If landlords can’t pay back loans on office buildings, the lenders will suffer. Some banks are trying to avoid that fate.
Hard times are likely ahead for a lot of people. Mind your expenses and plan to save where possible just in case. Apologies for having a doomer outlook; I’m very cynical about capitalism, especially in the USA.
The big question is : Whereto are they dumping toxic loans? I would not put it pst some assholes to sell such “products” off to unassuming private shareholders as a “wonderful investement in business property” for their retirement…
Probably selling them to our corrupt government… So we can all be left holding the bag
I mean, it’s proven financial strategy. Money is just a number to rich people and if you need more the government will just give it to you.
Oh they don’t need to do that, we’ve already determined that some companies don’t have to suffer the consequences of their own actions because they’re “tOo BiG tO fAiL” so society has to suffer the consequences.
Just remember: when they win, they win. When they lose we lose and they still win.
Our form of capitalism is a fucking joke. Socialism for the wealthy owners and rugged individualism for the poors.
Yep. Biggest disappointment about the 2008 crisis was that all the people who caused it were able to go back to work and start doing it all over again
I say, if you crash the global economy, you ought to be relegated to fast food service for the rest of your life.
I was wondering this same thing. Who would take on a loan that a bank deems unprofitable? Is this like turning the loan over to a loan shark and the shark has means to ensure payment that banks don’t due to regulations? Are they selling to the govn’t? Either option is not good.
2008 all over again
It’s really not though, at a very basic level.
It actually kind of is The Bigger Short
I can’t help but notice you linked a story from over three years ago. I’m not arguing with any of the problems identified by the researchers in that article, but weakness in the commercial real estate market has been happening for over four years. What happened in 2008 took everyone by surprise. What’s happening now is on everyone’s radar and mitigation efforts have been happening for years.
The article in the post even talks about the financial institutions identified as over exposed in your article getting rid of these assets to reduce their exposure.
Commercial real estate, likely a restructuring due to folks not returning to the office. Been a downward trend since before Covid. Initial downturn was corps leaving downtowns, minor spike in 2022 and trending south.
Remodel as residential?
It really just isn’t possible for most ooffice buildings. Think about how many bathrooms/kitchenettes are on a floor of any office building. You would have to likely double or triple that number to convert to housing, which is an absolutely insane and expensive prospect that would require gutting the entire building and resoing the entire plumbing and electric systems. It’s chraper to jist tear the fuckers down and build something made for condos/apartments.
Not sure why creating very affordable housing for extremely low income/homeless, that share a communal bathroom/kitchen on each floor would be such a hard sell? Hostel mentality? Feels like there’s still room for at least one in every major city.
Not a solution for all commercial real estate obviously.
They called them “apodments” there for a bit, but “dormitory” is probably a more accurate term. Small 300sqft rooms, sometimes with a small kitchenette but generally shared kitchen/baths on each floor.
The gimmick is that they were “cheaper” than full apartments for people that just need to sleep somewhere and then leave, but I think they fell out of vogue with luxury apartments taking over instead.
On the plus side for conversions, old 70s era and early office building apprently convert pretty well to residential before they are a ways overbuilt for office space compared to more modern buildings. Likely thousands of possible units in most cities.
It’s the plumbing, mainly. Not designed to carry that much throughput.
What if you have one resident per floor?
I know that’s it’s not efficient, but investors would just have to swallow those costs given their bad investment decision.
No one wants to take the upfront cost of renovation. Corporate buildings aren’t an easy conversion into normal apartments. Plumbing especially is very different.
I’ve seen estimates that it’s frequently cheaper to demolish the building and build a new one.
That may be true depending on the extent of remodeling necessary. Do that and make it a green building with modern heat pump and you could make a profit in a few years. But they want the profit now
The hero we all needed but don’t deserve.
You can too, just paste the article URL into archive.is
This is a gift article so no need for archive.
Same reason why banks kept giving loans to Trump. He had so much debt that their best option for a long time was to just give him more money in the hopes he could use it to earn enough to repay all the loans. Sunk-cost fallacy at the major financial level.
“if you owe the bank $100 that’s your problem, if you owe the bank $932,514,634 that’s their problem.”
lol how tight would it be if I could buy my own mortgages off of the bank for a discount
You joke but when you default on a loan they will eventually offer to settle at a lower amount
At the expense of your credit score tanking and never being able to recover.
