Commercial real estate market facing price crash that rivals 2008 financial crisis
The feds announced another aggressive rate hike — the third consecutive increase of three-quarters of a percentage point and the sixth rate hike this year alone. Lawrence Yun, chief economist with the National Association of Realtors, discusses its impact on the housing market.may be headed for a crash that rivals the 2008 financial crisis this year.
Complicating the matter is the fact that small and regional banks are the biggest source of credit to the $20 trillion commercial real estate market, holding about 80% of the sector's outstanding debt. Regional banks are at the epicenter of the upheaval within the financial sector, and there are concerns that the turmoil could makeDuring a credit crunch, banks significantly raise their lending standards, making it difficult for businesses or households to get loans.
Even before the collapse of Silicon Valley Bank and Signature Bank in early March, the commercial real estate market was struggling with a number of challenges, including higher interest rates and waning demand for office space as more companies allow employees to work from home.
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