Afternoon Links 1-20

Jan 20, 2010 21:25 UTC

Must Read – Short sale fraud + follow-up (Olick, CNBC) Great sleuthing from Diana Olick. Sounds like outright fraud being committed by big banks. One follow up question: In many cases, the second-lien holder is also the first lien holder. How is that impacting short-sales?

Buffett opposes bank fee (CNBC) See 2/3rds down the page. Obfuscation worthy of a banker. This should come as no surprise as Buffett is Wells’ top shareholder. He previously opposed the bank stress tests because it diluted his shareholdings. Nevermind that the stress test forced the bank to raise desperately needed capital. It’s a shame, really. As his career winds down, he’s sacrificed his reputation as a financial straight-shooter to protect his wealth.

In other Buffett news: He’s opposed to Kraft’s bid for Cadbury (he’s a big Kraft shareholder) and he split his shares, something he never wanted to do. So not a great day for the Oracle.

FT as shameless Fed booster (NakedCapitalism) Yves takes down the FT piece that said the Fed has made a killing on its AIG holdings.

CRE prices up 1.0% in November, not expected to continue (CR) Moody’s released its data for CRE prices for November today. They showed a month over month uptick for the first time in a while. That said, this is not a super reliable index due to the few number of data points available. And Moody’s says to expect prices to head back down.

Scott Brown successfully capitalized on bank bailout blues (Bottari, CMD) Walker Todd sent a missive over this morning noting, too, that while the healthcare bill’s unpopularity certainly played a role in Brown’s surprise win, anger over Obama’s kowtowing to banks may have pushed him over the edge. Unfortunately, Republicans are equally captured by the bank/homeowner lobby.

Foreclosure efforts failing b/c don’t reduce principal (Nasiripour, HuffPo) Helpful confirmation of a fact that is well-known.

Obama/Dems reach deal on debt, pay-go, fiscal commission (Alarkon, The Hill) A good start, but doesn’t sound like the kind of fiscal commission we really want….i.e. something like the base-closing commission that made recommendations that Congress was forced to vote on without amending.

China asks some banks to limit lending on insufficient capital (Jun/Dingmin, Bloomberg)

NY governor adds soda tax, raises cigarette tax, sanctions cage fighting in proposed budget (Kramer, WCBS)

Multitasking (imgur)

ht CSQT….


Ugly CRE charts

Jan 6, 2010 04:21 UTC

From the Mortgage Bankers Association’s Quarterly Data Book:

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Screen shot 2010-01-05 at 11.12.57 PM

Screen shot 2010-01-05 at 11.13.11 PM

Screen shot 2010-01-05 at 11.13.19 PM


If many of the people moving out are moving back in with Mum and Dad, that can leave vacancies increasing.

Posted by dearieme | Report as abusive

CRE cliff-diving continues

Nov 20, 2009 19:37 UTC

Moody’s/REAL released September data for their commercial real estate price index. Month over month drops have been fast and furious this year.


(Click chart to enlarge in new window)

  • -8.6% Mar to Apr
  • -7.6% May
  • -1.0% June
  • -5.1% July
  • -3.0% Aug
  • -3.9% Sept

Since the peak in October 2007, CRE prices are down 43%.

Residential real estate has been coming back lately, according to the Case-Shiller index. The composite 20 index rose 1.2% in August, after rising 1.7% the month before and 1.4% the month before that.  Again these are month over month changes. The index is still down 11% compared to last year.

There’s a lot of skepticism that this indicates we’ve reached the bottom. Real estate agents will no doubt tell you they have. I doubt many are aware that the GSEs now guarantee a super-majority of all mortgages and that the Fed is printing money to put most of those on its balance sheet. Also ask what they think will happen when the homebuyer tax credit finally goes away next year. Without government support, the housing market wold be a ways down from where we are right now.

As always, keep in mind that the chart above comes with a BIG caveat. The Case-Shiller index is more robust than the Moody’s CRE index. The former is based on millions of transactions. In September, there were a total of 363 commercial transactions, valued at $5.1 billion. Of those, 76 totaling $1.1 billion were repeat sales used in calculating the index.

(Click chart to enlarge in new window)


The market for CRE is as cold as ever. Will the Superdome be included in November’s data?


CRE, although only 1/4 the size of residential, blows a stiff deflationary breeze at the present.

Efforts to reflate residential real estate are fed by populism that likely does not extend to CRE.

Posted by Dan | Report as abusive

Commercial vs. Residential prices, June update

Aug 19, 2009 21:54 UTC

The Moody’s/REAL commercial real estate index for June was released today. Down just 1% compared to May, it suggests the pace of decline is moderating. The index was squarely in freefall the prior two months, declining 9% from March to April and 8% from April to May.

According to the index, prices are now down 35.5% from the Oct ’07 peak.

Case-Shiller data for June won’t be released till next Tuesday. But in May, the Composite 20 index actually rose slightly … for the first time since July 2006.

But don’t expect a V-shaped recovery for home prices (or for CRE prices for that matter).  While residential prices appear to have stabilized during the seasonally strong summer selling season, it’s likely they’ll turn back down later this year.

Even if prices stabilize around current levels, that would still imply large future losses for banks. They’re counting on prices to rebound sharply in order to avoid massive losses in their loan books.

(Click to enlarge in new window)


Just a reminder for everyone that comparing these two indices isn’t totally fair. There are literally millions of transactions that go into the Case-Shiller index. On the CRE side, there have been few sales recently to indicate pricing, as you can see below.  So you have to read Moody’s/REAL with a grain of salt.

(Click to enlarge in new window)



It is NOT seasonally adjusted. Case-Shiller publishes a seasonally adjusted index, but I don’t believe Moody’s does. Not in the data I saw, anyway.

Posted by Rolfe Winkler | Report as abusive