Property values in commercial real estate are beyond bear market territory
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A 155k SF office building in Chicago just sold for $17 million, or $109 per SF The seller took a huge 61% loss, paying $44 million for the building in 2017 Here's a worrying snippet from Crain's: "Thanks to remote work and higher interest rates, real estate investors can buy downtown office buildings on the cheap these days. Add a motivated seller trying to unload all of its office stock and the discount gets even steeper. Many office properties in the heart of the [Chicago] are now worth less than the mortgages tied to them, fueling a historic wave of distress." It will be interesting to see how bad the US commercial real estate meltdown gets (particularly in office) but it's certainly a story to keep an eye on in 2024 as big opportunities emerge". Source: TripleNetInvest
This is the lowest bearish % since Jan 2018 (which followed 2017's record 12 straight up months). What changed? Prices. The S&P 500 gained 8.9% in November, one of its best months ever. $SPX Source: Charlie Bilello
The US housing market is having its historical moment. Indeed, Real home prices in the US are currently almost 10% MORE expensive than they were in 2008. In fact, real home prices are now 80% ABOVE the 130-year historical average, according to Reventure. This means that even on an inflation adjusted basis, home prices have never been more expensive. Meanwhile, housing supply is 40% below the historical average. All while mortgage demand is at its lowest since 1994 and the median homebuyer now has a $3000/month payment. Source: The Kobeissi Letter, Reventure