Business Insider / July 2nd, 2017
Business Insider reports: After seven dizzying boom years, commercial real estate prices peaked in December 2016 and have since turned south. These values are collateral for nearly $4 trillion in loans, a good chunk from smaller banks. When the last bubble imploded after September 2007, prices plunged nearly 40%. The Fed has been pointing at the risks the new CRE price bubble poses for the banks. Among the sub-sectors, prices of apartment buildings, according to Green Street’s Property Price Index, were down 3% in May year-over-year.
And transaction volume of apartment buildings has plunged. Real Capital Analytics put the “story for the apartment sector” this way:
Activity in this sector, which was the largest and most liquid investment market for most of 2015 and 2016, declined in May and was lower than activity in the office sector. For the year to date, transaction volume for apartments is down 25% year-over-year.
View the full article on Business Insider: Apartment Rents Are Falling in the Most Expensive Markets