A lot has happened over the weekend. Dolphins traded for Jalen Ramsey. Everything Everywhere All At Once won best picture. Oh, and two banks collapsed…
Silicon Valley Bank was the 16th largest bank before it’s collapse. The 2nd biggest bank to collapse behind Washington Mutual in 2008. Silicon Valley Bank was the largest bank by deposits in Silicon Valley, one frequently used by tech startups and others alike. Signature Bank was the other collapse but in comparison a much smaller bank.
There isn’t a direct coloration to the Real Estate market. This might end up being a good thing for real estate. One of the reason’s for the banks collapse was rising interest rates. Analysts were predicting at half point hike during the next FED meeting. As a result to SVP and Signature Bank it’s certainly plausible the FED becomes precautionary and decides to keep raising interest rates at bay. Which will lower mortgage rates which sit at 6.76%.
However, if the collapse of SVB leads to a broader financial crisis or recession, then the real estate market could be affected. A recession could lead to a decline in demand for real estate, as people may be less likely to buy homes or invest in commercial real estate. This, in turn, could lead to a decline in real estate prices.
I’ll be following this very closely.
Thanks for reading,
Chris
