The New York-based bank posted a loss of 57 cents per share for the January to March period. It also lost $1.6 billion in December, and cut its dividend.
The first quarter shortfall is sharper than analysts expected. They had forecast a loss of 8 cents per share.
It is also worse than last year's first quarter, when Morgan Stanley earned $1.3 billion, or $1.26 per share.
In addition to the real estate market, Morgan Stanley was also hit by an improvement in the value of its own debt in the first quarter. This improvement caused other assets tied to the rates on that debt to lose value.
Also said on Wednesday that it cut its quarterly dividend 81%, to 5 cents a share. The company said the move will save it $1 billion a year.Disclosure I am Selling all my MS today.