What if a forced office-to-residential conversion wave reprices property?
A forced office-to-residential conversion wave reprices CRE credit: the clean read is HY/CMBS marks down as conversion economics impair office collateral. Rhymes with the 2023-24 office-CRE distress (sub-50c trades on trophy towers, regional-bank CRE fear). Forward angle: most conversions are uneconomic without subsidy, so the bid is selective; the durable trade is short office-heavy CMBS/regional-bank CRE exposure, with the GFC bank analogues flattering the systemic scale.
Every number ships with its receipt — the odds, the range, the precedents, and a public grade at Reality Check. The statistical machinery that produces it is proprietary.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 1–3 years horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. A forced commercial-to-residential conversion wave reprices property markets. The trigger decomposes into signed root‑shocks — Credit spreads ▲ — which propagate through our causal graph to the markets below.