Posted on 04/17/2023 5:36:50 AM PDT by Kaiser8408a
I wish The Federal Reserve had created only tiny bubbles. But after Bernanke/Yellen’s zero interest rate policies (ZIRP) and Quantitative Sleazing (QE) for too long, we have a monstrous asset bubble in commercial real estate … that is starting to unravel as The Fed raises rates and shrinks their balance sheet.
The NCREIF commercial real estate indices are beginning to decline as The Federal Reserve has finally started to raise interest rates and shrinking their balance sheet after being TLFTL (too low for too long).
Hotel (blue) and retail (orange) both got crush with the Covid shutdowns. But while the hotel property index continues to climb, retail properties are declining again.
Here is a photo of former Fed Chair and current US Treasury Secretary Janet “Bubbles” Yellen.
(Excerpt) Read more at confoundedinterest.net ...
It’s Transitory(TM)!!!
Most commercial real estate is rented in my area of Florida.
Many big malls will probably get demolished and replaced by mixed use developments.
“The lowest historical mortgage rates in history for 30-year FRMs were more recent than you might think. December 2020 saw mortgage rates hit 2.68%, according to Freddie Mac, due largely to the effects of COVID-19. The same goes for the lowest average, with an annual rate of 3.11% for 2020.”
https://www.rocketmortgage.com/learn/historical-mortgage-rates-30-year-fixed
This has a graph stating inflation for 2021 was 7%:
https://www.usinflationcalculator.com/inflation/current-inflation-rates/
Most commercial real estate is held for a long time and was bought at say 1983, 1994, 2000, 2010, etc. prices.
Tons of commercial real state still being built on speculation here in Jax, FL. Warehouses, retail, etc. Everything. Those wishing us catastrophe will have to wait a bit, apparently.
The Democrats won’t let this crisis go to waste.
Under-used business real estate is going to end up on the Federal Reserve balance sheet thus devaluing the dollar.
The physical real estate will be repurposed as “low income” residential property.
Just more oil on the slippery slope to the U.S. becoming a communist hellhole.
I was involved in the planning and zoning for exactly that, how a big mall, still pretty successful, would get redeveloped. All that real estate is quite valuable, even if it’s no longer retail. We’re talking a large mall with many acres of surface parking at a big highway and mass transit nexus.
Cash-out refinancing is one of the most important tools in real estate investing.
Florida is doing well for a reason: refugees with money from up North are coming in droves seeking security. That will continue until a new equilibrium is reached.
Florida may slip the economic upheaval created by the Biden effect - at least for a while.
“This has a graph stating inflation for 2021 was 7%:”
Not bloody likely, as the Brits say. Inflation statistics have been gamed since the 80s, by excluding the majority of the average person’s monthly expenses, so reality is much worse.
Florida is still booming due to the recent influx of COVID migrants. So it’s not the best place to use as an example of the economic health of the country as a whole.
Teaspoon, tide.
Yep. I work in banking. They are trying mighty hard to force everybody back to the office. Fortunately for me, I’m at a point in my career where I have leverage. I refuse all contracts that are not 100% remote. I finished my last contract 3 weeks ago. I got another one last week.
If I can possibly avoid it, I’m never going back to the office. Its only a matter of time before even the banks have to capitulate and allow almost everybody to work remotely.
I have nothing but contempt for those morons.
Well I hope it bursts, I’ve been sort of looking around for a warehouse type of space maybe I can pick one up for a whole lot less money.
There’s a POS movie theater up the street that’s for sale and they want $650,000 for it which is ridiculous the place is an smelly armpit that need a severe going over. I’m not interested but that’s just a valuation of some of the property out there that’s really run down but top dollar is being applied.
I spent 15 years vacation in Florida, most of it was out of the way places Some of it was in developed areas.
One thing I noticed there was an undercurrent of felony everywhere I went and it was very uncomfortable. I don’t know if I should wish migrant Northerners well or maybe they’ll just find out for themselves that the grass is always greener on the other side and you shouldn’t s*** in your own bed.
“Many big malls will probably get demolished”
Or turned into holding pens for deplorables.
“One thing I noticed there was an undercurrent of felony everywhere I went . . .”
There is no denying that. Much of it (that I read about) is drug related.
I don’t have information to compare and rank it to other areas of the country; regardless it is bad enough.
But criminals in Florida know that the political leadership at the state level will not back them up. In some Dem cities; yes.
Overall, violent criminals are at some risk in Florida. And our K-9 dogs will bite them without hesitation.
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