High real estate prices could do more than just deter investors. They could also put small banks in a dangerous position, the Federal Reserve mentioned in its report to Congress this week.
Fed Chair Janet Yellen said in her testimony that commercial real estate prices are getting so high that, were they suddenly to drop, it could devastate small banks, MarketWatch reports. The Fed has been increasingly concerned about rising commercial property prices, particularly where apartment towers in cities like New York, San Francisco and Boston are concerned.
Apart from highlighting weaknesses in small banks, the Fed's report said overall financial vulnerabilities in the U.S. have remained at a moderate level since the middle of last year.
