I guess I didn't need the Congressional Oversight Panel for the TARP to tell me that commercial real estate was in trouble, but somehow it's a bit more poignant when they do.
The Panel's February report opens pretty clearly:
Over the next few years, a wave of commercial real estate loan failures could threaten America‘s already-weakened financial system. The Congressional Oversight Panel is deeply concerned that commercial loan losses could jeopardize the stability of many banks, particularly the nation‘s mid-size and smaller banks, and that as the damage spreads beyond individual banks that it will contribute to prolonged weakness throughout the economy.
Over the next four years, according to the report, about $1.4 trillion in commercial real estate loans will reach the end of their terms, and nearly half of those are currently underwater, thanks to property values which have fallen more than 40 percent wince their peak in 2007.