Are the "commercial real estate" market and the "residential real estate" market strongly coupled? Will any "crash" of the "commercial real estate" market significantly impact the "residential real estate" market?
Regards,
“Are the “commercial real estate” market and the “residential real estate” market strongly coupled?”
I will take a stab at this.
It depends. :-)
In today’s economy I would argue they are moderately linked.
The linkage is that if large institutions and investors and banks are forced to liquidate commercial real estate holdings because they cannot pay the higher interest rate mortgage that leaves less money available to prop up the residential real estate market.
That is a bigger issue these days than normal because of the rise of institution investment in residential real estate that has kept prices very high in many markets.
CRE is the worst place to be—Residential Real Estate in “hot” markets is high risk but not as bad as CRE.
They are connected in the sense that the entire economy is connected. But they are two different markets and while interest rates affect both, residential won’t get as whacked for one large reason:
We have a national oversupply of office space.
We have a national undersupply of housing.
It would be nice to uncover the true identities of the residential real estate cash buyers. There aren’t that many people with a quarter mono in gash sitting around bored. Homes are still being snapped up.. smells like crony capitalism.. market booms while we try to pay for groceries at all time highs.. and my fave this week the WEF wants us to drink 2-3 cups of coffee per year.