Signature Bank and Silicon Valley Bank were two major banks that collapsed within days of each other in March 2023. Silicon Valley Bank (SVB) was a lender to many technology and life-science companies and venture capital firms, while Signature Bank was a regional bank based in New York that had high exposure to the Crypto market.
The collapse of these two banks has sent shock waves across the banking industry and the economy. According to foxbusiness.com, some experts warn that the failures might have a negative impact on the real estate market, especially commercial real estate, which relies on bank financing for development and acquisition. The failures could also reduce lending activity and consumer confidence, which could affect housing demand and prices.
You may be wondering what does this mean to me as a potential home buyer or seller?
Many local residential real estate lenders are optimistic and think that the bank failures are isolated incidents that do not reflect systemic problems in the banking sector or the economy. They believe that the government’s measures to guarantee all deposits at both banks and provide liquidity support to other banks will help stabilize the market and restore confidence among borrowers and investors.
Signature Bank and Silicon Valley Bank collapsed because they were unable to cope with rising interest rates and deposit outflows. But many experts agree that this does not have anything to do with the real estate market. This is not like 2008. In fact, many people are looking for safe places to keep money. Based on recent weakness in the banking industry and the volatility of the stock market, perhaps investing in real estate is the best thing to do!