Banking analyst predicts next bubble about to burst

The commercial real estate market may be booming, but trouble could be on the horizon for the biggest lenders in the market, according to banking analyst Dick Bove.

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“Commercial real estate is in a bubble,” Bove said on FOX Business’ “Mornings with Maria” on Tuesday. “I think that you are going to see loan losses coming up in that sector.”

The commercial real estate market celebrated its strongest year on record in 2017, according to the Mortgage Bankers Association. Mortgage bankers closed a record-high $530 billion in commercial and multifamily property loans. And while 2018 carries much of the momentum forward, economic headwinds could derail loan growth for banks in that market, Bove said.

“The fact is that the biggest lenders of the commercial real estate market tend to be the mid-cap banks,” Bove said. “So the net effect is if they are doing extraordinarily well because that sector is doing well, but if that sector pops they are going to get hurt.”