Two things happened today that gave a special feeling to my day. I was reading an article titled: “Commercial Real Estate Collapse Bigger than Subprime Implosion” published by a blog specialized in investing ideas (http://www.mybudget360.com). The gist of it is that the commercial real estate market is now valued $ 3.5 trillion versus the $ 6.5 trillion it was worth at its peak few years ago.
Commercial real estate is becoming the next big wave of investment
The value today is therefore closer to the loan amount outstanding and many properties are already upside down or ready to go that way.
Commercial and constructions loans combined are bigger than the residential bubble and are ready to burst with more toxicity than the residential market because some of them will remain unattractive no matter how low the price will go.
In the residential market, houses are being sold now at extremely low prices, which keeps the inventory moving and will bring the market back eventually. With commercial, reducing the price won’t be enough because nobody will buy a retail mall when people are spending less in an area or when there are no businesses willing to rent. So the future looks gloomy for who holds major portfolios of real estate properties in the retail area. But is really so bad? And can do something about it?
The second thing that happened to me today is that I met a friend whop has just returned from Haiti after serving as a volunteer in the major hospital of the town. He lost 20 pounds in a couple of weeks and has seen things I won’t even mention here, but he gave me a message that I want to relay to you: “I don’t worry anymore about the minor things in life because I have seen a world I didn’t even imagine it existed”.
Worrying and crying about the economy or the “disaster” in real estate is useless. There are much deeper and bigger real catastrophes that reach much closer in the actual life and death of people every day. And there are people who are making a success in today real estate market, both residential and commercial, because they don’t just listen to the bad news but they act and make a difference. I want to be one of them, will you you be?
Roberto Mazzoni
Thank’s for your thoughts. Your right on. I have retweeted this on my Dirtfinder Twitter account. Helping to spread the word. If you are living in this great country, life is good.