Commercial real estate delinquencies on mortgages hit a 5 year low as the residential market is having all sorts of trouble. Only .03 percent of loans are in foreclosure in California as the combination of high rental demand and surging prices have kept the market rolling along.
The dichotomy of the situation does make a bit of sense though. When the savings and loan debacle occurred in the 1980’s lending for commercial properties was very much like lending for residential has been for the past few years. Once the savings and loan crisis occurred, commercial lending has never been that loose and thus the market has avoided many of the highs and lows the residential market has.
Now we have gone through a period of loose lending in the residential markets and that has caused the rash of foreclosures we are facing now. Once we make it through this stage, residential lending will have found it’s limits and the odds of such a meltdown occurring will not be as prevalent.
The survey conducted by the state association at the end of June included $88.2 billion of mortgage loans serviced by 17 mortgage banking firms. Among the sectors studied – multi-family, office, retail, warehouse, hospitality, mobile home parks and research-and-development properties – only the hospitality and health care industries have delinquent loans. Hospitality has $12.1 million in delinquent loans, and health care recorded $13.7 million in delinquencies. via San Jose Mercury News
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