The Impact of the Commercial Real Estate Stress on Residential Real Estate

Banks have reported excellent credit performance in commercial real estate lending with low delinquency rates and minimal losses. This suggests that lenders have been cautious in their underwriting practices, and they have managed risk effectively. Despite the refinancing cliff, a considerable portion of commercial real estate debt appears capable of being refinanced without major issues. If we enter a recession in the second half of 2023, it is probably the most telegraph recession of all time. We already are seeing prices come down a little bit, but if we see a complete collapse, which I am not saying will happen, does residential follow? There is a lot to unpack there.