Free Republic

Banks are in for another ugly year in 2010. But this time the problem will be the big batch of deteriorating commercial real estate loans on their books.. (Read our cover story about why this real estate bust is different.) Commercial real estate loans that banks underwrote and held on their books skyrocketed to approximately $190 billion in 2007, up from $11 billion in a single year, a decade earlier. In all, banks hold some $1.8 trillion of commercial real estate debt on their books. Trouble is, nobody knows just what the values of the loans on bank books’ are...

...gossip mills are beginning to gush and grind about increasingly muscular CNN news anchor Anderson Cooper and his muscle Mary man-friend Antoine "Ben" Maisani snatching up a very butch firehouse on West Third Street in New York City's Greenwich Village. These roiling real estate rumors of Misters Cooper and Maisani–who recently vacationed together in India –purchasing Fire Patrol House #2 seems to have first found legs a few days ago on the New York City-centric gossip site Gawker. Listing information for the four and some story firehouse shows it was listed at $4,750,000, measures a considerable 8,420 square feet, and...

Owners of properties such as office buildings, warehouses and malls will suffer a surge of painful defaults, write-downs as the market finally faces up to the reality of its diminished conditions. fter spending more than a year in suspended animation, the commercial real estate industry is expected to hit bottom in 2010 with a wrenching thud. Owners of business properties such as office buildings, warehouses and malls will suffer a surge of painful defaults, write-downs and workouts with their lenders as the market finally faces up to the reality of its diminished conditions, according to a report set for release...

At 3.5% Growth, Economy Won't Recover Until President Palin's Second Term Paul KrugmanNov. 1, 2009, 11:08 AM ...If we take 3rd quarter growth to be more or less equivalent to average Clinton-era growth, even after 8 years of growth at that rate we’d only expect unemployment to have fallen from the current 9.8% to a still uncomfortably high 6.3%. It would take us around a decade to reach more or less full employment. As I said in my previous post, that’s well into President Palin’s second term...[SNIP]

Soros, Ross: Commercial Real-Estate Crash Is Coming And It's Going To Be Terrific Henry BlodgetNov. 1, 2009, 8:35 AM The commercial real-estate crash is the worst-kept secret in the economy, but it's happening. It's just taking a long time to play out. (Except in the hotel industry, which essentially has "one-day leases"). Wilbur Ross and George Soros were freaking out about it on Friday: John Gittelsohn and Thomas R. Keene, Bloomberg: Billionaire investor Wilbur L. Ross Jr., said today the U.S. is in the beginning of a “huge crash in commercial real estate.” “All of the components of real estate...

A Chicago suburb could not get anyone to fork over $1 for a home, the Belleville News-Democrat reported. The village of Barrington, Illinois put three older homes up for sale for just $1 each, but was not able to get any interested buyers. The suburb hopes to sell and relocate the homes in order to make way for redevelopment in the downtown area, according to the paper. If no buyers come forward, the village will demolish the houses, which many residents say hold an historic value.

As I walked home recently from a weekend trip to the grocery store, I passed a total of 13 vacant offices with signs saying "for lease" or "for sale." These spaces ranged from approximately 500 to 5,000 square feet according to their signs, and they are stretched along a main, commercial street in the center of Tucson, AZ. There is also an eight-screen movie theater that sits empty as well. These empty commercial spaces ... are empty now, and have been for quite some time. I found it intriguing that both in the central portion of Tucson and also in...

In what could have been the biggest piece of news today, yet making little headway into the media, the Fed announced that it is adopting a policy statement supporting "prudent commercial real estate loan workouts." And even though in traditional Fed fashion, the statement says a lot but is even more vague, some of the implications from a more nuanced read have very serious adverse implications for commercial real estate. The section: Financial institutions that implement prudent loan workout arrangements after performing comprehensive reviews of borrowers' financial conditions will not be subject to criticism for engaging in these efforts, even...

Just about everyone has become familiar with America’s foreclosure capitals – metropolitan areas like Las Vegas with the nation’s highest rate of foreclosed properties (1 in 20) or No. 2 Merced, Calif., (1 in 27). But the problem is expanding to new cities. In fact, as the subprime-mortgage crisis eases for some of the top metro areas, like Merced and No. 3 Cape Coral-Fort Myers, Fla., economic pressures are creating new foreclosure capitals. One of them, Reno-Sparks, Nev., broke into the Top 10 foreclosure metros in the third quarter, according to a RealtyTrac report released Thursday. And others are gaining...

