4 ms·

if you look at real estate as a thing to park cash into you see better what is going on. park your cash in a building (who cares if it is rented out or not jus

if you look at real estate as a thing to park cash into you see better what is going on. park your cash in a building (who cares if it is rented out or not just so long as it does not lose much of its value). Then if you need cash borrow against your asset. with low interest rates that was very viable to do as more than likely the building was appreciating in value faster than the rate. now that is much harder to do.

toomuchtodo 3y ago
The commercial real estate refinance wall over the next 3 years will bring some sanity to this situation. If not successfully refinanced at current rental income, loan to value, and debt rates, property ownership will shuffle, potentially enabling lower rents. https://www.bloomberg.com/news/articles/2023-04-08/a-1-5-trillion-wall-of-debt-is-looming-for-us-commercial-properties https://www.bloomberg.com/news/articles/2023-04-08/a-1-5-tri... | https://archive.today/ku9Xr https://archive.today/ku9Xr ("Almost $1.5 trillion of US commercial real estate debt comes due for repayment before the end of 2025.")
- onlyrealcuzzo 3y ago
  > The commercial real estate refinance wall over the next 3 years will bring some sanity to this situation Assuming we don't get back to ZIRP by then...
  - toomuchtodo 3y ago
    Beyond scope of this thread, but won't happen due to structural demographics. Fed will achieve soft landing at the cost of corporate profits. 9.6 million job openings as of last month's labor report, 3.6 million Boomers retiring per year, 1.8M deaths 55+ annually (with a majority of those folks still in participation rate). Inflation almost reined in, and we are at full employment. TLDR Can't fight the Fed, and the Fed can't fight demographics. Citations: https://news.ycombinator.com/item?id=37524951 https://news.ycombinator.com/item?id=37524951 https://news.ycombinator.com/item?id=36694276 https://news.ycombinator.com/item?id=36694276 https://news.ycombinator.com/item?id=36037097 https://news.ycombinator.com/item?id=36037097 https://news.ycombinator.com/item?id=35549039 https://news.ycombinator.com/item?id=35549039
- sumtechguy 3y ago
  I do not disagree. The real test will be over the next 2-3 years if we see a lot of commercial real-estate go up for sale. But the real trick is will they find another sucker to buy it. Also as you point out later on participation rate is going to be interesting within 10-15 years. It does look grim at the moment but that will change companies will have to pay more which will raise participation rate (not as much as I hope but it will raise it). I remember it was during the oil boom a couple of years ago that mc'ds was having trouble hiring people and were paying 20+ an hour just to compete against the oil riggers and that was when min wage was like 7 bucks. Remember scarcity usually raise prices in a market. I also posit that this is about to be this generations '1970s 1930s' moment. The boomers are hanging in there because they DO remember those moments. But age gets everyone in the end. It is interesting to see people mad about 5-6% interest rates. My parents had to pay 13%+ interest for a house at one point in the late 70s early 80s. I have the paper receipts to prove it.

toomuchtodo 3y ago

The commercial real estate refinance wall over the next 3 years will bring some sanity to this situation. If not successfully refinanced at current rental income, loan to value, and debt rates, property ownership will shuffle, potentially enabling lower rents. https://www.bloomberg.com/news/articles/2023-04-08/a-1-5-trillion-wall-of-debt-is-looming-for-us-commercial-properties https://www.bloomberg.com/news/articles/2023-04-08/a-1-5-tri... | https://archive.today/ku9Xr https://archive.today/ku9Xr ("Almost $1.5 trillion of US commercial real estate debt comes due for repayment before the end of 2025.")

onlyrealcuzzo 3y ago
> The commercial real estate refinance wall over the next 3 years will bring some sanity to this situation Assuming we don't get back to ZIRP by then...
- toomuchtodo 3y ago
  Beyond scope of this thread, but won't happen due to structural demographics. Fed will achieve soft landing at the cost of corporate profits. 9.6 million job openings as of last month's labor report, 3.6 million Boomers retiring per year, 1.8M deaths 55+ annually (with a majority of those folks still in participation rate). Inflation almost reined in, and we are at full employment. TLDR Can't fight the Fed, and the Fed can't fight demographics. Citations: https://news.ycombinator.com/item?id=37524951 https://news.ycombinator.com/item?id=37524951 https://news.ycombinator.com/item?id=36694276 https://news.ycombinator.com/item?id=36694276 https://news.ycombinator.com/item?id=36037097 https://news.ycombinator.com/item?id=36037097 https://news.ycombinator.com/item?id=35549039 https://news.ycombinator.com/item?id=35549039
sumtechguy 3y ago
I do not disagree. The real test will be over the next 2-3 years if we see a lot of commercial real-estate go up for sale. But the real trick is will they find another sucker to buy it. Also as you point out later on participation rate is going to be interesting within 10-15 years. It does look grim at the moment but that will change companies will have to pay more which will raise participation rate (not as much as I hope but it will raise it). I remember it was during the oil boom a couple of years ago that mc'ds was having trouble hiring people and were paying 20+ an hour just to compete against the oil riggers and that was when min wage was like 7 bucks. Remember scarcity usually raise prices in a market. I also posit that this is about to be this generations '1970s 1930s' moment. The boomers are hanging in there because they DO remember those moments. But age gets everyone in the end. It is interesting to see people mad about 5-6% interest rates. My parents had to pay 13%+ interest for a house at one point in the late 70s early 80s. I have the paper receipts to prove it.