During the Great Recession, commercial real estate (CRE) lending practices were heavily scrutinized and considered to be a leading factor of economic downturn. As a result, bank concentrations in CRE are assumed to be a strong predictor of bank failures.
Over a decade later, rising bank CRE lending concentration levels accompanied by historically high CRE prices have many economists convinced that regulations need to be revisited so history doesn’t repeat itself. As they debate whether or not current CRE lending practices are an accurate prognosticator, recent Qaravan data tells a far more nuanced story. Continue reading “Are CRE Concentrations Still a Financial Crisis Prognosticator?”