The flip side of the bullish argument in the sister piece to this post is that the real commercial tsunami is coming, probably in the second quarter of 2010 and it will be deeper than most think. The theory goes:
- We won’t see a rebound until 2013 or 2014 because the massive wave of mortgages underwritten at the peak are maturing in 2011-12
- Building owners will default on $500 billion to $750 billion of mortgage debt, or about 54% of the $1.4 trillion in loans coming due in four years
- 70% of them will not qualify for refinancing
- Oh, and did we mention the second huge wave of loan maturations on the way in 2015-16?
The generally agreed-upon notion is that the residential market is ahead of the commercial market, and the pains in the latter are just beginning to surface. The bears with whom we’ve spoken are waiting for the first real catalyst that will shed light on the true health (or lack of it, therein) of the commercial market. They then foresee that the residential side of the equation will definitely be impacted by the ails of it commercial sibling (hint: it would not be a positive impact).