Challenges Facing the Multi-family Housing Industry

The commercial real estate sector is the next shoe waiting to drop, possibly creating another crisis for the US economy. Many of the commercial loans coming due were packaged by Wall Street, and sold as bonds. We saw how this played out in the residential mortgage backed securities market, undoing that sector and ultimately triggering a global recession.

$700 Billion of commercial mortgages are being challenged by the massive downturn, and from what we are seeing so far the outcome is not pretty. Driving this reversal of fortune is the fact that commercial properties are no longer generating enough cash flow to make principal and interest payments, never mind the other expenses that come with owning property. The other issue is the inability of owners to refinance loans as they mature pushing them into foreclosure. This is a segment that we need to keep an eye on, so next week at the Mid-Peninsula meeting we will host Michael D. Pierce who currently serves as President of the California Apartment Association in Sacrament,o and has served as a member of the Board of Directors of the Tri-County Division of the California Apartment Association since 1991. In addition, Michael holds the designation of Certified Property Manager from the Institute of Real Estate Management.

Michael is also a frequent public speaker on the subject of the rental housing market, management, operations and ethics. He will address the economic and political challenges facing the apartment industry locally and throughout the state of California. He will also discuss the opportunities that currently exist in the marketplace as well as potential future issues facing the industry. Michael will wrap up his presentation with a discussion of the current state of the multi-family sales environment and a questions and answer session. Mark your calendars!