Three (Potentially) Sobering Credit Realities

Credit rating agency KBRA put together a list of a dozen aspects of credit as macroeconomic pressure waves continue to race about the country and globe. No mention directly of commercial real estate, but CRE sits in a context of an overall economy, and some of the dozen factors they mentioned could have ultimately an indirect effect on the industry.

First, the wealth effect. Decisions as any marketer can tell you is always in large part emotional. And consumer financial confidence has fallen. Even though most of the value of U.S. stock holdings are in the hands of the wealthiest 10%, people freak out when they see retirement savings getting hammered. “And now, we are just starting to see softness in consumers’ second largest asset, residential real estate, which was down 0.6% in July from the June level, according to the Federal Housing Finance Agency (FHFA) national home price index,” the report said. That could cause retail spending to start falling, which means retail property owners have to stay alert.