South Bend ~ Granger ~ South West Michigan REALTOR

Are better days ahead for commercial real estate? A new report by Real Capital Analytics shows the number of distressed commercial properties is plateauing and expected to continue to do so in the new year. Distressed properties — which include commercial properties that are in default, foreclosure, or repossessed by lenders — had totaled $171.6 billion in October 2011, a decrease from topping off at $191.5 billion in March 2010, according to Real Capital Analytics.

“The real test of the distress plateau is likely to be seen in 2012 and 2013, when about $300 billion in loans comes due each year,” according to a recent article in the Washington Post.

At $41.9 billion, the office sector continues to have the largest number of distressed commercial properties. But that number has been steadily declining — about 11.8 percent less than its peak reached in October 2010.

The apartment sector has the second-highest level of distressed commercial properties with $35.6 billion in troubled loans, according to the Washington Post article. Land and other property types have about $29.8 billion in distressed assets.

The metro areas with the largest number of commercial properties in distress is Manhattan, in which the total volume of distress properties stands at $11.8 billion, followed by L.A.-Orange County with $10 billion. Meanwhile, Houston has the lowest at $111 per capita.

Source:  Washington Post “Amount of Distressed Real Estate Could be on Way Down” 11/26/2011

Home prices fell for the sixth straight month in October, down 1.2% compared with September and 3.4% a year ago, according to the latest S&P/Case-Shiller 20-city index.

The decline was disappointing in light of several other recent reports, which painted a more positive picture of the housing market.

The 20-city index has dropped every month since April. Since the housing bust began in mid-2006, homes have lost nearly 33% of their value.

Peter Morici, a professor of economics at the University of Maryland, said home prices remain weak because demand for existing homes is soft. Many potential buyers are migrating to rental markets or buying new homes that had been sitting unsold for months.

According to Morici, the current home price levels represent a correction from inflated prices reached during the bubble.

Source:  CNN Money “Home Prices Drop for 6th Straight Month” December 27, 2011