The Commercial Real Estate Bubble
Adam J. Levitin
Georgetown University Law Center
Susan M. Wachter
University of Pennsylvania – The Wharton School – Real Estate Department
February 7, 2012
Georgetown Law and Economics Research Paper No. 1978264
Georgetown Public Law Research Paper No. 1978264
Abstract:
Two parallel real estate bubbles emerged in the United States between 2004 and 2008, one in residential real estate, the other in commercial real estate. The residential real estate bubble has received a great deal of popular, scholarly, and policy attention. The commercial real estate bubble, in contrast, has largely been ignored.
This Article explores the causes of the commercial real estate bubble. It shows that the commercial real estate price bubble was accompanied by a change in the source of commercial real estate financing. Starting in 1998, securitization became an increasingly significant part of commercial real estate financing. The commercial mortgage securitization market underwent a major shift in 2004, however, as the traditional buyers of subordinated commercial real estate debt were outbid by collateralized debt obligations (CDOs). Savvy, sophisticated, experienced commercial mortgage securitization investors were thus replaced by investors who merely wanted “product” to securitize. The result was a noticeable decline in underwriting standards in commercial mortgage backed securities that contributed to the commercial real estate price bubble.
The commercial real estate bubble holds important lessons for understanding the residential real estate bubble. Unlike the residential market, there is almost no government involvement in commercial real estate. The existence of the parallel commercial real estate bubble presents a strong challenge to explanations of the residential bubble that focus on government affordable housing policy, the Community Reinvestment Act, and the role of Fannie Mae and Freddie Mac. Instead, the changes in commercial real estate financing closely mirror changes in the residential real estate financing, which shifted from regulated government-sponsored securitization to unregulated private securitization. This indicates that changes in the securitization market contributed to the problems in both the commercial and residential real estate markets.
Full paper below…
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4closureFraud.org
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The Commercial Real Estate Bubble
These crooks did the same thing with the commercial property as they did with the houses ..they sold investments in anything and everything with a REVENUE FLOW….the CARS, CREDIT CARD BILLS, PENSION MONEY….AND THEY FOUND ANY WAY IMAGINEABLE TO GAMBLE ON THOSE LIES….THE AMERICAN PEOPLE FUNDED AND PAID FOR ALL OF THEIR FRAUD AND HAD NO KNOWLEDGE THEY WERE. AND STILL ARE….FUNDING, PAYING FOR AND BEING — USED AS PAWNS IN THE BIGGEST PONZI SCHEME SWINDLE AND HEIST OF OUR WEALTH IN HISTORY..! CNBC’S documentary HO– USE OF LIES interviewed an ex-Wall Street stock broker who revealed many of these facts…This same Ponzi Scheme continues up to this very minute as CNBC is reporting the Dow has hit 13,000 FOR THE FIRST TIME SINCE 2008….WOW…..EVIL..THIS BANKRUPTING OF AMERICA IS ALL BEING ACCOMPLISHED VERY DECEPTIVELY AND FRAUDULENTLY, AND IS BEING VERY CLEVERLY COVERED UP BY OBAMA AND MUCH OF THE MEDIA….CONGRESS AND THE SENATE AND MANY OTHER POLITICIANS AND THEIR CRIMINAL FRIENDS AKA THE GLOBALISTS AROUND THE GLOBE ARE FULLY INVESTED IN OUR FAILURE. THIS IS THE CRIMINAL ELITES EVIL, DIABOLICAL AND MANIACAL END GAME HITLER PLAN FOR MANKIND….AND IT IS ALL BEING VERY CRIMINALLY COVERED UP BY YET EVEN
MORE MASSIVE, DEADLY, EVIL SECRETS, LIES, DECEPTION AND FRAUD…THE PEOPLE MUST REVOLT…..WE THE PEOPLE…..STOP PARTICIPATING IN OUR OWN SNEAKY DESTRUCTION..STOP PAYING, COMPLYING AND CONFORMING WITH THEIR MASSIVE FASCIST, COMMIE, NAZI TACTICS. TO COVER UP FOR THEIR PERPS MASSIVE. FRAUDULENT, UNCONSTITUTIONAL AND ILLEGAL $1.2 QUADRILLION IN DERIVATIVES FRAUD DEBT…. THAT MASSIVE FRAUD HAS ALL BEEN CREATED BY MASSIVE SECRETS, LIES & MASS DECEPTIONS……..THAT MASSIVE CRIMINAL FRAUD IS BEING — USED AS A SNEAKY WEAPON IN WHICH TO TERRORIZE THE AMERICAN PEOPLE AND STEAL AND EXTORT ALL OF OUR. JOBS, WEALTH AND PROSPERITY…IN WHICH TO STEAL OUR NATIONAL SOVEREIGNTY. THEREFORE , OUR FREEDOM, PROSPERITY AND INDEPENDENCE…THEIR MASSIVE DEBT FRAUD IS HIDDEN IN THEIR COMPLETELY UNREGULATED… ELECTRONIC SHADOW BANK…ALL FRAUD……THESES EVIL CRIMINAL ELITE WHO OWN THE UN FEDERAL RESERVERE BANKARE BEING ALLOWED TO BANKRUPT AMERICA AND THE WORLD WITH THEIR MASSIVE UNSUSTAINABLE FRAUD DEBT…….WITH THE WEAPON OF SNEAKY CLASS WARFARE TACTICS. ALA NEITSZE..THEN THEY WILL HIT THE DELETE BUTTON ON ALL OF THEIR HIDDEN SHADOW BANK FRAUD….INSTITUTE THEIR MICROCHIPPED MARK OF THE BEAST…666….VATICAN/ROTHSCHILD INDENTURED SERVITUDE FRAUD…..GOLD BACKED CURRENCY….IT WILL THEN BE THE END OF THE WORLD AS WE KNOW IT AND WHAT WILL BE CONSIDERED BY GOD TO BE MANKINDS FINAL AND ULTIMATE REJECTION OF GODS PLAN FOR MANKIND WHICH IS FOR MANKIND TO BE FREE AND INDEPENDENT….THEN WE WILL ALL AWAIT ARMEGEDDON AND GODS FINAL JUDGEMENT OF MANKIND….THIS CAN ALL BE AVERTED IF INDIVISIBLY, IF WE THE PEOPLE STAND UP AND REJECT ALL OF THEIR EVIL FIXES FOR MASSIVE FRAUD….WHICH ARE GOING TO CA– USE ALL OF SATANS EVIL PLANS FOR MANKIND O BE FULFILLED….BY NOT PAYING, CONFORMING AND COMPLYING….OCCUPY….! GUTS, GUNS, GOD…!!!!! THIS IS THE ONLY WAY FOR… FREEDOM, LIBERTY, JUSTICE, INDEPENDENCE, PROSPERITY AND NATIONAL SOVEREIGNTY TO PREVAIL…!