Will the commercial real estate bust affect the broader economy like the residential real estate bust in 2008? Why or why not?
In: Economics
Maybe.
Many regional and mid-sized banks have lots of money loaned out on commercial real-estate. Those banks, like Silicon Valley Bank, might be your local alternative to the 13 big banks. They might fail, but most people will be completely protected by the FDIC. However, it’s super scary and massively inconvenient.
I can only assume bank failures, more consolidation of wealth and money printing. The fed always finds a way to put the onus on the working stiff.
Probably not *quite* as bad. It’s more of a soft landing than a sudden shock like in 2008.
And I don’t think it will impact the broader economy all that much different. In 2008, people lost their homes and many couldn’t really engage in the economy–it was a full-blown recession.
Meanwhile, the commercial real estate bust is because of changes in work schedules. People are still working, they’re just not working in a physical office as often.
That said, recessions are funny like that. If we do hit a recession there might be a ripple effect that commercial real estate gets caught up in.
Not as badly. The problem in 2008 was not only did it stress/break a lot of investment banks but it also heavily squeezed people who were supporting their excessive spending by doing cash out refi every several years. That slowdown in spending messed with things too.
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