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Who Needs Long-Run Profitability?

Life is tough for everyone in a recession. Even well off arts benefactors who make their living in commercial real estate are feeling squeezed:

"If you go up 270, from Chevy Chase out to Frederick, you will see building after building with big signs on them that said: 'Space.' Or you will see ground that is not being built on where you will see signs, 'Build to Suit.' The next year is going to be very tough," Charlie said. "Those who have the ability to keep up payments will be able to make it. The government has to step in and help."

The government -- local, state, and national -- has to, and should do, NO SUCH THING.

Commercial property owners should realize that their gains from when times are good are to more than cover their losses from when times are not. And if their firms have less than zero long-run profit, perhaps their management skills are best honed in other industries.

H/T: UrbanTrekker

ABC news reports about a poll of Americans about their attitudes towards the current housing situation:

Nearly three in 10 said they are concerned their home's value will decline over the next two years, while 14 percent of mortgage holders expressed worry that they might miss payments in the next six months.

However, this I find absolutely striking:
The number envisioning falling prices in their area has grown to one in four, while four in 10 think prices will rise, a decrease from two years ago.
But...
Underscoring the public's unsettled feelings, the number saying local housing prices are about right has fallen to 35 percent. Half say homes are overpriced — especially in the Northeast — while those saying housing is underpriced have doubled to one in 10. Midwesterners were likelier than those in other regions to feel this way.
Let me misread the data: 35% of Americans think prices are OK, AND won't change very much. 25% think prices will fall and 40% think prices will rise. These beliefs stand on top of the near majority (~50%) of people thinking prices are too high, and 10% thinking prices are too low.

There are no contradictions there, but absolutely not a monolithic sentiment. I mean, if you're a politician, how are you supposed to pander to everyone?

Housing Data

I was combing through the Mortgage Banker's Commercial/Multifamily Quarterly Data Book
when I ran across the data below. It shows that the growth in housing units over the last 17 years occurred mostly in the owner occupied segment. In fact, there has been no growth in rental housing units in the 12 years. Not sure what to make of this, but it would appear that a booming owner occupied housing market is a negative for rentals. As far as broad economic implications, it probably doesn't say much.
MBA.jpg

Subprime

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In their Daily email, FierceFinance has a nice roundup of stories concerning investment banks exposure to this sector:

TheStreet.Com

Forbes.com

Here's an article on New Century. It's an Orance County company that I looked into a few years ago and gave a pass. The subprime market always blows up, though this time seems to be bigger than normal. When I was looking at New Century, I laughed at the message board full of people incredibly naive about the market they were investing in. Of course, the news out yesterday that foreclosure rates skyrocket should come as no suprise to those following the data. If you are a renter, you are in the best shape in a decade. That last link is interesting as it shows that the housing market is responsible for any excess debt. Also, check out this data which shows pretty much the same thing that the economy overall looks good but it's the residential market where writeoffs and delingquencies are above historic lows.

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