January 13, 2009.
The commercial and investment property markets continue to take a real beating.
USA Today reported yesterday that commercial sales "plunged 73%last year".
In my opinion this "plunge" was from an unrealistic overheated real estate market in terms of prices and volume of sales.
"The 1990s crisis was sparked by massive tax breaks that encouraged over investment and overbuilding. This time around, the real estate frenzy ( including over-building and over-paying for property assets) was fueled by cheap credit.
According to one source $400 billion of commercial real estate mortgages will come due by the end of 2009. Will they be able to refinance?
Investors now need patience. Is the bottom in sight? Probably not for a while as the global and our capital and financial systems need to be properly diagnosed before the "cure" can even begin.
The knee-jerk, lame-duck administration Washington response to throwing more more taxpayer money or debt, to solve the debt problem, in going to be expensive but not all that beneficial.
But like prize fights a beating is not a defeat. The longer we wait the better will be the ultimate opportunities.
We all have to go a few more rounds.
Bill McInerney
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