Commercial Real Estate Could Bring Down the Entire Economy

 I think all of us have wondered aloud, "If all these hundreds of thousands of workers are now working from home...what is going to become of all the millions of offices that were built in every city across the country?"

I think we all know people who have told us, "My company didn't renew its lease for the offices we were in for the past 20 years.  They are saving millions and realizing that people are getting their work down just fine without ever coming to the office."

So let's say there is a 20 story building in your city that some group of investors paid $200 million for in 2018 and the financed it all?  It's now sitting at 1/2 capacity which means they are only getting 1/2 of the rents they assumed when they bought it.  How long can they continue making the payments?  Now let's take that story and multiply it by 1000.  What would happen if a few trillion dollars of mortgages go into default?  Could it bring down banks and ultimately the entire economy?

Over the last several years we have seen commercial real estate values plummet dramatically all over the United States.  One of the reasons why this is happening is because millions of Americans started working from home during the pandemic, and many of them never returned to the office once the pandemic subsided.  

Another reason why this is happening is because there has been a mass exodus of businesses from our core urban areas.  Conditions have rapidly deteriorated in many of our largest cities, and it is exceedingly difficult to run a profitable business in the midst of an environment of constant theft and violence.  

Ultimately, it is very easy to understand why commercial real estate values have crashed, and they will almost certainly go even lower.

Needless to say, this is a very big problem for financial institutions that are sitting on lots of commercial real estate loans.

Many of those loans have already gone bad, and more are going bad with each passing day.

A commercial real estate crisis of epic proportions is already here, and we will see many financial institutions fail in the months ahead.

At this moment, New York Community Bancorp finds itself in the center of the storm.  The bank's credit rating was just reduced to junk status, and it is desperately trying to reassure everyone that it is going to be able to survive...

New York Community Bancorp (NYCB) is attempting to reassure investors about its deposits, liquidity, and governance following a weeklong plunge in the company's stock and a decision by Moody's to cut the bank's credit rating to junk.

The $116 billion commercial real estate lender put out a press release just before midnight ET on Tuesday following the Moody's downgrade showing total deposits were up since the end of 2023 and that its total liquidity of $37.3 billion exceeded its level of uninsured deposits.

Of course the market isn't buying it.

Shares of New York Community Bancorp have been crashing, and they fell even more on Wednesday after the press release was put out...

The comments did little initially to lift a crisis roiling one of the country's top 30 banks that has deepened with each day.

Its stock has fallen by nearly 60% since it surprised Wall Street on Jan. 31 by slashing its dividend and reporting a net quarterly loss of $252 million. The price continued to slide by more than 13% after the market open Wednesday but that sell-off began to ease around noon.

Of course New York Community Bancorp is not the only institution that is hurting.

Here;  The Commercial Real Estate Crisis Could Bring Down The Whole Economy (prophecynewswatch.com)

We continue to hope that Jesus will come for his bride while people are still planting, building, marrying and giving in marriage and that we may not be here to witness the financial collapse of America...which would certainly mean the financial collapse of the entire system that the world has been built on these past 75 years.