Posted on Tuesday, February 23, 2010
Its seems commercial prices increased 4.1 % in December. This is a big increase relative to the past 10 years or so and is the second increase in a row. The number of deals also rose…over 75%. And the dollar value of the total deals was also up…a lot. But my personal feeling, and this is based on the stats and on my own experience representing banks on these deals, is that this is more a reflection of investors moving to close deals before year end, than any kind of indication that the predictions for a few bad years in CRE have changed. And the prices are of course still way down from their peaks. Commercial property prices for example, are down 29.2 percent from a year ago, 39.8 percent compared to two years ago, and 40.8 percent from the peak in October 2007. These are probably the biggest declines we’ll see overall.
The Congressional Oversight Panel estimates that banks’ losses from defaults on commercial real estate loans alone over the next few years could go as high as $300 billion and threaten to bury the balance sheets of nearly 3,000 community banks nationwide.