Posted on 08/23/2009 1:45:18 PM PDT by Clintonfatigued
The recent uptick in home sales, green shoots of new housing starts and rebounding stock market may suggest that the long-awaited turn in the U.S. economy is here.
But is this daylight at the end of the tunnel or the beam of an oncoming locomotive of commercial real estate insolvency coming down the tracks on a collision course with a shaky economy?
Commercial real estate (CRE), valued at $3.5 trillion in the U.S., has experienced a 39% decline in prices from the peak only two years ago, according to the MIT Center for Real Estate.
This drop is greater than the 27% commercial real estate decline associated with the longer savings and loan crisis of the late '80s and early '90s that precipitated government Resolution Trust Corp. (RTC) seizures and auctions.
Additionally, the 18% price decline in the second quarter was the largest three-month drop in the 25 years since MIT first published the CRE price index.
Real Capital Analytics reports that over $2 trillion in commercial properties bought or refinanced in the past five years are upside down on their loans — having fallen below the finance or purchase price.
It appears owners have lost their entire down payments on $1.3 trillion worth of property. In the first six months of this year, commercial properties in default, foreclosure or bankruptcy doubled. That pace may accelerate because commercial usually lags residential by a year.
(Excerpt) Read more at ibdeditorial.com ...
ping
Meanwhile, I've already gone mostly all cash, with at least one employer paying in cashy money.
I’m anxious to see what JasonC has to say.
/s
Everyone knew this was coming. With Obamanomics, the only thing for certain is that the economy will go from bad to worse before it suffers a complete, catastrophic breakdown.
OK, this either is or isn’t going to happen. I’m just going to sit and wait/see.
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It’s coming , no doubt about it ... the question is does Obama step in to “help” and prolong the pain by 5 years or more or does he let the people that can’t roll those 50/250/500billion dollar loan portfolios go down and we have only an 18-24 month extension to the recession/depression.
I support the belief that this is a beam of light from yet another oncoming locomotive, and the end of the tunnel is still far, far away. If it is not merely endless trains shooting out at us from the darkness.
There are several ways to turn this around, you know. One would be to turn around, and go back out the way we got INTO this mess. But that probably won’t be tried until absolutely every other bad alternative is attempted, found to be inadequate, and discarded.
Just get the toxic loans out of the system, and tighten up the underwriting to where it should have been all the time.
I wonder why SRS (3 times Real Estate Fund) at all time low.
[OK, this either is or isn’t going to happen. I’m just going to sit and wait/see.]
Trust me, it is happening. I do commercial real estate. We are trying right now to unload a great property that was worth $40 million two years ago that is now available for $22 million. The developer is now upside down $100 million at least on all his properties.
Incredible deal for any Freeper with $20 million cash!
All my poker playing buddies (mostly 60+) say there's no bloodless/peaceful way back.
SOme of us, including I have been posting articles about this for a few months. I was previously in sales contacting commercial real estate companies and many have said they have never, in 30 years, seen the type of implosion as they are seeing now.
SO yes, let’s wait and see what happens as the Gov not only knows about this but is starting to aid the sector with freshly printed cash from the treasury.
Personally, I want to see Buttcrack and his leftist goons get creamed by this tidal wave to the point everyone is screaming for his head (impeachment for mismanagement). And of course, would finally like to see the PUBES step up and LEAD as they haven’t in 8 frickin years under that RINO BUSH.
WE NEED FREE MARKET LEADERS and not spineless political hacks.
The commercial RE crash is overdue. So is the upcoming consumer credit crash.
Unfortunately, there's no way -14nobmama and his "fixers" will let this alone. They'll push through a huge bailout the effect of which, just like the banks and personal housing, will be to extend the pain and make it even worse.
What was that definition of stupid?
I haven’t made a solid decision yet about this likelihood, but am leaning 2-1 that it will.
So, who does the bleeding?
If it were just that easy, I’d say let’s get it on.
However, as I have posited before in other threads, who do you go after? Like swinging at ghosts.
BTTT!
Well, Bush did try to do a couple of useful things.
He tried to get Congress to dial back Freddie and Fannie while there was still time but the 'Rats beat him politically. (RiNO sellout.)
He tried to depoliticize Social Security/Medicare and draw ther fangs as 'Rat political issues (the "third rail" stuff that old Claude Pepper was always demagoguing), but again, he couldn't get enough "PUBES" as you call them to hang with him. Too many Arlens and Pennys and Olympias.
He was ruined by the "Katrina" kabuki, which I'm 100% convinced was stage-managed by the Man Behind the Curtain himself, whose whispered instructions James Carville passed to Mary Landrieu for her Louisiana political creatures to carry out. I am convinced that the "issues" in the "Katrina" episode were nothing but a Clinton conspiracy to wreck Bush's second term, and they worked.
Between RiNO's like McCain and Arlen Specter, Bush was broken-legged on anything that really mattered, which was why the only things he could get done were tax cuts (since the 'Rats' masters like money, too) and foreign policy -- and there, it took 9/11 to shut the 'Rats up long enough for the good guys to get anything done.
Got gold? Better not -- Treasury and Bernanke have at least one more shot in them, to take down gold against the dollar. Then, that'll be it. They'll be like Custer at Little Big Horn after that.
The techies who write on Minyanville.com and Financialsense.com are talking near-term downleg in precious metals lasting a couple-three months, and then they like silver just an awful lot (more than gold).
key word is tried but didn’t try hard enough. Bush didn’t LEAD like he did after we attacked. He sat back, kicked up his boots, and twiddled his thumbs while he let Rome burn.
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