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April 2017   Volume 43, Number 4      
 

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Fed Chair Says Rising Real Estate Prices Put Small Banks at Risk

High real estate prices have the potential to put small banks in a dangerous position, according to remarks from the Federal Reserve in a recent report to Congress. Federal Reserve Chairwoman, Janet Yellen, said in her testimony to the Senate Banking Committee that commercial real estate prices have increased so much that if prices were to suddenly drop, small banks would be devastated.

The Federal Reserve is becoming increasingly concerned about rising commercial real estate prices, especially in cities, such as New York, San Francisco and Boston. Yellen and other officials, including Boston Fed President Eric Rosengren, are looking at the growth of luxury housing with concern.

The majority of Federal Reserve officials have said that they would like to address any price bubbles through financial supervision rather than quickly raising interest rates. Although the Federal Reserve opted to leave interest rates unchanged in February, experts warn that the Fed would likely resort to raising rates in order to counter the effects of overheating markets, if left without any other options.

In addition to highlighting weaknesses in small banks, the Federal Reserve’s report said that overall financial vulnerabilities in the United States have remained at a moderate level since mid-2016.

Outstanding riskier corporate debt also declined over the past year. However, the issuance of leveraged loans has remained strong. .

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In this issue:

Top U.S. Markets for Buying and Selling Real Estate

Big Institutions Sell off Commercial Real Estate

Fed Chair Says Rising Real Estate Prices Put Small Banks at Risk

Iowa Realtor Warns Agents about Email Scam

Mortgage Delinquencies Spike among Some Homeowners

Next-Generational Homes Are the Latest Real Estate Trend

Silicon Valley Is the Top U.S. Real Estate Market

Top Three Legal Issues Facing Brokers

Trump Cut Causes FHA Applications to Decline by 3.2 Percent

Real Estate Agents: Stop Commoditizing Your Services

 


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