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A significant majority of the total wealth in the US is in real estate (~$90T of ~$150T). Most of that is residential, but about a third of it is commercial. S

A significant majority of the total wealth in the US is in real estate (~$90T of ~$150T). Most of that is residential, but about a third of it is commercial. So about 10-20% of the total wealth in the US is in the form of commercial real estate, a significant amount of which is offices or office-adjacent-services that lose value if offices are not occupied.

euroderf 2y ago
Is there a metric like PPP for real estate ? It might be a reality check for wealth vis-à-vis other nations.
- jaggederest 2y ago
  I think cap rates are a decent proxy for that kind of thing, and they're not too bad recently in commercial office space, as far as I can tell. It seems that office buildings are selling at a discount to what they were a few years ago. But I suspect that many buildings have not yet changed hands, and thus have debt based on their old values. I wonder how many underwater office buildings there are in the US right now, and who owns their commercial paper? Edit: looks like about half of all office mortgages are underwater. Welp, there it is.
  - HeatrayEnjoyer 2y ago
    But the mortgage is fixed. Bringing people back in won't change the contract.
    - jaggederest 2y ago
      The value of the building is as a multiplier of the net operating income, that's what a cap rate is. If people come back in and companies expand and renew their leases, that increases the value of the building and reduces the capital needed to recapitalize the mortgage. And, bringing people back in, especially in the context of e.g. Amazon with thousand of workers, also has lots of knock on effects on other businesses, and there are plenty of copycats who follow the big seven tech companies.
      - HeatrayEnjoyer 2y ago
        What is the motivation for the companies? They're not saving any money moving workers back in. They can just let the lease run out and not renew.
pash 2y ago
The Fed’s estimates thru 2022 say real estate makes up 46.8% of net US wealth ($83.5 trillion of $178.4 trillion) [0]. 0. Readably summarized at https://www.barrons.com/amp/articles/net-wealth-is-over-135-trillion-where-that-money-resides-d722c9c6 https://www.barrons.com/amp/articles/net-wealth-is-over-135-... .
- jaggederest 2y ago
  Appreciate the more accurate figures, I didn't want to have to break out a spreadsheet to read an inflammatory blog article.

euroderf 2y ago

Is there a metric like PPP for real estate ? It might be a reality check for wealth vis-à-vis other nations.

jaggederest 2y ago
I think cap rates are a decent proxy for that kind of thing, and they're not too bad recently in commercial office space, as far as I can tell. It seems that office buildings are selling at a discount to what they were a few years ago. But I suspect that many buildings have not yet changed hands, and thus have debt based on their old values. I wonder how many underwater office buildings there are in the US right now, and who owns their commercial paper? Edit: looks like about half of all office mortgages are underwater. Welp, there it is.
- HeatrayEnjoyer 2y ago
  But the mortgage is fixed. Bringing people back in won't change the contract.
  - jaggederest 2y ago
    The value of the building is as a multiplier of the net operating income, that's what a cap rate is. If people come back in and companies expand and renew their leases, that increases the value of the building and reduces the capital needed to recapitalize the mortgage. And, bringing people back in, especially in the context of e.g. Amazon with thousand of workers, also has lots of knock on effects on other businesses, and there are plenty of copycats who follow the big seven tech companies.
    - HeatrayEnjoyer 2y ago
      What is the motivation for the companies? They're not saving any money moving workers back in. They can just let the lease run out and not renew.

pash 2y ago

The Fed’s estimates thru 2022 say real estate makes up 46.8% of net US wealth ($83.5 trillion of $178.4 trillion) [0]. 0. Readably summarized at https://www.barrons.com/amp/articles/net-wealth-is-over-135-trillion-where-that-money-resides-d722c9c6 https://www.barrons.com/amp/articles/net-wealth-is-over-135-... .

jaggederest 2y ago
Appreciate the more accurate figures, I didn't want to have to break out a spreadsheet to read an inflammatory blog article.