From the New York website: If you asked a real estate executive to rank property types by bubble risk, odds are they’d start with condos. Then, probably retail with its precariously high vacancy rates. Third might be the office market, where supply has surged. Way down in the bubble-risk ranking would likely be multifamily: the asset class in which, conventional wisdom goes, rents tend to rise and never crash (not even during the depths of the 2009 recession).
With that in mind, you’ll forgive this reporter for almost falling out of his chair when Mark Zandi, chief economist at Moody’s Analytics, picked multifamily lending as one of the two greatest near-term risks to U.S. financial institutions (along with automobile loans). And Zandi isn’t alone. [more]