The Commercial Real Estate Problem Just Got Worse.

The U.S. commercial real estate crisis isn't over. Regional banks are under stress and investors are running away. Right now, it looks like the situation might be getting worse before it gets better. In this video, we look at the current state of affairs, including thoughts from Warren Buffett, Jamie Dimon, Steve Eisman, Janet Yellen and Jerome Powell, and examine the Fed's plan to stop the crisis from worsening in the future.

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★ ★ CONTENTS ★ ★
0:00 Commercial Real Estate Isn't Looking Good
1:27 The Commercial Real Estate Problem Explained
6:00 U.S. Banking System is Stressed
8:19 Jamie Dimon Explains the Problem
10:40 Jerome Powell Explains the Fed's Approach

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[NewMoneyYouTube]

What are you guys thinking about commercial real estate? Do you believe the Fed when they say they've got it under control?

[VictoriaWood-ucmp]

The whole talk about "reverse" market crash (real estate and stock market) basically argues that we are nowhere near done with inflation and that we might actually experience "hyperinflation" in the near future combined with accelerating poverty levels across the nation or going thru a historical economic depression...those are the extreme conditions that have produced the reverse market crashes in most examples I've seen. I personally don't see anything that extreme coming, but who knows.

[Kseniaramesh]

With the challenges facing commercial real estate lately. With the shift to remote work and the economic downturn, many businesses are struggling to maintain their office spaces.

[DonaldMark-nese]

I suggest you offset your real estate and get into stocks, A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!

[E.GCreates]

just sold a property in Portland and I'm thinking to put the cash in stocks, I know everyone is saying it’s ripe enough, but Is this a good time to buy stocks? How long until a full recovery? How are other people in the same market raking in over $200k gains within months, I'm really just confused at this point.

[michaelwebsternz]

I have $110M of industrial real estate in a fund I'm the chair / largest shareholder of. I'm glad we got an ISDA and bought an interest rate swap when we did to lower our interest rate exposure. Rates going from 2.3% up to 8% really had a big dent in cash flow. Fortunately industrial property, where tenants make real things, is much less exposed to vacancy and everyone needs to be there in person. We have seen some tenancy issues with less solid tenants, but we've been able to navigate that well. There was no financial support offered to commercial real estate investors during the pandemic at all, so when tenants were forced by law out of their premises the owners just had to take the costs while still paying the debt, something industrial real estate was also less exposed to compared to office / retail. There is probably another hard 12 months ahead before we start to see the light at the end of the tunnel isn't an oncoming train. We were still able to pay our investors dividends during the entire time, although at lower levels than before.

[treedoor]

The big banks are salivating at the thought of buying these smaller banks after they default. The last few years make it seem like this outcome was by design.

[tishadin]

Great video. I will be forever grateful to you, you changed my whole life and I will continue to preach on your behalf for the whole world to hear you saved me from huge financial debt with just a small investment, thank you katrina susan

[davidvial]

Most major cities are having an affordable housing crisis at the moment. There is at the same time this empty office space crisis where companies as big as Brookfield are handing back the keys to their buildings because they can't afford to keep them. This might be a major ignorance on the nuances behind it all, but the way I see it, I just have to ask myself; How is it that politicians can look at this and not see a simple solution? Give two options to these office space owning companies: 1.) Re-invest to repurpose your property for more housing. OR 2.) We (a combination of city/state/federal government working with the banks) will negotiate pricing to buy these buildings and outfit them for affordable housing. There is enough budget within those three levels of government, city/state/and federal, in order to work together and help alleviate the banking sector by buying these buildings and also help reduce the level of people struggling to find affordable housing.

[johndurbin]

They thought they had 2008 under control too

[DJEmonTV]

When talking about CRE, you are talking about so many different aspects: Offices, storage, retail, shopping malls.

If we are taking offices, it’s problematic. The rest is still holding for people who adapt to the market and repurpose their assets.

[liammateo]

Hit 200k today. Thank you for all the knowledge and nuggets you had thrown my way over the last months. Started with 14k in last month 2024.

[MrBoliao]

The bubble didn't pop in 2009, now it's poppin

[RaymondcrawRaymondCrawley]

Protecting your capital is much more important than making money. Basically because if you lose your capital, making money is much harder. ''Missing the train'' vs. ''losing your money''. There are a lot of trains, but if your money is gone, it's over.

[mazaggie]

Multifamily is just as much a threat as office. Way too many are only focusing on office. A huge portion of MF loans were 3-5 yr bridge loans originated between 2018 and 2022. These are all coming due and many of them are not worth their debt.

[nathankurz]

I’m in Austin as a commercial real estate agent and it’s pretty horrendous if you’re in a boutique brokerage trying to make it in the industry. Leasing activity is strong, but sales have been on the decline since 2022. Even our class A office space market is doing poorly. You can see it in our new high rise, 6G on Guadalupe. Facebook has half of this building up for sublease. Hard hats for residents happened, nothing. Residents moved in, still nothing. No concessions for new tenants. I think it’ll get worse

[CharleneCong]

Interesting to see how the troubles in commercial real estate aren't just a big bank problem; medium and small banks are feeling the pressure too. High-level warnings from big names like Jerome Powell, Janet Yellen, and Warren Buffett about possible bank failures show this is serious. Regional banks are especially at risk because they've lent a lot to the commercial real estate sector, which is now struggling due to high interest rates. This means property owners are earning less and paying more on loans, a tough spot to be in. With loans worth hundreds of billions due to be paid back by 2026, this could really shake up local banks. great video!

[Martin-kcxj]

GOOD... we have had a decade of acquisitions, near monopolies and talent hoarding, and as greed turned products into crap, the cycle is finally turning over... senior talent on the market, opportunity to provide a better service / product than billion dollar companies without overhead, and commercial real estate prices falling. We're probably not at the bottom yet, but we might get there in 2024-2025. As someone trying to pivot a senior level career into a startup, this is all good news medium / long term.

[hersdera]

fear a housing crash due to people buying homes above asking prices with little equity. If prices drop, affordability and potential foreclosures may arise, worsened by future layoffs and rising living costs. I want to invest more than $300k, but I'm not sure on how to mitigate risk.

[connorduffy]

We gotta stop conflating commerical real estate with office space. CRE fundamentals are actually quite strong