Friday, March 27, 2009

Can we afford ten years of debt stagnation?

That's what I am reading right now:

If the shortfall does materialize, it will lead to increased distress in the commercial real estate debt market and further downward pressure on values, which is what Foresight is predicting. Regardless, Foresight principal Matthew Anderson expects the commercial real estate debt market to show minimal net growth during the next decade because “the high volume of loans maturing in the multifamily and commercial mortgage markets will absorb most of the origination volume for several years.”
And there's much to be said in support of this theory: tight credit and loan after loan coming due
in the next three years, with potential equity needed to make the deals. Scenarios? Bargains for people with cash, major workouts because banks do not want these properties, government intervention or an uptick in lending. Those are the ones on my plate.

I don't think we can afford a decade of trouble. The commercial market often lags the residential, and what I hope could happen is proactive lending practices (especially if bad assets are being bought by Treasury) combined with intervention if necessary to keep an even keel.

As for me? I had one of my busiest weeks of the year. Call it anecdotal, though, and have a great weekend!