Not Your Standard Recession and Recovery
Most recessions and recoveries are straightforward. There’s oversupply, too much money and aggressive lending. The economy goes into recession. Values plummet, lenders foreclose, and occupancies and rents go down. Everything is distressed. Then, distressed assets are sold, the economy improves and rents and occupancies increase. Happy days are here again. But the Great Recession of 2007-09 and subsequent recovery have been anything but straightforward. Due to financial chaos and a slow-to-recover economy, the road from the valley to the mountain top has been long and winding. Financial Chaos In 2007-2008, government policy and deregulation encouraged overaggressive lending and leveraging of lender’s balance sheets, not unlike when the government deregulated the Savings and Loans and changed the tax laws in 1986. Not only did this create a deep recession, but it also caused a near collapse of the U.S. financial system. So, how did this impact real estate? Bank Failures +
