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Oh SH*T! This is the BIGGEST real estate crisis since 2008 | Morris Invest

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Published on 13 Jul 2024 / In News and Politics

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The United States government has avoided a complete financial disaster the past few years. Here are just a few of the tricks they keep up their sleeve: printing trillions of dollars, artificially lowering interest rates followed by rate hikes, and selling off bonds.
But now, we’re seeing a breaking point via a commercial real estate crash. This is not speculation; it’s unfolding before our eyes. Federal Reserve Chair Jerome Powell warned, “there will be bank failures” at the Senate Banking Committee in early March.
How did we get here? The pandemic marked an important change in the United States workplace. The work from home revolution changed everything in the once profitable office space. Americans are no longer commuting to and from office spaces.
Moody’s Analytics found that 19.6% of office spaces were not leased in the fourth quarter of 2023, up from 18.8% in 2022.
Commercial leases usually have a 5–10-year lifespan. Many of which, are coming due this year and into 2025. It’s estimated that nearly $1.5 trillion in commercial real estate loans is due for repayment by the end of next year. This combined with higher interest rates has put immense pressure on leaseholders. Now we’re seeing multiple businesses defaulting on their loans.
Not only are the banks are failing. Cities too, are affected by commercial real estate and banks failing. The consequences will undoubtedly reach small local economies, and potentially even worldwide.
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