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1. Embed this notice
   atomicpoet (atomicpoet@atomicpoet.org)'s status on Friday, 24-May-2024 05:03:07 JST atomicpoet

   There’s a commercial real estate crisis happening right now. And it’s affecting the bond market big time.

   $700 billion of non-agency CMBS is outstanding and another $3 trillion of commercial mortgages on bank balance sheets. Even AAA-rated bonds are affected.

   The last time we saw a real estate crisis like this was during 2008. Most analysts say this won’t be as big as the Great Recession, but I don’t know. Interest rates being what they are, and so many office buildings being empty, it’s only a matter of time that the domino effect gets in full swing.

   Where the bond market goes, the stock market tends to follow.

   https://finance.yahoo.com/news/losses-pile-top-rated-bonds-110000825.html

   • Embed this notice
     atomicpoet (atomicpoet@atomicpoet.org)'s status on Friday, 24-May-2024 05:03:04 JST atomicpoet

     in reply to

     Certain people are speculating that “return to office” policies are an attempt to stave off the commercial real estate crisis. However, the horse has already bolted from the barn.

     20% of all office real estate is already vacant.

     The Federal Reserve has signalled there will be no interest rate cuts this year.

     Defaults are already rising.

     What is already done cannot be undone.

   • Embed this notice
     atomicpoet (atomicpoet@atomicpoet.org)'s status on Friday, 24-May-2024 05:03:05 JST atomicpoet

     in reply to

     Next year’s forecast is that defaults of commercial real estate is going to double next year to 4.9%.

     Smaller banks that are heavily tied to CMBS are likely to fail. There could be contagion.

     Remember, we have the highest interest rates since the early 2000s—the highest in a generation.

     https://www.investmentexecutive.com/news/research-and-markets/commercial-real-estate-a-growing-risk-fitch/

     AnthonyJK-Admin repeated this.
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     atomicpoet (atomicpoet@atomicpoet.org)'s status on Friday, 24-May-2024 05:03:06 JST atomicpoet

     in reply to

     BBC is being more optimistic than I am about the commercial real estate crisis. The question is: how many commercial real estate companies are going to declare bankruptcy? How many banks will have to eat those losses?

     Will the financial system be able to deal with the fallout?

     https://www.bbc.com/worklife/article/20240509-corporate-real-estate-on-cliff-edge-to-rethink-communal-spaces

   • Embed this notice
     atomicpoet (atomicpoet@atomicpoet.org)'s status on Friday, 24-May-2024 05:03:06 JST atomicpoet

     in reply to

     Nearly 20% of office buildings are vacant.

     Which means many of those buildings are not collecting on rent. No rent means mortgages aren’t being paid. And mortgages not being paid means real estate companies are defaulting on their loans.

     When AAA-rated bonds are affected—and they are—it’s trouble.

     https://www.benzinga.com/real-estate/24/05/38989690/commercial-real-estate-tells-a-tale-of-resilience-and-adaptation-as-it-thrives-despite-challenges