Today I received the latest version of Kahr Notes, my favorite semi-regular newsletter from Kahr Real Estate. I last mentioned Josh when I talked about being able to download the lectures from his real estate finance course at Columbia’s MS in Real Estate Development for free. Well now you have access to all 13 of his lectures, over 26 hours of great content.
In the latest edition of Kahr Notes, Josh compares this crisis and number of bank failures to the S&L crisis. Looking at a table from a White Paper put out by the FDIC back in 2000, which shows the number of S&Ls that failed, we see that bank failures last much longer than most people think even when there is substantial government intervention. It took 8 years from start to finish and the creation of the RTC took place halfway through the crisis.
The two columns are for FSLIC (the Federal Savings and Loans Insurance Corporation which was like the FDIC for the S&Ls) and the Resolution trust Company (the quasi-governmental agency set up to dispose of the remaining S&Ls that were insolvent).
The next graph, produced by Josh, shows the number of banks that have failed each month since January 2001.
What is disturbing about this second graph isn’t the total number of bank failures, but rather the fact that the trend is increasing.
The main point is that we’re only two years into this thing, and by anyone’s measure the S&L crisis is almost trivial in comparison. The good news is that there should be a lot of distressed sellers entering the market over the next year or so.
In another article I read, the author believed distressed assets would be present in the market as far out as 2016 and 2017 when the 10-year CMBS loans that were originated in 2006 and 2007 mature. His belief was that growth will exist but will be too slow to recoup all of the losses experienced in this market downturn. I certainly hope he is not correct.
Click here to subscribe to Kahr Notes and check out the most recent edition below:
Do you think we’ll see a wave of distressed sellers enter the market or will it be more of a trickle?
Similar Posts:
- The Re-Financing Gap = Opportunity
- Josh Kahr’s Columbia University Real Estate Finance Course Now Available on Vimeo
- Working with Banks – Kahr Notes
