The U.S. banking system continues to struggle with significant exposure to the commercial real estate market compounded by the challenge of high interest rates, putting it at risk as potentially troubled loans mature, according to an analysis by Florida Atlantic University.
Troubled debt restructuring from commercial construction, multifamily, owner-occupied and owner-non-occupied mortgages has tripled since 2023, reaching $18 billion in the fourth quarter of 2024, up from the $6 billion in the second quarter of 2023.
Although more than half of this amount is attributable to non-owner occupied nonfarm and non-residential, the FAU report said there is “serious deterioration” in multifamily and commercial construction loans.
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