Real Estate Bubble 2017

Real Estate Bubble 2017 – Another real estate bubble?

Now, don’t get super worried about this because I am not talking about the residential real estate market here. What I’m talking about, is the approximate $11 trillion U.S. commercial property sector.

Moody’s investor services recently issued a warning about the increasing delinquency rate in the commercial mortgage-backed securities (CMBS) market. This report indicated that delinquencies of 60 or more days at increased from 4.6% in 2015 to 5.6% in September 2016.

Another major financial rating institution, Fitch Ratings, in its November report indicated that this sector may be a trouble spot. In particular, this report singled out CMBS backed by apartment buildings as security, and also expressed concern about construction loans.

Another indicator of trouble ahead in the commercial real estate market is the Green Street Commercial Property Index. This well respected commercial property index hit its peak in 2007. Then, after you drop the index bottomed out in May 2009, since then the index has gained 107% and now is actually over its bubble high in 2007 by 26%! Read more