Animated Unemplyment Map

I thought this map was amazing to see.  Click the link to see.

 

http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html

 

3 signs of the next real estate collapse

The latest bubble is about to burst, but this time it's in the commercial market. Here's how to see it coming.

By Katie Benner, writer-reporter

October 22, 2009: 10:16 AM ET

 

NEW YORK (Fortune) -- When the FDIC closed Chicago's Corus Bank last month, it may have signaled the beginning of the next shock to the banking system: commercial real estate defaults.

Corus, whose balance sheet was larded with bad construction loans, is just one of many banks that have a slew of this debt on their books. Refinancing the $2 trillion in commercial mortgages will be tough, as property values decline. And in this new age of cautious lending, few banks are willing to refinance loans.

"There is a lack of new debt," says Michael Haas, a real estate attorney at Jones Day. "There is a hesitancy to extend credit when there is a real possibility that the real estate may be worth less than it was a few years ago."

Now, in a situation eerily similar to the subprime crisis, the result is likely to be a wave of foreclosures and loan defaults that could, in turn, trigger a collapse in the market of the structured bonds backed by commercial real estate and construction debt. But when, and how bad will it be? Here are three indicators to watch.

1. Special Servicers

Firms such as LNR Property, CW Capital, and Centerline are tasked with unraveling the most troubled loans in a last ditch attempt to keep them from default. An uptick in business at these companies means more borrowers under duress.

Between April and August of this year, the value of commercial loans in special servicing doubled to about $50 billion, according to Trepp, a firm that tracks the commercial real estate market.

2. Big Projects

When rents and property values fall, apartment complexes, malls, hotels, and major projects financed during the bubble become more likely to default on their debt.

Fitch Ratings has identified several stressed loans that have been sliced and diced into billions of dollars in commercial mortgage-backed securities, including Tishman Speyer's $3 billion loan for its Stuyvesant Town-Peter Cooper apartment complex in Manhattan and a $4.1 billion loan secured by Extended Stay's hotels.

3. Regional Banks

Watch to see how banks such as Fidelity Southern and United Community Banks -- identified in a SunTrust Robinson Humphrey report as having a high proportion of noncurrent construction loans -- hold up over the next few months. Community banks were especially aggressive in originating commercial real estate loans, but they could still manage to avoid big problems.

"Medium and small banks have a lot of exposure to local building projects," says Chris Whalen, a bank analyst and co-founder of Institutional Risk Analytics. "They're forbearing or getting involved in their customers' business rather than taking losses. They're hoping they can hold out until values come back." 

 

Housing sale prices keep rising

by J. Craig Anderson - Oct. 21, 2009 12:00 AM
The Arizona Republic

The Valley housing market has settled into a pattern of mild price recovery, with the median sale price rising by a few thousand dollars in recent months, according to the latest Arizona State University report on same-home sales.

But the report's author warned area residents not to interpret his findings as proof that home prices have stabilized.

Professor Karl Guntermann, who published the most recent ASU Repeat Sales Index report on Tuesday, said there are signs that home foreclosures in 2010 could jolt the housing market out of its current state of relative calm.

"The worst appears to be past, but the large number of foreclosures likely to hit the market through 2010 makes it difficult to predict the direction of house prices with any certainty," said Guntermann, of ASU's W.P. Carey School of Business.

The ASU index continued to show a steady decrease in the gap between home-sale prices in 2009 and prices a year earlier.

In July, the most recent month covered by the index, home prices were down about 28 percent compared with July 2008, and the median sale price was $125,000.

The index showed steady improvement from June, when the year-over-year decline was 31 percent, and the median sale price was $122,000.

The same-home sales index, which compares prices of homes that have been sold multiple times since 1989, shows an uninterrupted run of year-over-year price decline that has lasted a record 29 months.

However, Guntermann said 2010 is likely to see that losing streak reach its end. With the year-over-year gap closing by 2 to 3 percentage points each month, it's likely the index will cross over into positive territory by the end of next year, he said.

 

Commercial Real Estate Debt Jumps Amid Soaring Delinquencies

By Sarah Mulholland

Oct. 19 (Bloomberg) -- Yields on bonds backed by hotel, shopping-center and skyscraper loans narrowed relative to benchmarks as U.S. programs help drive demand even as late payments soar on the underlying commercial real estate debt, according to Barclays Capital.

The gap, or spread, on top-ranked commercial-mortgage backed securities tightened 0.15 percentage point relative to benchmark swap rates to 6.25 percentage points for the week ended Oct. 15, Barclays data show. That compares with 10.15 percentage points in March, according to Barclays.

Demand for the bonds swelled as rising stocks buoyed investor sentiment and government programs helped further prop up prices of the debt. Rising delinquencies on commercial mortgages provide a “counterpoint to the rally,” Barclays analysts led by Aaron Bryson in New York wrote in an Oct. 16 report.

“The rally in cash CMBS continued,” Bryson wrote. “Better-than-expected earnings reports and strong economic data led to broad-based credit tightening and a further reduction of risk premia.”

Top-rated commercial mortgage-backed debt is trading at a price of about 84.70 cents on the dollar, up from 55.91 cents in mid-March, according to Merrill Lynch & Co. indexes.

Still, “the CMBS delinquency rate is on pace for a large jump,” Bryson wrote.

Commercial mortgages bundled and sold as bonds that are at least 30 days behind on payments rose 30 basis points to 5.42 percent for October, according to Barclays. About 36 percent of the loans hadn’t yet been reported for this month as of the report date. A basis point is 0.01 percentage point.

TALF Fading

The fourth round of the Federal Reserve’s Term Asset-Backed Securities Loan Facility, or TALF, is scheduled for Oct. 21. The Fed began lending against so-called legacy commercial mortgage- backed securities, or those sold before Jan. 1, in July as part of its effort to stimulate lending.

The Fed added newly issued commercial-mortgage backed bonds to TALF in June. No new bonds have been sold through the program.

The impact of TALF has “started to fade” as investors anticipate the start of buying under the U.S. Public Private Investment Partnership, a separate government program that also seeks to attract investors by boosting returns with taxpayer loans, according to Bank of America Corp. analysts.

“Legacy CMBS TALF is still in effect but demand does not seem strong enough, by itself to drive this sector significantly tighter,” the Bank of America analysts led by Roger Lehman in New York said in an Oct. 16 report.

Plunging Values

Unlike the TALF, the PPIP isn’t limited to securities carrying top-ratings and will finance the purchase of a broader swath of securities, including bonds that have had ratings cuts.

Spreads on some lower-ranked bonds have tightened on “at least the perception of PPIP buying,” according to the Bank of America analysts.

TALF loan requests to purchase legacy bonds will likely increase to around $2 billion for October, compared with $1.4 billion last month, according to Barclays. While the fourth round may be stronger than last month’s “disappointing” results, it will fall short of August’s $2.3 billion high, the Bank of America analysts wrote.

The government has made reviving the $700 billion commercial-mortgage bond market a priority as plunging property values and a pullback in lending threaten to derail an economic recovery. U.S. commercial real estate prices are down 40.6 percent from the October 2007 peaks, according to Moody’s Investors Service.