Commercial Real Estate Crisis: Was It Created By The Bailout?

businessinsider.com:

In a pattern familiar from the housing crisis, the value of commercial real estate has been plunging while the volume of distressed commercial real-estate loans is rapidly rising. The problems in commercial real estate could slam financial institutions, especially smaller regional and community banks, with billions of dollars in new losses. That, in turn, could snuff out whatever chances we have of a sustained economic recovery.

Read the whole story: businessinsider.com

Comments

[pmag88]

It’s a continuation of the original snl/deregulation scams pushed by republicans in the 80s and 90s, and anyone who’s ever paid attention could have seen it coming a mile away. It’s what they do. Deregulate, cut taxes for the rich, and then ‘cost shift’ the debt to working class/middle class citizens. Hey, I’m not hating on Republicans in general. Republicans are fine if you’re at a certain income level and you like investing all your money into fossil fuels and defense, (which is all they know how to do) but if you want a diverse economy that isn’t a one-dimensional paper tiger, then you have only one option. Vote for democrats for the next few decades and help us get this mess cleaned up.

[katieandtom]

i wonder when obamas administration will start to recognize that small businesses cannot hold on much longer. i understand that values needed to level out, but they have gone beyond that, they have truly tanked. things have got to somehow start looking up.

[unionave]

Commercial Real Estate is real estate bought by or rented to commercial enterprises . With the escalation of the exportation of jobs from the U.S. and the growth of the big box stores commercial real estate has been on a down hill slide since early in the 2000's . The local banks have also been failing because the mom and pop stores are ran over by the big box strores putting people out of work which reduces the number of people putting money in local bank accounts . Small banks need input to survive just like any other business . Big box stores do not put money in local bank accounts . If they did things would be a lot different . While Congress is writing laws to protect their friends and family in the insurance and Pharmaceutical industries they have sat and watched as this catastrophe happen to the rest of America .

[JBS]

The short answer is NO.

The collapse of the commercial real estate bubble is just lagging the collapse of the residential real estate bubble by about a year.

It's caused by the same thieving shenanigans that caused the residential mortgage market collapse.

[drkazmd65]

Ya beat me to the resounding "NO" there JBS.

It has been happening for quite a while. One of the stocks I hold is a Commercial REIT that I didn't buy into until they nearly collapsed last year. They nearly collapsed last year because of loans coming due that they couldn't refinance - like they had been for years.

Other REITs are in the same boat,... just lagging a bit further behind. This is just the trailing end of the train in the 'slow motion' train wreck that was "High Finance" in the USA.

[NoMoFearNoMoHate]

lol - the real estate bubble has only been deflating so far... you'll know when it collapses!

[Tom95134]

A very deceptive headline. It leads you to believe that the recent bailout is now causing a commercial real estate problem for banks and thrifts. However, the article clearly states that the current problems with commercial real estate was caused by a bail out championed by Paul Volker in the 1980's that trashed the Depression era Glass-Steagall regulations which kept banks out of commercial real estate financing.

[DASChicago]

That was championed by Phil Gramm!

[hellboundtrain]

Phil Gramm, Alan Greenspan, and Bill Clinton did this country almost indescribable harm!

The U.S is suffering, shall continue to do so because of their actions.

[PlayTOE]

The banks have a GREAT thing going here ..

#1 Refuse loans to the small business tenant.
#2 Add penalties and severe crippling interest when the landlord cannot pay the mortgage.
#3 Take over the commercial properties at a fraction of their previous value before opening the credit gates to small businesses.

Slick.

[katieandtom]

you are absolutely correct playtoe. 100% correct. banks are not lending and you will see more small businesses that have barely been hanging on - they are going to go under and things will get worse. the general public doesnt understand this, they are worried about their jobs and homes. but small business owners are suffering and cant hold on much longer if at all.

[thestargazer]

The commercial real estate market dive will be the next shoe to drop followed by dessert: an implosion in the bond market caused by state bankruptcies. And for an encore: hyperinflation.

Remember, you heard it here on 11-16-09

[BurtonOerney]

I also heard it here on 11-16-08. I don't understand how a large group of people who say they're paying attention to the economy can miss the experiment we just performed. Every condition that should have led to hyper-inflation has been met. The Federal Reserve bought a whole bunch of Treasury paper, China has recovered more quickly than we have, derivative assets are not being arbitrarily marked to a non-existent market. There are people who say every chance they get that we're on the brink of collapse for a decade because when there is a recession, they get paid. There are also newsy websites that run down the incumbent every chance they get because they're going to use their mighty power to run an independent candidate.

[Chipher]

...the only thing 'hyper' about your narrative is the gold bubble now growing on NYMEX...

[drkazmd65]

Thats gonna pop too Cipher,... you can't eat gold.