Risk of Banking Sector Disruption Driven by Commercial Real Estate Defaults Remains Low Following the failures of Silicon Valley Bank and Signature Bank, concerns have arisen around small banks holding high concentrations of commercial real estate debt. Outside of a few challenged segments, however, commercial assets have generally performed well. Much of the small bank CRE debt is also not set to mature this year. These factors temper risks of a banking disruption stemming from… Read More

Mild mortgage rate relief brought buyers off the sidelines. Existing single-family home sales hit a 5-month high in February, correlating with a slight retreat in borrowing costs. Mortgage rates have been volatile in the opening portion of 2023, climbing after the Federal Reserve voiced a more aggressive stance, then falling again after Silicon Valley Bank’s demise and the related banking sector turmoil. The average 30-year mortgage rate is nevertheless undercutting last year’s 7 percent peak, hanging… Read More

CRE investment strategies that face higher risk Areas of the CRE investment spectrum facing the greatest headwinds Will a “snowball” of CRE distress begin to form?

Employers continuing to hire, but at tapering pace. The economy welcomed 236,000 new positions in March, the slowest month for job creation since a net loss in December 2020. Hiring was led by the leisure and hospitality sector, along with additions in health care, the public sector, and professional and business services. These gains offset job losses in retail trade, construction and manufacturing. Overall, while last month’s hiring is well above the long-term average, it falls… Read More

Marcus & Millichap CEO Hessam Nadji featured on Fox Business Why home buyers remain on the sidelines and what will trigger their return The recent apartment rent growth downturn and what to expect for 2023 The events that will spark a revival of apartment demand, and how investors can capitalize

Yahoo Finance Features Marcus & Millichap CEO Hessam Nadji Reduced size of rate increase and outlook suggests end to tightening cycle nearing Factors impacting CRE values and trading activity Trend variations by property type: How real estate has adapted to the many challenges and headwinds of the past and what’s ahead

Could emerging cracks in the labor market influence future Fed rate hikes? Why a softening labor market could be a positive for CRE Which types of companies are shrinking their recruiting efforts?

Banking shock prompts Fed to take a more measured approach. At its March 22 meeting, the Federal Open Market Committee raised the federal funds rate for the ninth time in 12 months. The 25-basis-point hike matches the margin from February and lifts the lending rate’s lower bound to 4.75 percent. The FOMC cited still-too-high inflation and a persistently tight labor market as reasons for necessitating the increase, which is nevertheless below what was anticipated by… Read More

Job growth continues at generally swift pace. Employers added a net 311,000 personnel to payrolls in February, down from January’s robust 504,000-position gain, but still above the long-term monthly average. Hiring was likely aided by an expansion to the labor pool last month, leading to a 10-basis-point uptick in the unemployment rate to 3.6 percent. Despite this slight increase to unemployment and a slowdown in job growth, the labor market is still showing…

How much CRE debt will come due in 2023? Could CRE defaults spark a wave of bank failures? How much of the total CRE debt do regional and small banks really hold?