The $3T Problem No One in Real Estate is Paying Attention To
On The Market
Banks' exposure and theoretical containment
Dave explains limited bank exposure but notes banks have lent to private credit funds too.
A $3 trillion market is beginning to crack. JPMorgan CEO Jamie Dimon has sounded off, saying there are “cockroaches” in the system. Investors are pulling billions of dollars out of the market, and real estate could be affected in a massive way.
This is the private credit crisis explained.
When big investors go to buy or build, they don’t always take money from a bank; instead, they get loans from the private credit market—lenders who operate outside of the traditional lending apparatus. But over the past four years, commercial real estate has seen values tank, income drop, and demand shrink for everything from office to multifamily and more. And the people who lend their money to private credit are starting to get nervous.
Billions of dollars have already been pulled out of the market, with many investors going on “bank run” style withdrawal sprees. But, this isn’t only a commercial real estate problem—residential real estate could be affected if enough money leaves the systems.
So what happens next? Will real estate prices fall even further as a result? Are we on the brink of a credit crisis mirroring the 2008 subprime bubble? We’re breaking it all down in this episode.
In This Episode We Cover
Private credit explained: who’s lending the money and what is being leveraged
“Cracks” begin to form, and why investors are pulling billions of dollars out of the system
Riskier commercial real estate debt that could trigger a “debt spiral” of serious proportions
Why residential real estate is not completely safe if commercial real estate starts to fall further
The one thing worrying experts the most about this hidden credit crisis
And So Much More!
Links from the Show
Join the Future of Real Estate Investing with Fundrise
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Find Investor-Friendly Lenders
On the Market 410 - The First Domino? Investors Pull Billions as Real Estate Bank Runs Return
Grab the Book, "Recession-Proof Real Estate Investing"
Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/on-the-market-411 .
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