CRE Prices Could Fall 40% This Year in an Adverse Fed Planning Scenario

It is a worst-case projected scenario and not the most likely, but also not impossible.

After the Federal Reserve developed its 2023 stress test scenarios — the baseline and severely adverse sets of assumptions used in testing the resilience of large banks — Trepp projected potential commercial real estate property prices and portfolio losses under each.

This is scenario planning, so the most challenging assumptions aren’t a prediction of a likely outcome. But even the baseline wasn’t all that encouraging. Given the current economic climate, that shouldn’t be surprising.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

Unlimited access to GlobeSt and other free ALM publications
Access to 15 years of GlobeSt archives
Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
1 free article* every 30 days across the ALM subscription network
Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account? Sign In Now

NOT FOR REPRINT

Erik Sherman

Dig Deeper

Recommended Stories

Sugar Land Home to Successful Corporate Headquarters Relocations

Richard Berger | April 25, 2024

Texas town thrives by offering state and local corporate tax incentives, office retention incentives and tax abatements.

GDP Growth Slows But Doesn’t Shrink

Erik Sherman | April 25, 2024

However, the details of what was up and down were important and there is at least one disturbing sign.

Land Scarcity, High Construction Help Provide Buffer on this MF Asset

Natalie Dolce | April 24, 2024

Just one other market-rate multifamily asset with 100 units or more has been constructed within a three-mile radius of Hangar at Thunderbird since 2010, says a source close to the deal, which has just been traded to Decron Properties for $69 million.

Resource Center

Discover how to transform your real estate assets from mere spaces into vibrant experiences that captivate tenants -- and their employees -- to support engagement and retention.

Guide

GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
Exclusive discounts on ALM and GlobeSt events.
Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now