Posted on 04/20/2009 6:26:33 AM PDT by TigerLikesRooster
Commercial real estate sales plunge
Silicon Valley / San Jose Business Journal - by Katherine Conrad
Commercial real estate sales plummeted across the globe with transactions dropping in the first quarter more than 70 percent from the end of 2008, according to a report released this week by Real Capital Analytics.
The New York-based firm said sales in the first three months of 2009 were just one-sixth of the number of buildings that traded two years ago. All told just over 1,000 buildings valued at $47 billion were sold in the first quarter of 2009.
Another worrisome sign is the rise in the number of distressed properties. Real Capital reported that another $55 billion worth of assets fell into default on their mortgages during the first quarter, bringing the total value of assets known to be in distress to “a stunning $153 billion,” an jump of 56 percent over the fourth quarter of 2008.
Of the properties across the globe that are in trouble, 85 percent are located in the United States, Japan, Spain, the United Kingdom and Australia. Real Capital noted a trend emerging in which lenders are extending the loans rather than forcing payment, calling it “kicking the can down the street.”
By the end of March, $36 billion worth of debt had been restructured.
(Excerpt) Read more at bizjournals.com ...
Ping!
other shoe dropping. Clearly predicted on here for months now. Cheerleaders saying glimmers of hope in economy on the news today. Not all that glitters is gold............
Tiger...
Drive through the parking lots of the commercial and retail developments both old and new projects. I have done it on early Sunday morning. It is shocking to see the number of vacancies.
pointsal
Mass psychosis: new strip malls going up where ones 1/2 mile away have 70% vacancy.
They are all becoming homeless shelters in near future. Stay away from these malls, which will become strongholds for bandits who would raid and plunder nearby neighborhoods.
The builders don’t know anything else but to build, even though asset prices are falling, in no small part because occupancies are so low. The market will teach them all a painful lesson.
One problem is that none of us really know how to make money during deflation. During the opposite, inflation, a simple buy-and-hold strategy works on everything from rental real-estate all the way up to commercial property like shopping malls.
But during DEflation, buy-and-hold fails. As prices on homes fall, the new landlord gets creamed.
And make no mistake that prices on homes (for rentals) and offices and malls are falling...thus obsoleting the old buy-and-hold business model.
It’s problematic.
Does capitalism only work during inflation?
What deflation? Where is the dollar gaining in value?
This is by design. The MSM has been reporting that things have magically turned around, coordinated I’m sure by the White House. Problem is, they haven’t. Credit is still extremely tight to the consumer while the banks continue reporting better then expected earnings (thank you TARP).
Either this administration/FED doesn’t know what actions to take or it doesn’t care.
Deflation means falling prices. In case you missed it, the stock market is down into the 7 handles from over 14,000...home prices have plunged 40%...and offices have 14.4% vacancies (i.e. office rents aren’t exactly climbing).
The subject of this thread is commercial real-estate...and prices are clearly lower.
Capitalism is working now, too. It is correcting the mindless excess, made worse by Fed's easy credit policy.
The current crisis is the result of fighting and attempting to buck the tide of market too long.
Umm... No.
Go look up the definition and get back to us, K?
I agree that the markets are correcting for past excesses/mistakes, but my question was bascially “How does a landlord profit when the value of his land declines by more each year than his rents earn?”
Dow is down 171 points already- 20 mins into the day.
As for commercial real estate companies like SRS (ultra short realestate proshares) Their stocks have dropped $90 a share over the past few weeks- worse than the crash in November.
I guess the markets are reacting to something Obama did over the weekend. Now we’ll see how Obama media spins it all day.
Might be time to re-read "The Wealth of Nations."
Exactly.
My question was bascially “How does a landlord profit when the value of his land declines by more each year than his rents earn?”
I don’t think we can go screaming ‘deflation’ just because real estate prices are dropping in California and a few other hot zones. The national average is what matters.
Places like California where prices were hyper inflated 3-500% over the space of 2-3 years was abnormal. Wiser people knew that this day of reckoning would come sooner or later to these markets.
Unfortunately, it’s the taxpayers that are paying for those crooks who took out mortgages they couldn’t afford hoping to flip these houses and make some quick cash.
These particular markets are outside of the other defaulted mortgage problem across the nation perpetuated by the community re-investment scam the democrats cooked up and had ACORN manage.
Last year it took almost $150 to buy a barrel of oil, over $4 to buy a gallon of gas. Oil is now $47, gas about $2.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.