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 ...
Same way slum lords have always made money on properties that are constantly declining in value. You keep them occupied until the city condemns them, then you abandon the property and let the city reclaim it for back taxes. This saves you the expense of having it torn down and the hole filled in.
I understand, but that wasn’t your question. Your question was “Does capitalism only work during inflation?” The answer is that capitalism works all the time. Deflation is the correction that capitalism imposes on the market.
Now as to how does a landlord make a profit, well that is a business question, not a philosophical question. Now I do agree certain conditions have to be present to allow capitalism to work, but inflation isn’t one of them. I would say that political stability, enforcement of private property rights, and ability to adjudicate disputes with finality are among those conditions.
But to ask if capitalism only works during inflation presupposes, in my opinion, a flaw in capitalism that requires a certain unsustatainable or malevolent circumstance to “work” (sort of like those who used to posit that capitalism “only works during wartime”).
You can't claim deflation based on a few sectors of the entire market place loosing value.
Everything else is generally more expensive. Have you bought any groceries lately? Tires, garden hoses, etc etc.? Inflation is alive and well.
You See! Another sign Obama has fixed the economy. Better shop now before all those bargain sales end, this economy is getting ready to boom! /msm
I agree, but your question was, "Where is the dollar gaining in value?"
In this bizarro manipulated economy, somehow it is the responsibility of the taxpayer to shore up the profits of people who bought real estate at artificially inflated prices.
Warehouses to be converted into apertments or as they are called in chicago the projects.
Are you smoking crack, man?!
Did you see oil today?
..... VALUE .....CHANGE ....% CHANGE
Oil .. 46.87 ....... -3.46 ........ -6.87
Rubber Poised for 35% Decline as Tire Sales Signal Biggest Drop Since 1975
Citigroup Credit Losses Are Rising at `Rapid Rate,' Goldman's Ramsden Says
San Francisco Area Home Prices Fall Record 46 Percent
Yeah, but a can of corn is more expensive!
[other shoe dropping. Clearly predicted on here for months now.]
I do commercial real estate. 2008 was disastrous, this year we will get some deals done hopefully before it all crashes again. May be time to rework my resume for the umpteenth time.
Commercial real estate will take a hit, but people apparently are buying into Simon Property Group and various other REITS that make up the DJ Real Estate Index...doesn't make any sense to me.
“but people apparently are buying into Simon Property Group”
Simon’s business model is different from a lot of others in many ways, mainly in the percentage of debts they carry.
Unlike the big corp that filed BK last week, they don’t leverage everything to the hilt, and constantly refinance to extract more cash, like many Commercial property-holders do.
I had to close my mall based store after Christmas and many more were closing also...even without the debt, it would seem that their cash flow should be suffering.
“Its problematic. Does capitalism only work during inflation?”
The problem isn’t Capitalism, that works just fine.
The problem is DEBT, DEBT, and more DEBT.
It became fashion in the 90’s to leverage EVERYTHING to the hilt, and cash out rising property values as they went up. They called it “Putting equity to work”.
Now that it is going the other way, the people who did that don’t have the cash to keep up with the fall.
If you maintained a clean balance sheet, kept your debt low, and survived the derision and laughter of your Ferrari-driving friends, you’re doing OK right now.
Can you call a buddy of mine and talk some sense into him? He's been a commercial Realtor for years in Atlanta and he simply refuses to entertain other possibilities or opportunities.
“until the city condemns them, then you abandon the property and let the city reclaim it for back taxes. This saves you the expense of having it torn down and the hole filled in.”
It’s DIFFERENT with Commercial properties...
We have people who ACTUALLY MAKE MONEY, (almost ALL of them Inner-city DEMOCRATS. of course), by purchasing commercial centers in decline, CLOSING THEM, and allowing them to become eyesores and crime centers, until the cities are forced to step up and buy them, at a LARGE PROFIT for the investor!!
In Indiana alone, this has happened SEVERAL TIMES. Research the Fort Wayne Southside Mall fiasco.
Thanks for the ping.
Gang members will take over - and you're right - don't want to live near one.
http://turnerradionetwork.blogspot.com/
The Turner Radio Network has obtained "stress test" results for the top 19 Banks in the USA.
The stress tests were conducted to determine how well, if at all, the top 19 banks in the USA could withstand further or future economic hardship.
When the tests were completed, regulators within the Treasury and inside the Federal Reserve began bickering with each other as to whether or not the test results should be made public. That bickering continues to this very day as evidenced by this "main stream media" report.
The Turner Radio Network has obtained the stress test results. They are very bad. The most salient points from the stress tests appear below.
1) Of the top nineteen (19) banks in the nation, sixteen (16) are already technically insolvent.
2) Of the 16 banks that are already technically insolvent, not even one can withstand any disruption of cash flow at all or any further deterioration in non-paying loans.
3) If any two of the 16 insolvent banks go under, they will totally wipe out all remaining FDIC insurance funding.
4) Of the top 19 banks in the nation, the top five (5) largest banks are under capitalized so dangerously, there is serious doubt about their ability to continue as ongoing businesses.
5) Five large U.S. banks have credit exposure related to their derivatives trading that exceeds their capital, with four in particular - JPMorgan Chase, Goldman Sachs, HSBC Bank America and Citibank - taking especially large risks.
6) Bank of America`s total credit exposure to derivatives was 179 percent of its risk-based capital; Citibank`s was 278 percent; JPMorgan Chase`s, 382 percent; and HSBC America`s, 550 percent. It gets even worse: Goldman Sachs began reporting as a commercial bank, revealing an alarming total credit exposure of 1,056 percent, or more than ten times its capital!
7) Not only are there serious questions about whether or not JPMorgan Chase, Goldman Sachs,Citibank, Wells Fargo, Sun Trust Bank, HSBC Bank USA, can continue in business, more than 1,800 regional and smaller institutions are at risk of failure despite government bailouts!
The debt crisis is much greater than the government has reported. The FDIC`s "Problem List" of troubled banks includes 252 institutions with assets of $159 billion. 1,816 banks and thrifts are at risk of failure, with total assets of $4.67 trillion, compared to 1,568 institutions, with $2.32 trillion in total assets in prior quarter.
Put bluntly, the entire US Banking System is in complete and total collapse.
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