The Next Shoe to Drop: Commercial Real Estate

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The mortgage mettdown is is a symptom of a larger problem. The lack of jobs or nore acturarely the lack of high paying jobs. We have 6% unemployment where jobs are mostly related to low paying service jobs.
Soution: The next time the US Congress wants to spend $180 billion on an economic stimulus package, it should spend the money on job creation. We have spent the last 50 years destroying the quality of our air and water. Now is the time to create an economic stimulus package directed toward rewards for creating solutions and jobs related to protecting our environment.

Bear Bryant of TN 8:52AM March 30, 2008

Thanks for your comments, folks.
I've written about the likelihood that builders -- unable to sell their inventories -- will themselves start to default on their construction loans, which represents yet another leg down in the real estate market.
Just want to add another datapoint from today's Wall Street Journal, it appears that's starting to happen even to the biggest, best funded builders:
http://online.wsj.com/article/SB120553684871238089.html?mod=hps_us_whats_news

Alex Markels of CO 12:43PM March 15, 2008

Thanks for your comments, folks.
I've written about the likelihood that builders -- unable to sell their inventories -- will themselves start to default on their construction loans, which represents yet another leg down in the real estate market.
Just want to add another datapoint from today's Wall Street Journal, it appears that's starting to happen even to the biggest, best funded builders:
http://online.wsj.com/article/SB120553684871238089.html?mod=hps_us_whats_news

Alex Markels of CO 12:41PM March 15, 2008

Act now to get your family insulated from what's coming.......No one is paying attention and the ship is sailing itself! Change your lifestyle today...Not tomorrow!

William Fouts of FL 9:36PM March 14, 2008

With the government increasing the money supply so much since 2001 and manufacturing and labor markets held down by intense competition from Chinese and Mexican labor, where was this money going to go? Housing.
So the market oversupplied demand. Lobbyists kept Washington from noticing.
The entire mess is one more bust created by lobbyists and a government whose strings are pulled by them and not the people they are supposed to represent.
Remember the S&L crisis? Lobbyists pushed for greater freedom to lend but nobody was minding the taxpayer's interest by requiring corresponding greater responsibility by those lenders. So they took ridiculous risks because they'd get rewarded if the risk worked out and and could send the tab to the taxpayer if it didn't. No one was watching out for the public interest.
I'm for limited government intervention in the economy. But if we are going to do it, it has to be done by decisions makers are not bought by those that stand to profit from such intervention.
We have got to fix this systemic problem, not just knee jerk react to each bubble as it pops.

Alan Brown of CA 9:07PM March 14, 2008

I cannot believe what I am reading..you are the FIRST, and I mean FIRST pundit,writer,journalist,etc to aknowledge that this economic crash is a direct result, well maybe a condition of far too many people reliant on the real estate economy for their incomes. Brokers,lenders,escrow employees,notaries,appraisers,title officers,real estate agents, and many many more no longer have "jobs" in this industry. Because of this, a HUGE influx of high income spenders are no longer contributing to our economy. The domino effect of this paradigm is exceedingly exponential. I could go into a complete detailed analysis, but I do not have the platform. I have the solution!!!!!!!!!!!!!!!!!
Congratulations to Alex for realizing this clear, but "unpublished" analysis. I can be reached at bcanada102@comcast.net

Brian of CA 6:17PM March 14, 2008

There is a small probability of this. I study trends and own retail space. The problem you suggest is that lenders are MUCH more aware, credit has been tightened and 25% down will even become tough to find on retail and office properties. The only area even possibly to feel this will be areas heavily hit by the residential bust, ie; Sacramento, Las Vegas, Miami, etc. Banks will not let highly leveraged deals happen but I'm glad you've alerted the media who fuels these ideas and tries to impact the thoughts of speculators, not investors

Jerry K of 11:47AM March 13, 2008

The projections are realistic. However, I can't consider Moody's a reliable source. They have lost ALL credibility after rating subprime mortgage garbage triple A. I see no way for them to ever regain the credibility they once had.

Hal Mann of NY 3:17PM March 04, 2008