Posted on 05/30/2023 8:05:47 AM PDT by dynachrome
Elon Musk is once again ringing the alarm on the US real-estate sector.
"Commercial real estate is melting down fast. Home values next," the Tesla and SpaceX chief tweeted on Monday.
The tech billionaire made the comment in response to a tweet by the Craft Ventures founder David Sacks, who said that a big chunk of commercial real-estate debt was due to mature soon.
Musk has previously warned that cracks could appear in property markets following turmoil in the banking sector. For example, the clean-energy pioneer said commercial real estate was "by far the most serious looming issue," and cautioned regional banks could experience a wave of defaults because of their huge exposure to the sector.
The debt-fueled industry has kept investors on edge in recent months, given that it faces a raft of headwinds. These include higher interest rates, tighter credit conditions, and work-from-home trends.
(Excerpt) Read more at markets.businessinsider.com ...
Hoping it goes way down so I can buy material for the new house cheaper. I know that is very selfish of me but ask me if I care.
Most commercial real estate is done by medium term to long term lease. The problems are only beginning. People are not returning to offices when they do not need to. When leases come up companies will reduce space by half, that's going to be a big hit.
It is both. But I catch your drift. Speculators have screwed up housing and vintage guitar prices, etc.
Lots of people are waiting it out. Staying in their small home because house prices and interest are “too damn high”.
Always the case when demoRATS are in charge.
I prefer to live in a cave but my wife wants the Clampitt’s Mansion in Beverly Hills. Where do we reach a compromise?
“Where do we reach a compromise?”
Buy the Mansion.
Pitch a tent out back with the doghouse.
Good luck. We held onto my folks old house til the market was at peak and then it sold in 2 weeks. Housing market has always been speculative, go for it.
It also has been an inflation-hedged store of asset value.
It’s impossible for me to feel sorry for any commercial real-estate owners who just let the property sit vacant for months or years. If it’s not renting for what you want, lower your darn prices instead of having everyone have to deal with an empty storefront that depresses all the other venues. I know there’s some silly BS excuses relating to leases being for long terms and valuation being based on what rent is ASKED, but quite frankly, if they are going to sit there with a ‘for lease’ sign for a year, they can take a massive bath or have the hell taxed out of them and I won’t care.
House prices have been ‘too damn high’ since Reagan, if not Ike.
But then I’m old and cheap; I haven’t seen a car or a house in 40 years that was worth more than 1/10th that was being asked for it.
As of now, only small percentages of houses have been purchased at top dollar pricing.
A quick correction reduces actual losses.
Historically it’s been a decent inflation hedge, and (effectively) a long-term forced-savings vehicle to many. But you’re right - rarely is it an “investment” in the true sense of the word.
The worth of something is what someone is willing to pay for it.
Huge commercial buildings in San Francisco are already selling for 35% to 40% of what was the asking price two to three years ago. One big commercial building just sold for $65 million and a FReeper observed that’s not a lot more than the most expensive residential estates on the San Francisco Peninsula.
So many cities are in death spirals. People don’t want to commute to the inner city, something they learned during COVID. BLM and antifa made many cities burned-out messes. Building prices collapse resulting in the tax base collapsing. City revenues to keep streets safe and clean aren’t there. Bums, druggies, graffiti, and excrement proliferate. Cops are fired. Cities become a lot more dangerous.
The result is people are even less inclined to commute to the city. Rinse and repeat.
Breaking cycles like that is extremely hard to do. It could take ten or fifteen years to climb out of this hole.
Maybe big city governments will come to their senses and hire lots of police, get rid of the bums, clean the streets, hire lots of tough-on-crime DAs, prosecute criminals, incarcerate them with long terms, and provide tax holidays to companies to keep their downtown offices open.
buy it cheap. pay it off. live in it rent free. sell it at the height of the market. bank the money. buy cheap again.
play the housing market, invest wisely.
three last things... location. location. location.
My corporation has transitioned to pretry much full virtual. Lots of buildings let go a little bit everywhere
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.