Impending Commercial Real Estate Crash Threatens $160B Bank Losses

US banks could face up to $160 billion in losses as the commercial real estate sector faces its largest crash since the 2008 financial crisis, according to a working paper from researchers at USC, Columbia, Stanford, and Northwestern. The paper suggests that declines in property values from rate hikes and remote work could lead to 10%-20% of commercial real estate loans defaulting, potentially causing insolvency for 31 to 67 smaller regional banks and 340 banks facing insolvency due to losses from higher interest rates. The stability of the US banking system has been a concern, with Moody's recently lowering the credit rating of 10 large- and mid-sized US banks.