by Tom Royce on September 8, 2010
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If you are in the commercial mortgage lending world there are some new and interesting numbers out there. The credit crunch has stifled much of the lending for new construction but that is not being a very big help to those who own commercial real estate.
The default rate for commercial and multi-family mortgages is rising, but mainly in those that have been packaged up as commercial mortgage backed securities. The rest seem to be doing okay.
The latest data published by the Mortgage Bankers Association shows that the delinquency rate on CMBS loans now stands at 8.22 percent in contrast to 4.26 percent for loans at commercial banks and just 0.29 percent for life insurance companies. More alarmingly, while the delinquency rate was stable at commercial banks and fell at life insurance companies during the second quarter of 2010, the rate for CMBS loans by 139 basis points. via Retail Traffic
These numbers do make sense. The loans given by the large insurance companies are designed to be the safest. They are typically large office towers or business parks and if they get into trouble the insurance companies can work with the borrowers as they have the capital to do so.
The commercial bank loans are defaulting about half as much as the CMBS loans, but these are the loans cherry picked by the banks to stay in their portfolio. They will keep the best loans while selling the rest.
That leaves the CMBS that were sold to investors and while being sold as top rated investments are now turning up as close to junk.
I wonder where we have heard this song before…
Hat tip to @BenjaminBack for finding this story.
by Tom Royce on September 7, 2010
Read this and just nod your head.
As the economy again sputters and potential buyers flee — July housing sales sank 26 percent from July 2009 — there is a growing sense of exhaustion with government intervention. Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.
When prices are lower, these experts argue, buyers will pour in, creating the elusive stability the government has spent billions upon billions trying to achieve.
“Housing needs to go back to reasonable levels,” said Anthony B. Sanders, a professor of real estate finance at George Mason University. “If we keep trying to stimulate the market, that’s the definition of insanity. via the NY Times
Translated: Buyers are not stupid.
They will not overpay for such a big purpose unless they feel that they are making a long term decision that they can re-coup. We need realistic prices for a realistic market to emerge devoid of government intervention and manipulation.
by Tom Royce on September 7, 2010
Sex Sells is an adage that has been around for a long time.
We also know that being attractive in real estate is never been a hindrance for an agent.
However for an agency to build their marketing campaign around how sexy their agents are does not make sense for a number of reasons. First, even though people tend to like to be around attractive people, when buying and selling a house competency should be the driving factor.
Secondly, the process of real estate sales includes a great deal of alone time in the car or homes with the buyer and the agents. If my marketing campaign was based upon how hot my agents are there is a good chance that a wacko will come out of the woodwork eventually.
You know the wacko who will attack an agent. It is one of the bigger fears in the industry and by promoting the agents based upon the concept sex sells, it will attract those looking for sex?
This marketing tactic, even in slow times, just does not make a great deal of sense to me.
What do you think of this Charlotte, North Carolina agency using sexy agents as a key marketing technique?
Nick Peters used to run a regular real estate firm catering to the rich. Then the economy tanked, and it became a lot harder to sell those kinds of houses.
So Peters decided he and his agents, including his wife, should project success by taking special care with their appearance. They began dressing in expensive, provocative clothes.
And he says clients automatically started acting differently.
“They reacted to us very differently. The guys started calling the women. The women, just me,” Peters says.
But they also stopped calling his less attractive employees. So Peters says he got rid of them.
“People want to work with other people that they’re in all honesty attracted to,” Peters says, shrugging. via WBTV
