We are now facing the worst economic disaster in history - worse even than the Great Depression. I’ve warned for two years now that the real estate picture is far worse than most Americans understand. The foreclosure disaster we’ve seen is only the tip of the iceberg. At the moment, 30% of all mortgages across the country are underwater. The so-called “shadow inventory” (homes in foreclosure or far behind on payments) is already 11 million homes and growing. And millions of additional homes will soon fall into foreclosure.
Yet the bigger disaster is the commercial real estate market. Banks have been hiding this tragedy by extending loans on properties that are no longer worth ten cents on the dollar. Many commercial properties have lost most or all of their tenants, and haven’t made mortgage payments in months, if not years. Yet by extending the loans, banks have hidden the disaster unfolding on their books. Make no mistake, commercial real estate loans - shopping centers, malls, strip malls, office buildings - will face foreclosure in unimaginable numbers over the next 5 years. Each new wave will cripple the U.S. economy more. [more...]
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