The amount of outstanding multifamily and commercial real estate expanded in 2008, despite the credit crunch. Most of the expansion occurred in the commercial banking sector where outstanding debt grew from $1.40 trillion to $1.55 trillion from the fourth quarter of 2007 to the fourth quarter of 2008. In contrast, the volume of outstanding debt held in commercial mortgage-backed securities (CMBS) and collateralized debt obligations fell from $788.2 billion to $746.4 billion in the same time period—the first year over year drop in that segment. As a result, commercial banks’ percentage of outstanding debt grew from 41.92 percent in 2007 to 44.27 percent in 2008 and the share for CMBS fell from 23.65 percent to 21.33 percent.

Overall, the amount of outstanding debt has grown from $2.07 trillion at the end of 2003 to $3.50 trillion at the end of last year—roughly a 75 percent increase in that span. The volume of outstanding debt held by commercial banks has roughly doubled in that time span—from $868.1 billion to $1.55 trillion and more than doubled for CMBS, CDO and other asset-backed securities from 361.7 billion to $746.4 billion—despite the drop in 2008.

Jamie Woodwell, Vice President, Commercial Research, Mortgage Bankers Association, provided further analysis on the numbers and the lending climate in an expert column in our May issue.