High Foreclosure Rates Spread into New Metro Areas Published: Wednesday, 28 Oct 2009 | 1:23 AM ET By: Joseph Pisani CNBC News Associate It comes as no surprise that metro areas like Las Vegas, Nev. and Fort Myers, Fla. had the highest foreclosure rates in the country—they've been high for some time. Foreclosed Home But high foreclosure rates are now moving into metro areas that previously avoided the problem, according to a new report from RealtyTrac, an online foreclosure marketplace. “Rising unemployment and a new variety of mortgage resets continued to gradually shift the nation’s foreclosure epicenters in the third...

U.S. home prices logged their third monthly increase in August, according to the S&P Case-Shiller home-price indexes, but prices remained below year-earlier levels. Twelve of 20 major metropolitan areas posted price declines of more than 10% from a year earlier, with Las Vegas continuing to post the worst results. Nationally, home prices are at levels similar to the autumn of 2003. As of August, the 10-city index is down 30.2% from its mid-2006 peak, and the 20-city is down 29.3%. The indexes showed prices in 10 major metropolitan areas fell 10.6% in August from a year earlier but rose 1.3%...

Get Ready: The Case-Shiller Will Show Housing Is Falling Again Vince VenezianiOct. 26, 2009, 12:43 PM The last few Case-Shiller reports have shown sequentially increasing home prices, but that's about to come to an end when the new numbers come out tomorrow. The Altos Research 10-City Composite Index is down 1.1% for the third quarter of 2009. Altos Research: From our October 2009 Real-time Housing Report, The Altos Research 10-City Composite Index was down by 0.5% in September and 1.1% during the third quarter. Using the housing market ask prices and more specifically, looking at the ask prices of new...

CHICAGO - Capmark Financial Group, one of the largest U.S. commercial real estate lenders, has filed for bankruptcy protection amid mounting bad debt, becoming the latest casualty in the still turbulent U.S. real estate market. Capmark has been hurt by rising losses on mortgage loans, and has had to foreclose on properties such as the Equitable Building in Atlanta because borrowers were not able to make loan payments. In its bankruptcy filing Sunday in Delaware bankruptcy court, the company listed total debt of $21 billion and assets of $20.1 billion. It seeks to reorganize under court protection, reducing its debt...

NEW YORK (AP) -- Home resales in the Northeast posted the biggest annual increase of any region in the country last month, reflecting a more stable market than September last year when financial markets were roiled. The nine-state region registered 81,000 home resales last month, up 11 percent from a year ago, the National Association of Realtors said Friday. The median price, however, fell 7 percent to $234,700. Nationally, sales of existing homes jumped almost 8 percent from September last year, without adjusting for seasonal factors. The median sales price declined 8.5 percent to $174,900. Real estate agents and economists...

Despite some tentative signs of recovery, the U.S. housing market remains vulnerable to further price drops—especially in areas where large numbers of mortgages are headed toward foreclosure over the next few years. The Wall Street Journal's quarterly survey of housing-market data in 28 major metro areas shows sharp drops in the number of homes listed for sale across the country. But the potential supply of homes is far larger because banks are likely to acquire significant numbers of foreclosed homes in some areas, notably Las Vegas, Atlanta, Detroit, Phoenix, Miami and other parts of Florida, and Sacramento, Calif., over the...

My ex-wife died about two and a half years ago. She had purchased a home in Southern California after our divorce for $250,000. I can’t help but mention that some of the funds that she used were provided by me by order of the divorce Court. Well, we have two children, one 18 the other 16. Since she belonged to a cult religion that believes that there is no disease and that medical care is unnecessary, she therefore made no preparations for a possibility of her death. No Will, no Trust, no life insurance. Well the kids asked me to...

It's hard to not be spellbound by the sight of half of a new house slowly swinging across the street and gently coming to rest on a precast concrete foundation. Raise the roof line, join the two sections, add a decorative facade, tidy up the entrance and it's almost ready for occupancy, right down to the sparkling bathroom mirrors and kitchen appliances. But would you want to live in a house that arrives on two flatbed trucks? Or would you feel your home sweet home is one front step away from living in a trailer? A California businessman with Chicago...

While surfing tonight I ran across this small city website in North Dakota. They are selling lots for homes for $200.00. If I were a hearty soul that wanted to get away, and did not mind the cold, this would be very interesting...

Describing it as a developing story, Fox News Channel’s Bret Baier just reported that President Barack Obama was briefed today about “the next big financial shoe to drop” — commercial real estate. It dovetails perfectly with what I reported nine months ago in a post, Trendwatcher: ‘Crash of ‘09? Will Be Worst Ever", and portends of more radical financial shenanigans — bailouts, stimulus packages, etc. — coming out of Washington, D.C.

