Real Estate Reality Check™ - Building Wealth in Real Estate
As a costly and polarizing Congressional election campaign is heading into its closing week, new trends and expectations emerge in commercial real estate.
According to the annual “Emerging Trends in Real Estate” survey, lenders are expected to shift toward amending commercial mortgages instead of extending maturities as early as 2011, which could lead to increased sales of distressed properties.
Yesterday, international regulators agreed on Basel III, a set of new regulatory standards for banks and other financial institutions. Meant to curb reckless lending, these new regulations are going to be gradually phased in over the course of the coming decade. They shall be in full force by 2019, but their impact will be felt much earlier.
Under the new rules, banks have to maintain significantly increased capital reserves. Gone are the days of cheap money, easy credit, and no-docs loans.
For the real estate market and the general economy, Basel III can only mean one thing: a slowdown in growth. Do not expect a rebound of real property prices in real terms anytime soon. This is the time to invest not for capital gains but for cash flow.