Is commercial real estate likely to be the next crisis?
ORLANDO (Reuters) – U.S. commercial real estate problems could derail the country’s economic recovery later this year, a top Federal Reserve official said on Monday.
“Many banks are pretty heavily exposed to commercial real estate. It is also a big part of the securitization market. So commercial real estate is one that concerns me,” said Federal Reserve Bank of Atlanta President Dennis Lockhart.
Lockhart, a voting member of the Fed’s policy-setting committee this year, said that around $400 billion of commercial real estate refinancing was hanging over the market and he was monitoring its progress with care.
“If you think of 2007 and 2008, in a negative sense, as the year of…residential real estate issues, it is possible to think of 2009 as the year of commercial real estate. That is the one domestic factor that keeps me up at night,” he told the Association for Financial Professionals after a speech.
With the government incapable of instilling any confidence in the markets, it seems inevitable to me that nothing will be done about this seemingly impending disaster. For now, I remain short real estate via SRS.
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