Commercial Real Estate Musical Chairs Mike Mish Shedlock Oct 16, 2009 9:15 am New chairs keep being added, but fewer people are playing. Commercial real-estate vacancies hit nearly 25% in the Phoenix Valley area. Scottsdale and Southeast Valley vacancies are even higher. Consider Office vacancy rates in Valley hit record. Nearly one out of every four square feet of Valley office space was vacant in the third quarter ending September 30, commercial-real-estate experts said. That's about 28 million square feet of empty space, according to Phoenix commercial-realty brokerage Colliers International, one of several Valley firms tracking the progress of sales...

New data suggest that foreclosures are rising in more expensive housing markets. About 30% of foreclosures in June involved homes in the top third of local housing values, up from 16% when the foreclosure crisis began three years ago, according to new data from real-estate Web site Zillow.com. The bottom one-third of housing markets, by home value, now account for 35% of foreclosures, down from 55% in 2006. The report shows that foreclosures, after declining earlier this year, began to accelerate in the late spring and that more expensive homes have more recently accounted for a growing share of all...

Kevin's homebuilding business collapsed in the recession, and they couldn't pay the mortgage. Their bank, JPMorgan Chase, rejected the Martins' request for a mortgage modification and took legal possession of the house Aug. 19. On their anniversary two days later, the Martins and their two young children moved in with Kevin's aunt in her small condominium in Charbonneau. They're broke, unemployed and visibly stunned at their rapid plunge from the middle class to the newly poor. A bomb of debt vaporized the Martins' once-comfortable life. The heavy load of leverage they had assumed in hopes of grabbing their piece of...

S&P: Dubai Is Nearly Out Of Cash Joe WeisenthalOct. 11, 2009, 12:07 PM Don't assume that the economic comeback means Dubai is out of the woods. Holders of its debt may be in trouble, unless the Emirate can raise more money. DUBAI, United Arab Emirates (AP) — An analyst at credit rating firm Standard & Poor's says Dubai has "insufficient" funds to pay back billions of dollars worth of debt coming due, putting added pressure on the city-state to raise additional cash. Farouk Soussa, S&P's head of Middle East government ratings, said Sunday that the sheikdom has about $4 billion...

Americans Still Delusional About House Prices Henry BlodgetOct. 11, 2009, 9:09 AM The recent upturn in house prices from April to July (3.6%) is the sharpest change in direction professor Robert Shiller has ever seen. It could signal a v-shaped recovery in house prices. Or it could be the "mother of all head fakes," as investor Whitney Tilson has described it. Robert Shiller's recent survey of attitudes about house prices suggests it's probably the latter. The survey also suggests that Americans are still delusional about the long-term trajectory for house prices.[snip]

The vacancy rate for rental apartments in the U.S. is now 7.8% and climbing, says the Wall Street Journal. This is the highest vacancy rate in 23 years. Worse, the vacancy rate is expected to keep climbing through the winter, ultimately hitting the highest rate on record. This is good news for renters and bad news for landlords. It's also bad news for anyone who owns and would like to sell a house. Why are rising rental vacancies bad news for homeowners? Because rising vacancies put pressure on rents, as landlords have to cut prices to woo a smaller pool...

Troubled homeowners may be losing a major lifeline: so-called short sales. To get bad loans off their books and spur home sales, lenders have been forgiving the difference between the outstanding mortgage balance and the purchase price. Banks were never eager participants in short sales, and now financial firms—even those that can offload losses to the government—are balking at such transactions. Some lenders are forcing the sellers to pay extra money at closing. Others want a promissory note for part of the amount due. The situation could be a setback for the already wobbly housing recovery. A record one-third of...

For those who have studied most closely the decades of Charlie Rangel’s financial tangles and fiscal subterfuge, one doggedly puzzling question overshadows all the rest. How does Rangel have so much money and where did it come from? This is a man who draws a salary from the government of about $175,000 a year. It’s a comfortable salary, but it certainly isn’t going to make anybody this rich — especially someone living in one of the world’s most expensive cities. Rangel did not inherit a fortune and did not marry one. And nor had he built some huge fortune before...

