The reality on the ground does not match the rhetoric coming from the government, Wall Street and the corporate mainstream media. The truth is as follows:
- The vacancy rate for office space in the U.S. is currently 16.5%.
- The vacancy rate for industrial space in the U.S. is currently 14.2%.
- The vacancy rate for retail space in the U.S. is currently 13%.
- Delinquencies within collateralized debt obligations in commercial real estate loans rose to 14.6% in February. The increase signals a trend of higher delinquencies in the segment. Signs of pressure surfaced as early as January when the delinquency rate on CDOs within commercial real estate loans hovered well above 13%.
- According to Moody’s, CRE prices are down 4.3% from a year ago and down about 43% from the peak in 2007.
- The delinquency rate on loans packaged and sold in commercial mortgage-backed securities rose to a record 9.2% in February, according to a March 15 report by Moody’s.
- Regional and local community banks have as much as 80% of their balance sheets tied up in commercial real estate, and very few other sources of significant fee income to offset CRE losses.
- CRE once had an estimated national value of $6.5 trillion. Today it stands at an optimistic $3.5 trillion.
- There are 1.8 million homes seriously delinquent, in the foreclosure process or REO that are not currently listed for sale.
- There are about 2 million current negative equity loans that are more than 50% “upside down”.
- Home prices are off 31.3% from the peak. The Composite 20 is only 0.7% above the May 2009 post-bubble bottom and will probably be at a new post-bubble low soon.