The Financial Crisis 2025: The Bad, and The Good
A deep dive into the current financial crisis affecting real estate markets, from empty office buildings to low residential inventory, and why this presents the biggest wealth-building opportunity of our generation.
It's a long one guys, but worth it if you're into this Real Estate stuff.
Hello everyone, and thank you for joining me today. We need to talk about what's happening right now - the financial crisis of 2025. Or maybe they'll call it the 2026 crisis, because it seems like there's some cover-up happening in 2025. Whether that's intentional or just how these things unfold, I'm not sure. But what I do know is that we are definitely in a crisis, especially in US real estate markets.
This crisis isn't limited to real estate - it's everywhere. Jobs, businesses, bankruptcies are skyrocketing. Just the other day, a friend told me about a bankruptcy attorney who said he can't believe the volume of people contacting him about new bankruptcies every single day.
But today, I want to focus on real estate - both the problems it's creating and the phenomenal opportunities it's presenting.
Commercial Real Estate: The Eye of the Storm
Let's start with commercial real estate, which includes industrial, office, shopping centers, and multifamily properties. The sector facing the most problems right now? Office buildings.
The Office Crisis
Since COVID, we all know the story. People don't go to offices anymore. They work from home, freelance, or find flexible arrangements. From a company's perspective, why rent a full office when you can share space with another company, split the costs, and give employees the work-from-home flexibility they want?
Go to any downtown area right now and walk through those skyscrapers. You'll find entire empty floors - not just one, but plenty. Even co-working spaces like WeWork haven't created the demand the industry hoped for.
Here's the critical part about commercial real estate financing: Most commercial properties are purchased with balloon loans - interest-only payments for five years, then you need to pay off the entire debt and refinance.
Think about this scenario: Five years ago (2019-2020), interest rates were 2-3%. Now these same owners need to refinance with less tenant demand, reduced cash flow, and interest rates of 5-7% (Bloomberg, Business Insider). They're facing higher expenses while their income has dropped.
The result? Price corrections that are already happening and will only get steeper (ITM Trading).
Shopping Centers: Still Working, But Different
Shopping centers are adapting but changing dramatically. The trend toward online shopping and delivery services continues, but these properties are surviving by focusing on different tenants:
- Beauty salons and nail services (you can't get a haircut on Amazon)
- Self-storage and delivery storage
- Medical offices and healthcare services
If you visit small shopping centers now, that's mostly what you'll see. The era of traditional retail tenants is shifting to what I call "internet-proof" businesses.
Multifamily: Still Demand, But Interest Rate Pressure
People still need places to live, so there's continued demand for multifamily properties. However, owners who bought with thin margins, expecting low interest rates to continue forever, are facing serious challenges. Some bought with poor business plans and insufficient cash cushions - these investors are already struggling or going out of business.
Residential Real Estate: The Inventory Crisis
Let me tell you about Milwaukee, where I work - it's fascinating. Right now, in August (typically the peak season), there are only 900 properties on Zillow for a metropolis of 1.5 million people. A month ago it was 800, so it might get better.
This low inventory tells us something crucial about the industry. With so few transactions, everyone in the real estate ecosystem is struggling:
- Flippers have no deals
- Buy-and-hold investors can't find properties
- Contractors have less work
- Title companies, lenders, brokers, appraisers, and realtors are all seeing reduced business
From an economic standpoint, you might not call this a crisis since prices aren't dropping. But ask any real estate professional - they'll tell you there absolutely is a crisis. There are no jobs, no deals.
Why No Inventory?
People who bought properties 2-3 years ago have amazing interest rates and no intention of selling. Why would they sell and then buy something else with a 7% mortgage? (Kiplinger). Young couples are still buying because they need homes, but existing homeowners aren't selling because there's no financial sense in upgrading to higher monthly payments.
This pattern is playing out nationwide. LA has virtually no transactions. New York and Texas are seeing significant price drops. Florida too. The bigger the market, the bigger the hit (Barron’s, Business Insider).
According to NAR, U.S. existing-home sales in June 2025 fell to 3.93 million units, with a 4.7-month supply — the highest since 2020. FRED data shows active listings at 1.1 million in July 2025, still below pre-pandemic levels.
International Markets
In Israel, the secondhand market is definitely in crisis. Major metropolitan areas like Kiryat Ono, Herzliah, and Ra'anana have seen 10-12% price drops from December 2024 to August 2025.
What's propping up the market temporarily is new construction, where developers are offering 10-20% down payment deals and financing the rest. This is going to explode in their faces in a few years - remember I said that.
Europe's problems are even steeper. I've posted about Lisbon, Portugal on my Instagram - you can check those numbers.
The Opportunity of Our Generation
Here's what you need to ask yourself: What's your position in the market right now?
If you own multiple properties in New York, Florida, Texas, or LA - or 200 office units in downtown Milwaukee - this might be challenging news.
But if you're like most of us - in your 20s or early 30s with limited real estate holdings - this is fantastic news. Even those with struggling commercial properties should be excited about what's coming.
This crisis is creating the biggest wealth-building opportunity of our generation. We need to:
- Prepare cash - Liquidity will be king
- Build relationships - Connect with realtors, investors, and professionals who need us most right now
- Position for opportunities - Deals are coming that will be hard to duplicate in the future
Investment Strategy Going Forward
Short-term investments: Be extremely cautious. If you're flipping:
- Double your timeline estimates
- Increase cost projections by 50%
- Lower your ARV expectations
- Always have safety buffers
Buy and hold: Real estate is forgiving over time. Even people who bought in 2008 came out ahead eventually. Continue buying, but do your due diligence and ensure proper safety margins. how to do this? here.
Commercial real estate: This is where the biggest opportunities are emerging. If you don't have connections in commercial real estate yet, start building them now. The opportunities will be fantastic (WSJ).
The Bottom Line
Don't stop investing - just invest wisely. A crisis, by definition, doesn't necessarily mean something bad. For those positioned correctly with cash and connections, this represents unprecedented opportunity.
The market is about to provide access to deals we've never had before. People are going out of business, inventory will eventually increase, and motivated sellers will emerge.
Stay cautious, stay connected, and keep your eyes open for commercial opportunities. If you need help navigating this market, you know how to reach me.
This is our time. The opportunities are coming fast - in fact, they're already here.
Have a blessed day, and keep investing wisely.