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Journal Article
Real estate could pose challenges for some banks
The Southeast's banking industry overall is in good shape, with healthy earnings and capital levels. But upheaval in the region's real estate markets could pose challenges to institutions.
Speech
An update on the status of the economy and its implications for monetary policy
Remarks for the Annual Joint Luncheon of Commercial Real Estate Women Dallas and North Texas Certified Commercial Investment Members, Dallas, Texas, August 16, 2006 ; "In determining future policy, my colleagues and I will watch and listen and "taste" the indicators carefully as they come in. And, as we said at the conclusion of our last FOMC meeting, we will act accordingly. If anybody tells you with absolute conviction that the Fed is done raising interest rates or with equal conviction that they have only paused and will raise rates more starting in September or October, remind yourself ...
Journal Article
Swap meet
How a real estate law has driven up farmland prices.
Report
Real estate investors, the leverage cycle, and the housing market crisis
We explore a mostly undocumented but important dimension of the housing market crisis: the role played by real estate investors. Using unique credit-report data, we document large increases in the share of purchases, and subsequently delinquencies, by real estate investors. In states that experienced the largest housing booms and busts, at the peak of the market almost half of purchase mortgage originations were associated with investors. In part by apparently misreporting their intentions to occupy the property, investors took on more leverage, contributing to higher rates of default. Our ...
Journal Article
Commercial real estate and low interest rates
Commercial real estate construction faltered during the 2007 recession and has improved only slowly during the recovery. However, low interest rates have led to higher property valuations and are clearly benefiting the sector. The recovery of commercial property prices has been notable. Some measures suggest that, in some segments of the market, prices are close to their pre-recession highs. Valuation measures do not suggest that current prices are excessive.
Journal Article
Cloud over commercial real estate is slowly lifting in Texas
Every segment of the Texas commercial property sector suffered during the recession of 2009. Demand withered for space in offices, warehouses and retail centers, pushing up vacancy rates and lowering rental rates. Private nonresidential construction dropped sharply, reaching near-record lows. The global financial crisis temporarily brought lending to a halt. Commercial-mortgage-backed securities (CMBS) lending dried up in Texas and the U.S. as it became clear that repackaging suspect loans didn't lower risk. Banks also became wary of adding CRE loans to their books, especially in Texas, where ...
Speech
The U.S. economic outlook
Remarks at the Washington and Lee University H. Parker Willis Lecture in Political Economics, Lexington, Virginia.
Working Paper
Time and risk diversification in real estate investments: assessing the ex post economic value
Welfare gains to long-horizon investors may derive from time diversification that exploits non-zero intertemporal return correlations associated with predictable returns. Real estate may thus become more desirable if its returns are negatively serially correlated. While it could be important for long horizon investors, time diversification has been mostly investigated in asset menus without real estate and focusing on in-sample experiments. This paper evaluates ex post, out-of-sample gains from diversification when E-REITs belong to the investment opportunity set. We find that diversification ...
Report
Defaults and losses on commercial real estate bonds during the Great Depression era
We employ a unique data set of public commercial real estate (CRE) bonds issued during the Great Depression era (1920-32) to determine their frequency of default and total loss given default. Default rates on these bonds far exceeded those originated in subsequent periods, driven in part by the greater economic stress of the Depression as well as the lower level of financial sophistication of investors and structures that prevailed in 1920-32. Our results confirm that making loans with higher loan-to-value ratios results in higher rates of default and loss. They also support the business ...