Also, it's surely a sign of how bad market conditions are when an almost 50% increase in delinquencies for non-residential commercial mortgages can be called a "slight increase" (compared to a 4x increase for condo construction loans that's not too bad, I suppose).
A few big sovereign fund deals can't be far behind. And, with the recent pullback in mainland stock markets and the Chinese affinity for real estate, I'm sure they will be another important source of transaction volume.
It will be interesting to see how this impacts the Seattle market.
This is from the WSJ:
During the current downturn, commercial real-estate values are likely to fall 20% from their recent peaks, according to J.P. Morgan Chase. By contrast, Credit Suisse projected late last month that home prices, which peaked in 2005 and have declined substantially since, will fall an additional 25% to 40% in some regions before hitting bottom. The average price of a house in the Miami area, which has already fallen around 6%, is expected to tumble an additional 40%, the report says.
For banks lending to condo developers, the pain was even worse. Delinquencies for condo-construction loans rose to 10.1% in the fourth quarter, up from 2.6% a year earlier. By comparison, delinquencies on nonresidential commercial mortgages, secured by properties like office buildings and shopping malls, were 1.6% in the same quarter, up slightly from 1.1% according to Foresight Analytics.
The problem is that while most properties' cash flows are holding up, their values are falling primarily because financing is so much more costly. That's particularly scary for owners (and their lenders) who borrowed aggressively during the easy-money years of 2005 to 2007 and need to refinance soon. Many won't be able to borrow nearly as much or get the same terms, putting them at risk of default.
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