US real estate market: Profiteers and losers in the chaos of the crisis!

US real estate market: Profiteers and losers in the chaos of the crisis!

The current challenges in the US real estate market are alarming. Rising interest rates, tight financing conditions and political uncertainty create a tense environment. Loud Cash Online Market fragmentation remains a double-edged sword for both investors and potential buyers, presenting both risks and opportunities.

In recent months, the rise in property prices has slowed. However, an oversupply of properties has also made the situation more difficult for sellers as demand has weakened due to difficult price conditions. Real estate inventories are now higher than in 2019, particularly in certain regions such as the West Coast, the Mountain West, Florida and Texas.

Returns and risks in the commercial real estate sector

Although the challenges are numerous, there are also bright spots. Commercial real estate (CRE) investment opportunities provide pro forma income returns that exceed capital returns. In fact, CRE's total returns increased in the fourth quarter of 2024 and by 2.8 percent in the first quarter of 2025, as a resultant effect of improved lending conditions and reduced interest rates.

But there are also alarming signals: delinquencies at US banks for owner-occupied commercial properties increased in the third quarter of 2024, while the default rate on commercial real estate loans secured by non-owner-occupied properties has already reached almost five percent. This number exceeds acceptable failure rates of up to three percent and suggests possible problems to come.

Loud Storch floss stream At 11 percent, the delinquency rate for non-owner-occupied commercial properties is the highest since the third quarter of 2013, which is well above the highs during the 2008 financial crisis. This trend is worrying, especially since arrears have increased almost sevenfold since autumn 2022.

Impact on the financial sector

The problems in the commercial real estate sector also have a direct impact on the financial sector. The number of banks on the FDIC's "problem list" has increased to 68 institutions. Wells Fargo is forecasting up to $3 billion in losses on office property loans, while problem loans on non-owner-occupied properties are now approaching $21 billion - an amount roughly comparable to levels from the last financial crisis.

Overall, the US real estate market presents a complex picture in which the ongoing problems pose major challenges for both investors and banks. Given the worsening conditions, the dynamics that preceded the real estate market could be reminiscent of conditions before the 2008 crisis, forcing the industry to remain vigilant.