We have an excess of inventory of 980,000 homes - STOP building!
The $3.5T commercial real estate market is a mess. It should drag on longer as commercial booms usually follow residential ($14T market) - most times commercials don’t build when there are no residents around to consume goods. Moodys/REAL Commercial Price Index is down 21%. The peak to trough drop is expected to be 35-45% (Deutsche Bank) due to loan refi’s that cant be completed (thru 2012). This will be a problem for small banks as they have 28-30% of the banking industry’s assets - but have responsibility for 60% of the nation’s commercial real estate lending. Many more banks (community and regional) are set to fall. Plus there are problems for some of the 8000 credit unions that were smart and avoided the subprime lending But have a lot of exposure to commercial real estate.
‘Economists are worried that after the residential housing bust, the next shoe to drop will be commercial real estate.”
Economists are worried this shoe for a while, but I don’t buy it.
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