Commercial Real Estate — the Economy's Anvil

[Crewleader]

By Stephen Gandel Friday, May. 29, 2009




Commercial real estate may soon bulldoze the green shoots.

A coming wave of defaults on loans to developers of condominiums, office buildings and malls could do significant damage to the already deflating economy. That was the overwhelming concern expressed at a public hearing of the Congressional Oversight Panel (COP) on Thursday that focused on corporate and commercial real estate lending.

The COP was set up last fall as part of legislation that gave the Treasury Department permission to spend $700 billion to rescue the nation's ailing financial system. The panel, which is headed by Harvard Law professor Elizabeth Warren, has no legislative or official regulatory powers. It is supposed to monitor the Treasury's spending and report back to Congress as to whether it is being effective in boosting lending and shoring up the financial sector.

http://www.time.com/time/business/article/0,8599,1901718,00.html?

[dkf]

1. I keep on thinking we're doomed.

And then I look at the DJ futures...we're up 39 pts. I don't get it.

Is it because GM is going to be replaced in the index? Crazy.

[Double T]

3. wall street and their investor's got US in this horrendous mess.

Can't believe ANYTHING wall street says or does. wall streeters are pathetic liars and cheats and are the root cause of our economic and financial disaster.

[imdjh]

2. Lots and lots of paper pyramids in commercial.

Like residential, many long ago paid-for buildings were sold by their long term owners in the half way point of the boom, the original "this must be the top" position. The people who bought them, thought to be very savvy shortly thereafter, took out refi loans on their "bargain" purchases as they 'apprecited" in the topless boom. So like the "ten cent millionaires" (as my mother would call them) who pyramided residential properties which really weren't supporting themselves, we have the new commercial McMoguls perched to crash and burn with every "for rent" and "for sale" sign we see.

In 1995, an inordinate amount of real estate was vacant or for sale in this part of Florida. But it was PAID FOR. Then the "equity is for losers" folks came on the scene.

[pokercat999]

6. Some folks still don't get it. I was talking to a friend in

Orlando who is about 50% upside-down on a $400K house he purchased on a 10 year interest only loan morphing into a regular P&I loan after the initial 10 years. I mentioned that we were looking into buying a retirement house with cash sometime in the next 2-3 years on the Florida east central coast. His remark was why would you want to buy cash when credit is available? DUH, R E T I R E M E N T, I don't want ANY loans; food, taxes, insurance and FUN all paid for in cash, that's how I want to retire, NOT in an over-sized McMansion with a huge mortgage.

[Double T]

4. We need to hear from Doctor Office Bubble, Doctor Factory Bubble, Doctor Strip Plaza Bubble.........

and Doctor MegaMall Bubble. I believe the 'glimmer' of hope is actually the Commercial Real Estate ARMAGEDDON COMET heading directly toward US.

[dkf]

5. One saving grace is that Commercial Real Estate went on a

building frenzy, but at least it didn't get into a bidding war like how the Japanese went all nuts in the 80s.

[Hawkowl]

7. HA!

Love that comment! "Look! It's a bird! No, It's a plane! No, it's green shoots, er a glimmer of hope...Oh. Oh shit. It's the Armageddon comet!"