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Office real estate crash will be so sharp, values unlikely to recover by 2040

fortune.com

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Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#201

Post by olddustytrail »

snow_mac wrote: post #121
BeFlatXIII wrote: post #111

Earlier quoted context omitted.

Those are all reasons why I hope the crash is as big as possible. Let's enjoy the show.

This is a stupid response. Remember 2009 when the housing bubble popped and it effected the entire economy? With billions tied up in commercial real estate, it will have a wider impact then just office buildings and retail locations

You mean "affected", as in it "had an effect". Unlike "effected" which, as in the saying "cause and effect", means "caused".

Dear God, English is the stupidest language ever.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#202

Post by speakfreely »

nine_zeros wrote: post #152
snow_mac wrote: post #121

Earlier quoted context omitted.

This is a stupid response. Remember 2009 when the housing bubble popped and it effected the entire economy? With billions tied up in commercial real estate, it will have a wider impact then just office buildings and retail locations

> This is a stupid response. Remember 2009 when the housing bubble popped and it effected the entire economy? With billions tied up in commercial real estate, it will have a wider impact then just office buildings and retail locations A lot of people are so disenfranchised from the wealth that the world could crash and they could care less. They are already at the bottom with nothing to lose. Such is the inequality i…

> They are already at the bottom with nothing to lose.

If they have access to running water and a roof over their head, this is a wildly misinformed perspective. The people at the bottom typically feel the most pain during economic wipeouts.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#203

Post by jliptzin »

spokeonawheel wrote: post #6

crazy idea: us govt scoops up all the office real estate at the crash and converts to low income housing for free. Solve two crisis at once, the obviously coming real estate crisis and the homeless crisis. All for the cost of a handful of F35s If only politicians had an iota of strategy.

They have a strategy; the strategy is to help bring about the next crisis, either by manufacturing it, or allowing it to happen, so voters can be scared into whatever it is the government wants to do. For example, while Biden is president, Republicans are rooting for an all-out economic collapse so they can seize power again in 2024. And if there is no collapse, they'll tell you we're on the precipice of one, and to be afraid.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#204

Post by rsync »

bushbaba wrote: post #140

A collapse or real estate would be a good thing for the economy. It would free up middle class paychecks to be spent on more goods, driving long term growth of our businesses. The risk is without the correction you end up like many EU countries whos main GDP growth is real estate which only takes you a few generations to fall apart.

"A collapse or real estate would be a good thing for the economy."

I disagree.

Periodic recessions and repricings would be good for the economy - just as periodic small fires are healthy for forests.

But we snuffed out all of the recessions in the same way we snuffed out all of the small fires - and now we have accumulated so much "fuel load" that the inevitable fire will be an uncontrollable catastrophe.

(I love this analogy, by the way)

So it will occur but it won't be good or healthy. A large number of otherwise healthy business firms and otherwise reasonably employed people will all get burned while they would have survived a series of smaller recessions.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#205

Post by Atheros »

yazaddaruvala wrote: post #153
CydeWeys wrote: post #123

Earlier quoted context omitted.

Or we could just use the actual definitions of words rather than make everything worse and harder to follow along with.

Or we could just be flexible and evolve with any reasonable colloquialisms of the time.

In a ponzi scheme, some actors go to jail for the rest of their lives and in a speculative bubble they do not. There are good reasons to have separate words for these separate concepts.

Dishonest people will always use hyperbole when describing the world. That hyperbole is not justification for honest people to abandon technical definitions. And that is what you are proposing. Having everyone "evolve" on the definition of 'ponzi scheme' means that the current definition is erased. But the current definition is still in use!

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#206

Post by JumpCrisscross »

simple-thoughts wrote: post #99
kryogen1c wrote: post #69

Earlier quoted context omitted.

>> Current market prices for a lot of commercial real estate seems to be a ponzi scheme > Ponzi scheme? Yes. How in the world are these the top comment and top reply? Commercial real estate isn't a ponzi scheme. Like, at all. In any way, shape, or form. There are disparate actors making separate, uncoordinated decisions. There are single transactions being made delivering real value. There's no long term holdings fal…

In common parlance, an asset bubble is called a Ponzi scheme. Actual Ponzi schemes should be referred to as “rob peter to pay Paul” scams to prevent confusion.

> In common parlance, an asset bubble is called a Ponzi scheme

This is a crypto phenomenon. Porting crypto’s corruptions of financial and economic terms, from Ponzi to inflation and market cap, given the benefit of hindsight, doesn’t make sense.

Here’s, mechanically, why it’s not a Ponzi scheme: there is no incentive to get your money out first.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#207

Post by JumpCrisscross »

klodolph wrote: post #147
dragonwriter wrote: post #133

Earlier quoted context omitted.

> I think the correct term here is “speculative bubble”, but there are deep similarities between a speculative bubble and a Ponzi scheme. There are deep differences, too, most obviously the one highlighted by the “scheme” in ponzi scheme. > In both a speculative bubble and a Ponzi scheme, early investors are paid out with funds taken from later investors, for an asset which does not have enough utility to justify tho…

> In a ponzi scheme, money is deliberately directed to early entrants to cover the conscious absence of any mechanism to produce actual value. I don’t think the “deliberate” part is particularly important. It sounds like you disagree. There’s a whole discussion to be had here about mens rea, and that discussion is important in the context of criminal justice, but I think it’s less important when discussing systemic p…

> it’s less important when discussing systemic problems

It’s unimportant whether commercial property owners are fraudulently or not inflating their property values? That seems incredibly important to what kind of solution is appropriate.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#208

Post by JumpCrisscross »

throw9away6 wrote: post #145
dmoy wrote: post #90

Earlier quoted context omitted.

Sure, but the word to describe it may be "bubble", not "ponzi scheme". E.g. you can't say a failed startup is a ponzi scheme because it loses a bunch of money. A ponzi scheme is a very specific type of fraud.

There is an element of ponzi because none of the actors have an interest to break the cycle. Mutual hallucination might be a better term though. Like you would think the asset buyers would have an incentive to stop holding the loans and the whole thing would collapse, but because the buyer are investing with other peoples money they are also incentivized to keep the cycle going. The people whose money is eventually g…

> none of the actors have an interest to break the cycle

This is collective behaviour. If you discover you’re in a Ponzi scheme, it’s in your interest to get your money out first.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#209

Post by JumpCrisscross »

grepfru_it wrote: post #150
snow_mac wrote: post #121

Earlier quoted context omitted.

This is a stupid response. Remember 2009 when the housing bubble popped and it effected the entire economy? With billions tied up in commercial real estate, it will have a wider impact then just office buildings and retail locations

some people just want to watch the world burn

Almost nobody does. A lot of immature people think they do, because they’re not aware that it can get much, much worse for them without getting too bad for the people they hate.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#210

Post by GauntletWizard »

JumpCrisscross wrote: post #207
klodolph wrote: post #147

Earlier quoted context omitted.

> In a ponzi scheme, money is deliberately directed to early entrants to cover the conscious absence of any mechanism to produce actual value. I don’t think the “deliberate” part is particularly important. It sounds like you disagree. There’s a whole discussion to be had here about mens rea, and that discussion is important in the context of criminal justice, but I think it’s less important when discussing systemic p…

> it’s less important when discussing systemic problems It’s unimportant whether commercial property owners are fraudulently or not inflating their property values? That seems incredibly important to what kind of solution is appropriate.

Everything is worth what the market will bear. If you can achieve a price, it's a fair price - some relator, probably.
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