Fed warning about commercial real estate.

No surprise here. Seems a bit late though and everyone currently is looking at that debt ceiling debacle. Well, it’s been a slow train wreck imo.

I’ve been seeing tons of empty real estate properties that sit empty for years. Worst is that they don’t reduce prices. My guess is that large commercial real estate mega corps rather just wait and if if something goes really bad they’ll get a bailout or something. But i don’t know much about that back end. Most of what would be affected are REITs, correct? How big of an issue you think it is? 08’ crash level?

… Article below;

https://www.nytimes.com/2023/05/08/business/economy/the-fed-commercial-real-estate.html?smid=nytcore-ios-share&referringSource=articleShare

“Federal Reserve financial stability experts are on the lookout for weaknesses after a year of rising interest rates — and as they survey the potential risks confronting the system, they are increasingly watching office loans and other commercial real estate borrowing.

Fed officials have lifted borrowing costs rapidly over the past year — to just above 5 percent from near-zero in early 2022 — to cool rapid inflation by slowing the economy. So far, the fallout from that abrupt change has been most obvious in the banking sector. A series of high-profile banks have collapsed or faced turmoil in recent weeks partly because they were poorly prepared for heftier borrowing costs.

But Fed staff members and market experts whom they survey cited commercial real estate as another area worth watching in the central bank’s twice-annual Financial Stability Report, which was released Monday. (Rest on the link)