A combination of economic recovery and overcrowding has seemingly canceled the distressed asset boom that so many private funds had planned for.

Private equity funds in the U.S. have raised $250B for commercial real estate loans as of March 23, including a record $75.8B for distressed debt specifically, according to Preqin data reported by Bloomberg. But lenders' patience with property owners devastated by an exogenous shock has perhaps prevented the anticipated wave of foreclosures from happening.

Over the past year, lenders have been giving forbearance or loan modifications in unprecedented numbers, which has succeeded in keeping property values from sinking — commercial property value rose by an average of 6.8% in the 12 months ending in February, according to Real Capital Analytics data reported by Bloomberg.

Even as indicators of a recovery became clearer earlier this year, fundraising for distressed assets didn't slow. Cerberus Capital Management closed a debt fund on Monday after raising $2.8B, well above its target of $2B, and Oaktree Capital Management raised $4.7B for its own fund that targeted $3.5B, Bloomberg reports.

Investors' hunts for deals are starting to show signs of "desperation," JLL Capital Markets Senior Managing Director Will Sledge told Bloomberg. The commercial real estate services firm evaluated $24B in potential debt deals last year but only saw $1.4B worth come to market. What did get traded only showed discounts of 5% to 15%, Bloomberg reports.

The competition-based inflation of distressed debt pricing forces fund managers who have raised billions into a difficult choice: deploy capital for lower returns than they may have promised investors or return the money to those investors when the closed-end funds run out of time.

“With all the capital out there, there’s going to be a bit of a ‘Three Stooges’ effect,” Real Capital Analytics Senior Vice President Jim Costello told Bloomberg. “They’re all running through the door at once, but nobody can get through.”

Rather than wait for foreclosure sales, debt funds may look instead to other ways to lend, such as giving bridge loans to hotels that aren't participating in the early stages of recovery.