Commercial Real Estate Progress Ebbs

It is not news that the residential real estate market is still very weak with minor progress towards recovery; however, back at the end of August it was evident that the commercial real estate market was on the upswing as foreign investors showed a significant interest in the United States commercial real estate market. However, where does the commercial real estate market stand now?

Although the residential real estate market is showing some signs of progress with home prices increasing, home loan applications still remain undesirably low as the unemployment rate is stagnant. As with the residential market, commercial real estate proves to be a great investment opportunity right now as you can acquire incredible interest rates and properties that are significantly lower than the market values before the crash. However, both markets are struggling.

Despite the great investment potential, many believe that commercial real estate progress is no longer on the upswing.

One reason for the slowing of the commercial real estate market is a concern that there will not be enough capital for those looking to refinance in 2012. Why, exactly, is the lack of capital an issue? It is important to understand that home loans are often 30 year mortgages; however, in the commercial market most are somewhere between 5 and 10 years. Therefore, in 2012 approximately $150 billion of commercial loans will be due. Of the $150 billion, approximately $100 billion will have issues refinancing due to the current capital issues.

It is unfortunate to see that the one market that was showing the most progress, with the exception of the luxury real estate market, is now starting to ebb due to the country’s economic conditions.

All eyes are on the White House to see if Obama’s job plan will receive Republican approval to stimulate the job market; however, many Democrats strongly believe that Obama’s job plan does not provide nearly enough funding to do what is needed to help with true economic recovery. In the end, the continuous congressional battles leaves our country stagnant as the real estate market eagerly awaits an improving job market and lower unemployment rates. I guess we are all waiting for the political parties to rest their dramatic debates and to finally have someone step up and make true progress to help the country as a whole. Until then, the real estate market (commercial and residential) will remain stagnant and interest rates will remain surprisingly low.


People also view

Leave a Reply

Your email address will not be published. Required fields are marked *