Per BI
Bank of America clients pulled $451 million from real estate stocks amid commercial property concerns
4/12/2023
Clients of Bank of America have decided to pull almost half a billion from real estate stocks. Due to fears regarding commercial property concerns, clients have pulled $451 million from real estate stocks.
Bank strategists led by Jill Carey Hill wrote in a note that this was the largest outflow from real estate they have seen since July 2021. There were a lot of reasons mentioned as to why worries are piling up for the commercial property sector.
Here are some of the reasons mentioned.
- higher interest rates
- work-from-home trends
- tighter credit conditions
While big property owners are looking to refinance their loans, high borrowing costs and harder loan-obtaining steps have caused their hurdles. This comes as commercial occupancy rates have dropped but are still far from pandemic levels.
Morgan Stanley Wealth Management's top strategists give their forecasts on the real estate market, expecting a potential drop of up to 40% from their peak. This would make the crash worse than what happened during the 2008 financial crisis.
Here's what the bank strategists had to say.
"Clients sold US equities (-$2.3B) for a second consecutive week, with outflows from both single stocks and ETFs (first ETF outflows since early March),"
US home sales reportedly dropped 36.9% year-over-year in January, resulting in the 12th consistent monthly decline. This also resulted in a new all-time low in over 12 years, with the last time the market experienced this low being in 2012.
Recently, mortgage applications dropped to a 28-year low. This was due to higher mortgage rates deterring newer applicants and the requirements to get a mortgage becoming harder for most potential homebuyers.
Realtor.com mentioned other debts that consumers must deal with, including personal, auto, and student loans. These, combined with the rates and yet other factors, have made it harder for new applicants.
See flow at unusualwhales.com/flow.
Other News:
- US home sales were down by 36.9% YOY in January, reaching their 12th consistent monthly decline
- Mortgage applications for home purchases fall to a 28-year low
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