Federal Reserve bailout of the $3 trillion commercial real estate industry. South Florida apartment building prices down 52 percent from peak.

If you think residential real estate is having problems, you should shift your gaze to the mammoth issues confronting commercial real estate. Little is mentioned about commercial real estate (CRE) in the mainstream media yet this is a $3 trillion market (or twice the annual GDP of Texas). Much of the problems in CRE are profound and pose systemic risks to the banking sector. While the current attention is on fraudulent paperwork on residential housing, the biggest and most hushed bailout of commercial real estate is occurring. The Fed directly buying up questionable mortgages from banks is an indirect form of bailing out CRE. Yet in some instances, the Fed has gone ahead and directly taken on the role as owner for places such as a mall in Oklahoma. While U.S. residential property prices have fallen approximately 30 percent CRE has fallen by 42 percent.

Let us take a look to see where prices stand today: (more)