Although the rate of price decline in the US housing market has slowed over the past few months, that doesn’t necessarily mean that the housing market is on the road to recovery. There are still serious flaws in the fundamentals of the market, such as lack of demand and growing supply. See the following article from Property Wire for more.
Real estate fundamentals in the US are still being eroded despite some experts talking about green shoots of recovery in the economy, according to the Mortgage Banker’s Association.
In its latest report it says that property sales across the nation have plummeted to unforeseen depths and it is not predicting a rapid recovery.
The report says that property sales reached $8.9 billion in the first quarter of 2009 compared with $43.4 billion in the first quarter of 2008 and $125.5 billion in the first quarter of 2007.
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‘While the pace of the economic slowdown appears to be easing, different aspects of commercial real estate and commercial real estate finance are feeling different levels and types of pressure,’ it says.
The only glimmer of hope in a depressing report is that the rate of decline for originations did slow in the first quarter, falling 26% from the last quarter of 2008 to the first quarter of 2009, after falling by 65% between the third and fourth quarters of 2008.
But the report concludes that across most markets and asset classes, decreased demand continues to significantly pressure both vacancies and asking rental rates.
All together, more than 64 million square feet of excess space was added to the apartment market, 38 million square feet to the industrial market, 45 million square feet to the office sector and 101 million square feet to the retail market.
Retail properties have seen the most dramatic impact with vacancy rates climbing to 16.2% from 11.3% a year earlier.
The report also shows that every major investor group has seen originations fall, CMBS saw the greatest, down 96%, followed by commercial banks down 80%, life insurance companies fell 66% and Fannie Mae and Freddie Mac saw declines of 26%.
At the end of the first quarter, delinquency rates for many investor groups rose to levels higher than those seen during the 2001 recession.
This article was republished from Property Wire. You can also view the article at Property Wire, an international real estate news site.