Declining home values have put a serious squeeze on one of the mortgage market's most popular and fastest-growing financing concepts: the Federal Housing Administration's reverse-mortgage program for senior citizens 62 or older. In a letter to reverse-mortgage lenders on Sept. 23, FHA Commissioner David H. Stevens said his agency must reduce the maximum amounts that senior citizens can receive on reverse mortgages because the program faced an estimated budgetary shortfall of $798 million in the fiscal year that began Thursday. Mortgage industry sources said the move amounts to a 10 percent cutback for all new applicants for FHA reverse mortgages....

>>>People who default strategically and lose their houses appear to understand the consequences of what they're doing. Piyush Tantia, an Oliver Wyman partner and a principal researcher on the study, said strategic defaulters "are clearly sophisticated," based on the patterns of selective payments observable in their credit files. For example, they tend not to default on home equity lines of credit until after they bail out on their main mortgages, sometimes to draw down more cash on the equity line. >>>Strategic defaulters often go straight from perfect payment histories to no mortgage payments at all. This is in stark contrast...

Photo taken today by Big Government contributor Kevin Kane at ACORN Headquarters in the Big Easy

Most of the mobile homes in the U.S. are located in the south, where land is more plentiful, the weather is warmer, and rural poverty is higher. The region is home to over 56% of the mobile housing units in the U.S., according to the U.S. Census Bureau's 2008 American Community Survey data released Monday. Specifically, two cities outside of Jacksonville, Fla., had the country's highest concentration of mobile homes, which are generally about 12-feet wide and include a kitchen, a living and dining area, and one or two smaller bedrooms. While mobile homes make up only 6.17% of the...

Americans have tamed their wanderlust during this recession, according to the latest data released by the U.S. Census Bureau. Only about 2.4% of Americans moved from state to state in 2008, down from 2.5% the previous year. "The mobility rate is lower than it has been in years," said Robert Lang, a demographer with Virginia Tech University. "There's a recession and a housing bust. People can't sell their homes in California and move to Las Vegas or sell their condo in Florida and move to North Carolina." "People are hunkering down, trying to hold on to what they have," added...

It's tempting to consider gold overbought. It currently trades at $1,017 an ounce, near its all-time high. It's survived two asset bubbles with flying colors. It sells for three times its April 2001 decade low of $255 an ounce. Now you have all kinds of cheesy, late night TV pitch-men screaming that they will buy your gold while former Richard Nixon staffers hock gold coins--things seem a bit overheated. Two years ago it was time to quit your job and get a realtor's license. Now it's time to melt down your dental work? Well, gold has long been an emotional...

A study shows that people who abruptly and intentionally abandon their mortgages often have high credit scores, in stark contrast with most financially distressed borrowers. Who is more likely to walk away from a house and a mortgage -- a person with super-prime credit scores or someone with lower scores? Research using a massive sample of 24 million individual credit files has found that homeowners with high scores when they apply for a loan are 50% more likely to "strategically default" -- abruptly and intentionally pull the plug and abandon the mortgage -- compared with lower-scoring borrowers. National credit bureau...

The buyer of a pretty property in northern Wisconsin will get a former hideout of Chicago mobster Al Capone along with a bar and restaurant complete with portholes to shoot from

If you've been waiting for home prices or interest rates to fall further before you buy a home, it's time to rethink your strategy. If you act soon, you'll be able to take advantage of historically low prices and interest rates that won't be around forever. And if you're a first-time buyer and you act very soon, you can still take advantage of an $8,000 tax credit. Here are five reasons to take the plunge now. 1. You may get a fat tax credit. The first-time home buyer's tax credit is worth 10% of the home's purchase price, up to...

DALLAS - When Congress passed an $8,000 tax credit for first-time home buyers last winter, it was intended as a dose of shock therapy during a crisis. Now the question is becoming whether the housing market can function without it. As many as 40 percent of all home buyers this year will qualify for the credit. It is on track to cost the government $15 billion, more than twice the amount that was projected when Congress passed the stimulus bill in February. In the view of the real estate industry and some economists, all that money is well spent. They...

Bernard Madoff once slept there. Soon, someone else will. The imprisoned swindler's Montauk, New York, home, located on a beach with sweeping views of the Atlantic Ocean, has been sold for more than the $8.75 million asking price, a spokeswoman for broker Corcoran Group said on Thursday. The name of the buyer and the purchase price were not immediately disclosed. Several buyers submitted bids for the four-bedroom, three-bath, 3,000-square-foot home, which was on the market for two weeks. Sale proceeds will go toward reimbursing victims of Madoff's estimated $65 billion Ponzi scheme. The government is also selling two other U.S....

