Commercial banks reported a delinquency rate of 5.28% on commercial real estate loans as of June 30, 2012. The rate has dropped by more than half from a peak of 10.76% in 2010.
The delinquency rate for Arizona is 3.47%.
Economists who adhere to rational-expectations models of the world will never admit it, but a lot of what happens in markets is driven by pure stupidity—or, rather, inattention, misinformation about fundamentals, and an exaggerated focus on currently circulating stories.
Recent trends are mixed. Values and sales bottomed in 2009 (charts 1 and 3 below), but vacancies are high (chart 2) and commercial mortgage-backed securities lending, while improving, is still weak (chart 4). “Extend and pretend” is the order of the day at commercial banks, which are digesting $80 billion of losses on commercial real estate loans, and the real challenge is still ahead: $1.6 trillion of commercial real estate loans are coming due in the next eight years.
New-home sales in the U.S. were up 17.5% in December, but 2010 was still the worst year on record for the homebuilding industry. For the entire year, approximately 321,000 new homes were sold—the lowest number since 1963, and 14% below 2009. The December surge is attributed, in part, to a homebuyer tax credit in California.