Posted on 12/17/2009 3:01:41 PM PST by FromLori
What has been lost in the housing talk recovery is the grim statistics that commercial real estate has fallen 37 percent in value in the last year. This wouldn’t be such a big problem aside from the tiny detail that some $3 trillion in commercial real estate loans are still outstanding. The commercial real estate debacle is already happening with defaults reaching 16 year highs. This is already occurring before many of the commercial real estate loans reach their refinance dates. In some instances banks are simply ignoring non-payment and giving borrowers a few more months or even years. Why? Because they can still claim the note is current and claim the asset at inflated values. Yet this is a game we are all familiar with. Suspending mark to market has always been a method for the U.S. Treasury and Federal Reserve to skirt any real accounting from Wall Street. If we look at the current FDIC insured bank balance sheet, we can see that many more problems lie ahead for commercial real estate:
(Excerpt) Read more at mybudget360.com ...
I’ve been reading this series called the day the dollar died it is eerie it is of course fictional lol for now you might find it interesting if you check it out scroll down to the bottom and read the first one so it is in order since it comes up last first kind of a Pale Rider theme
http://johngaltfla.com/blog3/category/the-day-the-dollar-died-series/
To a large degree, default is the ONLY way these
borrowers can actually talk to workout negotiators.
After the securitization of these mortgages, they
are in packages owned by many, many individual
investors. You can’t be moved to a negotiator
unless you are in default. I expect at least half
to go into default, but most to have a workout.
We just picked up another property in Queens (Jamaica Estates) and are looking for another in the Bayside-Little Neck area. Lots of stuff reduced after 200 plus days on the market and rates at 4.8%. There may never be a better time.
I might think that was a possibility if the economy were not so bad but no jobs, no loans for small business I don’t see it myself.
I think they may have over built especially with everything crashing not expanding but thats just my opinion.
There would be a substantial loss and banks are hiding toxic home loans with mark to market as it is. I can only imagine what this will do to their balance sheets.
Lori,
You may be right, but remember, huge numbers of these
commercial loans became commercial paper and were sold
to wall street investors as securities. Non-recourse
basis to the borrower too. Banks don’t own them.
They will get renegotiated at a better rate, or the
borrowers will simply walk.
And if we muzzle Obama, there is now available prime
space for the expansion of the next round of winning
companies.
best,
ampu
I’m looking in LIC and JC right now. I think that there may be an uptick (in sales, and, in certain nabes, in price) due to Wall Street bonus season, but no “sustained housing boom” even coming close to the first half of the decade in 2010-2011.
Commercial and industrial in the Missouri and Kansas area is dead. Industrial space in Same areas KC and STL at 60% Rate. Word on the street many are ready for forclousures.
Because our county and municipal governments have “assisted” excess commercial construction here for decades, “we the people” have watched (and fought, but ineffectively) this “bubble” stretching thinner and thinner for at least a decade.
It’s sad and infuriating to face a W — or L — shaped recession because of this second collapse, but if it looks like it may affect the midterm elections, I will “enjoy” hearing Hussein tell us how our President W managed to set this devastating time bomb just to hurt our Dear Leader.
Just be prepared to hold on to it for at least ten years just in case we aren’t near bottom yet and you have to wait for values to come back.
I’m 33, I’ve got time (knock on wood).
You eat a hope sandwich...... take two slices of bread and hope for some ham.
Just make sure you have enough cash to cover six months of bill-payments (all your bills) in your back pocket and you’ll be fine.
Do you know I actually read today that the economy would help them at midterms talk about drinking the kool aid.
I had to think a minute where I read that but here it is.
Van Hollen may have the brass to try controlling “the economy issue(s),” but a MD LIBERAL said in response, “V H is ok... the dirty lie however... no credibility left....” Literally in-flipping-credible! Thanks for the link.
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