Commercial Real Estate the "Next Ticking Time Bomb"

Back on December 10, 2008 we spotlighted a terrific story by Terry Pristin in the New York Times pointing out the seriousness of the commercial real estate market situation. Today the New York Times has another terrific piece, this time by Charles V. Bagli. You need to read it.

Here's why you care: Just as the economy is struggling to gain footing, either through Treasury's cash infusion to banks in the hopes of greasing the lending wheels of commerce or the still in the works Obama stimulus package, the market (and thus YOU) may get another whammy - defaulting commercial loans. As we pointed out back in December, commercial loans impact you because when the bank takes a hit it makes it harder for the bank to lend to you. Furthermore vacant real estate impacts the properties nearby - just like a foreclosed home.

Thus, in the words of Charles Bagli in his story today, "Stock analysts say commercial real estate is the next ticking time bomb for banks, which have already received hundreds of billions of dollars in capital and other assistance from the federal government. Big banks — like Bank of America, JPMorgan Chase and Morgan Stanley — each hold tens of billions of dollars in commercial real estate securities. The banks also invested directly in properties."

Care now? Read his piece and be enlightened.