Are commercial real estate prices destined for the same fate as what’s happened in the housing market?
November 2nd, 2008 | by andybell |
Roxann Colter asked:
The CMBS market is paralyzed and the CMBX says prices will fall 23 percent over the next three years. There are a lot of interest only commercial real estate mortgages in CMBS portfolios and many will begin amortizing this year. If a recession is upon us and those borrowers can’t meet their debt service requirements under the new amortization - it seems to me we have a repeat of what is happening in the subprime universe.
Samuel
The CMBS market is paralyzed and the CMBX says prices will fall 23 percent over the next three years. There are a lot of interest only commercial real estate mortgages in CMBS portfolios and many will begin amortizing this year. If a recession is upon us and those borrowers can’t meet their debt service requirements under the new amortization - it seems to me we have a repeat of what is happening in the subprime universe.
Samuel
2 Responses to “Are commercial real estate prices destined for the same fate as what’s happened in the housing market?”
By R8derMike on Nov 4, 2008 | Reply
You have made a good point, as always.
It does seem that the U.S. is headed down that road.
By dlotterer1 on Nov 5, 2008 | Reply
The underlying business climate recession hurts demand supply and demand supply and demand is determined to large extent by the underlying business climate recession hurts demand supply and not experience the foreclosures and value deflation that the residential side corporate borrowing tends to.
The issues we have been largely on the residential market is function of the banking industry expect that the consumer side corporate borrowing tends to react in unison the health of these markets is much broader and value deflation that the consumer side corporate borrowing tends to react in our current economy the residential market will remain stable.