Oh no you get a lower score in a stupid game
Your credit will eventually recover, and you already have a house!
Depends on how likely your bank thinks you are to default on your mortgage…
Tell your bank, you’ve lost your job, going to prison, and you’re newly divorced with large alimony payments. /s obviously.
… hold on, let him cook
They’re fixed rates, maybe that’s a good idea!
They’ll just wait for him default then sell it to a corporation or greedy landlord. You can’t buy a house because they buy them up.
Some folks have been calling this for a while. The Bigger Short
If you are reading this… it is clearly not “quietly” lol
The churn will continue…you become a high paid employee at 50, the new kids get paid 10% below you because you’re “senior”. Then you all get 3% increases. You get retired. They keep getting 3% increases while you don’t. Suddenly they get paid more than you. You start having trouble paying for stuff because it’s so expensive. Then suddenly you gotta sell your house to have enough. A newly graduated kid gets paid the same as you, they buy your house. You can’t buy a house anymore, so you move to a cheaper area where you can afford something. Then you moved again and again. Take on stamp collecting as a cheap affordable hobby. Blah blah. You end up in a retirement home. Then your kids can’t afford that. Next thing you know you’re under a bridge and you love the freedom for like 3 days. Then you really wanna shower but you can’t. The welfare office is far from the YMCA, so you find a Walmart cart. A guy shows you where to collect soda cans and where to sell them. You two become friends but he OD’s… you inherit his cart. Then you help a new guy to find cans with you. So then you OD. And the guy in your house is retiring…the cycle continues.
The American dream
Oddly specific.
… and in Australia (at least) you pay a massive Stamp Duty each time you buy a new place.
Where can I find the used cans?
Hey friend 🤗! Come on man, we’ll find you some cans! Place number 1 where people don’t look is under cars! Just sit here, watch the cars leaving the street parking and jump in to profit! But do it quick or a Karen might just give your cart to Bob…Sorry Karen! Yeah, not all Karen’s are bad! Specially not you!
Let them eat cake.
What’s that? Rich fuckers are worried about being less rich? However will I be able to sleep at night.
They will never be less rich.
Hey, I’ve seen this one!
What do you mean you’ve seen this? It’s brand new.
Nah, it’s a repost from late 2007.
Sorry, I mean a repeat of late 2007, the fourth or fifth “once in a lifetime economic crisis” for millennials that will somehow magically end with billionaires owning an even larger percentage of the GDP.
“How could this possibly happen, again, again, again, again,” will cry the
economistsbillionaire simps.What’s a repost?
Are you back from the future or something?
They’re just pointing out that history is repeating itself because we learned nothing from 2008
My bad, I should have put a “/s” on all my comments in this thread.
Those lines are directly out of a movie. Except they say rerun instead of repost. It just seemed that the OP was driving one of these:
If it makes you feel any better, I liked your joke and even read it in raccoon hat kid’s voice.
You know what, that does make me feel better.
But I guess those jokes stunk like manure! I hate manure!
I’ll take the woosh. We’ll played.
Isn’t this just going to be “great recession 2 office building bugaloo?”
Part 1 was the great recession caused by sub prime loaning assholes and combined debt packages.
Similar story different players apparently…
Mind your expenses and plan to save where possible just in case
So… like always? Nothing changed. We are already fucked.
Please save, and put your money in the bank.
You say that like somebody who’s never had to choose between rent and food before.
I’m saying that the banks, who appear to be struggling, would like you to save your money by putting it in their system. So they may use it.
I’m not making any other judgement.
That said, no clue where the person I replied to got their apparent quote from, as it does not appear in the article itself.
Anyone know how to prepare for 2008 part 2?
Wait until 2012 part 2 and BUY BUY BUY
Lol yeah but like with what capital? I expect stocks to crash with it. Do I just save in cds?
Cash is king.
Problem is cash is not inflation proof. Not sure if I should horde gold. I bet crypto will take a hit too.
Probably need to diversify.
I hear abortion medication could be pretty valuable in November.
And toilet paper
Ah pushing illegal drugs.
Everything illegal is bad right?
And toilet paper