Commercial real estate (CRE), highlighted by the blue box in the table below, has always been a significant contributor to credit creation in the United States. The table reveals that CRE loans have been contracting aggressively for more than a year. The following headline reads, “The Coming Collapse of Commercial Real Estate is Already Here, Says Davidowitz”. I’d say the writing has been on the wall since October 2009.
QE to infinity!
Table: Breakdown of Credit for Commercial Banking
Headline: The Coming Collapse of Commercial Real Estate is Already Here, Says Davidowitz
A coming collapse in commercial real estate has been looming for the last couple years, but Davidowitz thinks it has already begun. “I think there has [already] been a partial collapse in the commercial real estate business,” he says pointing to the rising number of community bank failures. “I think retail real estate developers better start rethinking the use of their space.”
There are always exceptions to the rule, but his resounding advice is to stick to commodities and stay away from the retail space, at least for now.
Video
Source: finance.yahoo.com
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