Elon Musk, CEO of Tesla and SpaceX, added his voice to a growing choir of business executives and financial experts sounding the alarm on the U.S. real estate market.

In a tweet on May 29, Musk delivered a short but grave notice, “Commercial real estate is melting down fast. Home values next.”

As The Dallas Express reported, the writing has been on the wall for the commercial real estate market for weeks. A severe downturn came about as a consequence of rising interest rates, declining property values, more restrictive loan conditions, and falling tenant demand, especially for office spaces.

With a record total of $2.5 trillion in U.S. commercial building debt set to mature over the next few years, seeing it refinanced when the banking sector is in turmoil is going to be tough, according to Insider.

On May 1, the Federal Deposit Insurance Corporation recommended raising the bank deposit insurance limit for accounts holding more than $250,000 in light of several bank failures, as The Dallas Express reported.

However, to finance this reform, the FDIC would likely need to hike its fees on banks, which many larger banks might oppose.

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Still, it is the smaller regional banks — like the recently failed Silicon Valley Bank and Signature Bank — that are most exposed to what might be a wave of commercial mortgage-backed security defaults.

“A lot of the construction lending and real-estate lending and small business lending is done by these smaller banks. Commercial real estate is a major part of our economy. If these banks lose all their capital and deposits, that will cause a meaningful slowdown,” said Bill Ackman, billionaire investor and CEO of Pershing Square Capital Management, according to Insider.

For its part, JPMorgan predicted that the banking sector would see about $38 billion in losses due to defaults in commercial mortgage-backed security office loans.

As The Dallas Express previously reported, there are more than 1,100 commercial property loans backed by nearly $23 billion in commercial mortgage-backed securities in the Dallas metro area alone that have recently raised flags among lenders.

Musk’s assertion that the commercial real estate market meltdown would be followed by a drop in home values is not unfounded.

Very much mirroring the problems of the commercial real estate sector, the residential real estate market in the United States is grappling with issues related to high borrowing costs.

Morgan Stanley executives Jim Egan and Jay Bacow reported a downturn in home sales, with purchase applications in May seeing a 26% decrease year over year, according to Insider.

Coupled with the ongoing credit crunch, Desmond Lachman, a senior fellow at the American Enterprise Institute, predicted a sharp drop of between 15% and 20% in residential home prices, according to Insider.

“Housing gets hit kind of two ways here,” Lachman explained. “Housing gets hit by tighter credit conditions, but then it also gets hit if the economy goes into recession.”

At the same time, other experts recently projected home prices to remain up due to the tight inventory.

“Home sales are trying to recover and are highly sensitive to changes in mortgage rates,” explained Lawrence Yun, chief economist at the National Association of Realtors, according to Forbes. “Yet, at the same time, multiple offers on starter homes are quite common, implying more supply is needed to fully satisfy demand. It’s a unique housing market.”

As The Dallas Express reported, home values — and thus tax appraisals — have soared in the Dallas-Fort Worth area. Tarrant County, for instance, saw increases in property tax of 18%.