"The most problematic part of the market was the CMBS sector. That business essentially evaporated overnight going from originating about $230 billion in loans in its peak year of 2007 to less than $3 billion two years later. Things finally picked up a little in 2011, and last year marked a post-recession high of about $50 billion.
For those of you who don't care about this sort of thing, CMBS stands for Commercial Mortgage Backed Securities. The selling, packaging and re-selling of commercial loans was a huge deal in the mid-2000's, both for Wall Street and major real estate players everywhere. The CMBS market added a tremendous boost to the commercial real estate world by providing financing and liquidity, the life-blood of development.
My question is - which is worse (or better) for the economy in general and real estate specifically: too much money chasing ill-advised deals and financings, ala 2007; or fewer loans available only for those deals conservatively underwritten, ala 2011?
Setting our eyes on "recovery" looking like 2005-2007, would seem like a big mistake from here. $50 Billion actually sounds about right.
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