It’s no secret that the commercial real estate sector has seen huge impacts since the pandemic. The work-from-home revolution has brought about sweeping changes for society and the economy at large. Office spaces and retail locations specifically have been hit hard with vacancies over the past few years, and there’s no sign of things trending in a positive direction. You don’t have to be an economist to see that things have gone south. If you’ve been in any downtown area or shopping mall in the past couple years, it’s blatantly clear that there’s been a shift in commercial real estate. In fact, Moody’s Analytics found that a staggering 19.6% of office spaces were not leased in the fourth quarter of 2023, up from 18.8% in 2022. This major shift in the workplace has totally upended the commercial office space industry. Continued below the vid
This combined with higher interest rates has put pressure on leaseholders and lenders alike, resulting in many businesses defaulting on loans. Nearly $1.5 trillion of US commercial real estate will be due for repayment by the end of 2025. And with interest rates being a bit higher, refinancing is risky. Small local banks with a high percentage of commercial properties on their balance sheets WILL fail. That’s exactly what Jerome Powell said. There will be defaults and collapses in community banks; we heard it straight from the horse’s mouth. You don’t have to read between the lines. There’s big trouble here. Federal Reserve data from September 2023 showed that commercial real estate comprised 44% of portfolios at small banks, vs. only 14% of the country’s 25 big banks. This situation could have serious consequences on a widespread scale. If you have money sitting in small local or regional banks, start thinking about ways to protect your money. There’s no longer any uncertainty about how work from home practices and the changing economy will impact office spaces. We’re seeing it unfold right in front of us, things are crashing. —————– DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
To all you folks looking at your IRAs, all your big, fat, bank accounts or skinny accounts, whichever the case may be. Sit down, put your earbuds in or turn the TV off. This is an awesome listen. Global Financial Collapse Is A ‘Mathematical Certainty’ Edward Dowd.
To all you folks looking at your IRAs, all your big, fat, bank accounts or skinny accounts, whichever the case may be. Sit down, put your earbuds in or turn the TV off. This is an awesome listen.
Global Financial Collapse Is A ‘Mathematical Certainty’
Edward Dowd.… pic.twitter.com/IjSmlv3wPf— I’m No Angel (@HappyCamper2626) March 27, 2024
The collapse of Silicon Valley Bank (SVB) marked the exact top in lending growth. Both small and large banks saw lending growth peak at ~15% and ~10% respectively in early-2023. Since then, lending growth has moved in a straight line lower and it is about to turn negative for large banks. After the Fed’s fastest interest rate hike campaign of all time, borrowing is coming to a halt. As higher for longer seems to be returning, we should see negative lending growth into late-2024. Higher rates are the new normal.
If you read the news, it seems that the US banking sector is in a deep crisis. At the same time, the US financial sector ETF is one of the best this year.
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