Banks in real estate

Interesting article in The Denver Post stating that Colorado banks have increased their real estate portfolios in the past five years.

Seems that since 2001 Colorado bank holdings in real estate have increased from 48.8% to 59%.  There is a similar trend nationwide.  Colorado Division of Banking commissioner says he "appreciates the concern" about real estate concentration.  Even though banks have posted solid earnings quarter after quarter.

So why do banks invest in real estate?  Because it's safer than the stock market and historically offers more long term gain.  Is there a possible down side?  Yes, if foreclosures spike and home builders invest in less land for new construction bank earnings could go down in the short term.

But there is a lesson here.  If banks, whose stock in trade is conservative investment strategies, feel that real estate is a better investment, shouldn't the average investor feel safe putting money into real estate as opposed to the stock market, the bond market or other securities?

Listen to your banker.  Invest in real estate.

3:23 PM - Jul. 18, 2006 - comments {0} - post comment

Write a Comment
Your Name:	RealTown Members: Click here to login
Your E-Mail:
Your Website:
Subject:
Your Comment:
Notifications:	Notify me by email when new comments have been posted to this entry.
Privacy:	Private Comment - Do not publish this comment to the public.
Verification:	To verify that you are a human and not a script, please enter the verification word from the image into the box on the right.

RSS Blog Feed

Categories

Favorite Links

Favorite Blogs