A combination of factors resulting from the subprime mortgage crisis have led to problems in the commercial real estate market.
Patricia Nooney chair of the Realtors Commercial Alliance Committee portrayed the decline as unusual since "transactions are being curtailed not for lack of demand, but for serious challenges in obtaining financing.
"[1] Financial companies going bankrupt or being acquired has also been projected to affect commercial real estate with analysts at JP Morgan estimating office vacancies could go up 5 to 7% and rents decrease by 20%.
It is also expected the unloading of Lehman's debt and equity pieces of the $22 billion purchase of Archstone could cause a similar action with apartment buildings.
[4][5] A secondary cause and effect of the crisis relates to the role of municipal bond "monoline" insurance corporations such as Ambac and MBIA.
The effect of such a devaluation on institutional investors and corporations holding the bonds (including major banks) has been estimated as high as $200 billion.
[23] Housing prices are expected to continue declining until this inventory of surplus homes (excess supply) is reduced to more typical levels.
A 2006 study by the Securities Industry Association found a significant proportion of baby boomers were not saving adequately for retirement and planned to use their increased property value as a "piggy bank" or replacement for a retirement-savings account.
[28] About 46% of Hispanics and 55% of African Americans who obtained mortgages in 2005 got higher-cost loans compared with about 17% of whites and Asians, according to Federal Reserve data.
According to a January 2008 study by the Mortgage Bankers Association, one out of every seven Maryland homes that lenders began foreclosure proceedings on the preceding summer was not occupied by the owner.
[31] In October 2008, responding to a dramatic increase in such evictions since 2006, Tom Dart, the elected Sheriff of Cook County, Illinois, decided to take a stand on the issue.
He criticized mortgage companies for failing to fulfill their obligation to identify renters in foreclosed properties, and announced that he was suspending all foreclosure evictions immediately.