Many are accustomed to thinking in terms of a 'housing bubble.' But this is only part of the story. In fact, the first decade of the 21st century brought us a real estate double bubble—one in housing, and one in commercial real estate. Many are accustomed to thinking in terms of a “housing bubble.” But this is only part of the story. In fact, the first decade of the 21st century brought us a real estate double bubble—one in housing, and one in commercial real estate. They both involved property prices increasing by an obviously unsustainable 90 percent over six...

As you may have guessed, rising unemployment accounts for many home foreclosures. That's turning many people from homeowners to renters. Judy Heller and her husband spent 24 years in their Rochester home, raising their kids. But they're moving out soon. "It's too expensive, we can't afford to stay here and my husband had looked for a job around Rochester but most of them are minimum wage, and you can't survive on minimum wage now," Says Heller. They're moving to an apartment in the Twin Cities, where her husband's found a job. Down sizing means living in a smaller place, and...

I was fighting traffic on my way in to work today, when I heard a headline on the radio, something to the effect of, "Good news on the housing front! Foreclosures are moderating, potentially signaling an end to the housing crisis." This is why people don't trust the news. Headlines.

One of San Francisco's biggest landlords is disappearing beneath waves of debt. Defaults, receiverships and foreclosures are threatening to sink Lembi Group Inc., which in the not-so-distant past owned more than 300 apartment buildings containing approximately 7,000 units throughout the city.

Treasury: Millions More Foreclosures Coming Official says a strong housing market is crucial for the economy Sept. 9, 2009 WASHINGTON - Only 12 percent of U.S. homeowners eligible for loan modifications under the Obama administration's housing rescue plan have had their mortgages reworked, and millions more foreclosures are coming, the Treasury Department said on Wednesday. A Treasury report showed 360,165 people had their monthly payments reduced through August, up from 235,247 through July, but a senior Treasury official conceded much more must be done to soften the impact of a severe and prolonged housing crisis. Treasury has begun releasing monthly...

At a time when retail landlords are struggling with record vacancies, a novel sales strategy employed by some tenants is helping them fill the gaps and earn some additional rental income. Pop-up stores, which allow a retailer to sign a temporary lease lasting anywhere from two months to six months, have traditionally been scoffed at by mall and shopping center owners who could take their pick of permanent tenants. But in today’s environment, with retailers wary of new store openings, pop-ups are becoming a hot new trend and landlords are finding it suits them just fine. “I am seeing more...

Due to the economy and weak real estate market, Miles Brannan is raffling off his luxury home in Fort Lauderdale, Florida. The raffle is attracting buyers from around the world due to both the appealing price of $10 per ticket and international interest in U.S. real estate. Brannan's raffle is a great deal for foreign investors who want to break into the market because the deed and title will be transferred to the lucky winner free and clear. There will be no need for a jumbo mortgage or creative financing, making the $10 investment an even more attractive offer. "The...

For years, business boomed at Gilberto Preciado’s home-furnishings store in a working-class neighborhood near downtown Phoenix. But on a recent afternoon his showroom was deserted. Other businesses in his strip mall have been shutting down at a brisk clip. With a big grocery store nearby gone already, the parking lot was an empty field of asphalt baking in the sun. “You stand out there a couple of hours and you hear crickets,” Mr. Preciado said.

Arguably, today investors face the polar opposite of conditions that existed only a few months ago, with economic optimism, improving valuations and positive sentiment. To most investors, today the fear of being in has now been eclipsed by the fear of being out as the animal spirits are in full force. Bears are now scarce to nonexistent in the face of steady price gains in equity and credit prices. As if the movie is now being shown in reverse, the bull is persistent, stock corrections are remarkably shallow, cash reserves at mutual funds have been depleted, and hedge funds hold...

Video at site Another prediction for how many small and medium-sized banks are bound to fall. It seems everyone has an opinion. The Real Deal passes along this video of Harrison Lefrak predicting 500 bank failures resulting from commercial real estate problems. He predicts that thigns will really start getting bad in 2010 and beyond, as the five-year loans that started up in 2005 go sour. That's more than Dick Bove sees and half of John Kanas. We'll be keeping score.

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...

After having given away billions faster than even the optimists had anticipated, it was announced today that the federal government's "Cash for Clunkers" program is coming to an early end. But, based on the standards of economic analysis which prevail in Washington, Wall Street and academia, the program must be considered a master stroke of public policy. These experts will tell you that by mandating that citizens destroy older (but still working) vehicles to receive $4,500 toward the purchase of a new car, the program not only revved up the economy by encouraging Americans to borrow more, but it may...