Commercial Real Estate Lurks as Next Potential Mortgage Crisis

Commercial Real Estate Lurks as Next Potential Mortgage Crisis

online.wsj.com

Federal Reserve and Treasury officials are scrambling to prevent the commercial-real-estate sector from delivering a roundhouse punch to the U.S. economy just as it struggles to get up off the mat.

Their efforts could be undermined by a surge in foreclosures of commercial property carrying mortgages that were packaged and sold by Wall Street as bonds. Similar mortgage-backed securities created out of home loans played a big role in undoing that sector and triggering the global economic recession. Now the $700 billion of commercial-mortgage-backed securities outstanding are being tested for

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I believe this could be described as "the other shoe dropping".

Many of us have been predicting this fall will be interesting to say the least and this development will be the knife in the heart of the current suckers rally on Wall St.

Pump and dump seems to work every time.

Still, most of the $6.7 trillion in commercial real estate is privately owned. Also, it is unlikely commercial real estate will benefit much from an early stage of an economic recovery. What landlords need is occupancy and rents to rise, and that means employers have to start hiring and consumers need to shop more. So far, there are few signs this is happening.



online.wsj.com
(visit the link for the full news article)

reply to post by Leo Strauss


An abandoned ghost mall in McKinney Texas.
[atsimg]http://files.abovetopsecret.com/images/member/4ba3e7765238.jpg[/atsimg]

It's funny, the banks and brokerage houses bought up all those ridiculous residential loans, packaging and selling the bonds, ignoring all signs that the loans were bad, the real estate overvalued and the market oversaturated with the crap they were selling. Even the ratings on the bonds were b.s. and they all knew it but they were all making so much money that they simply kept borrowing to finance this garbage. Once the residential loans started to reset, and the delinquencies, the defaults and the foreclosures started to rise, coupled with the sudden slowdown and eventual decrease in residential values, they didn't think to cut and run. Instead, they simply moved the game into the commercial sector.

As disastrous as this might be, they deserve the outcome they created. All this done to line their pockets.

To be honest, I was surprised it took this long. There are so many abandoned stores in my area its unreal. Perhaps I will take pics. Entire shoping strips that are less than 5-10 years old with maybe one store left open. Its really sad. I was surprised, actually that it didnt go first, or at least at the same time. So many areas that were in the middle of construction when they had to stop. Its a bit scary when you pay attention to your suroundings and realize how vacant they are.

Want to buy a property in Flint?
Cheap...Priced for quick sale...

Source

Here's an example:

5 beds, 2.0 baths

For Sale: $2,900

Monthly Payment: $ 13

When these prices are nation-wide...

Matthew 25:30
And cast the unprofitable servant into the outer darkness. There will be weeping and gnashing of teeth.

Thought I would add this graph.

[atsimg]http://files.abovetopsecret.com/images/member/449a138e5b2c.gif[/atsimg]

[edit on 31-8-2009 by Leo Strauss]

[edit on 31-8-2009 by Leo Strauss]