by Calculated Risk on 2/04/2009 12:27:00 PM

Here are a couple of quotes that are making the rounds:

"Every month that we do not have an economic recovery package 500 million Americans lose their jobs."
Speaker of the House Nancy Pelosi

Obviously she meant 500 thousand (she corrected herself later). And it appears likely that another 500,000+ jobs were lost in January.

“We should agree, as a world, on a monetary and fiscal stimulus that will take the world out of depression.”
Prime Minister Gordon Brown, Feb 3, 2009

Mr. Brown's office issued a correction later (recession, not depression). Here is a short video:

by Calculated Risk on 2/04/2009 11:30:00 AM

From the San Diego Union-Tribune: Offices' vacancy outlook gloomy

[T]he latest prediction from a survey conducted by the UCLA Anderson Forecast and real estate law firm Allen Matkins ... are grim. UCLA's computer models predict that office rents will continue to decline all the way through 2010. When adjusted for inflation, they are expected to be at levels seen in the mid-1990s.

Occupancy also is expected to fall over the next few years. UCLA's computer models have vacancies topping out at 22 percent by the end of 2010.

Today, office vacancies range from 14 percent to 17 percent, according to reports from local commercial brokers.

This still might be too optimistic.

by Calculated Risk on 2/04/2009 10:03:00 AM

From the Institute for Supply Management: January 2009 Non-Manufacturing ISM Report On Business®

"The NMI (Non-Manufacturing Index) registered 42.9 percent in January, 2.8 percentage points higher than the seasonally adjusted 40.1 percent registered in December, indicating contraction in the non-manufacturing sector for the fourth consecutive month, but at a slightly slower rate. The Non-Manufacturing Business Activity Index increased 5.3 percentage points to 44.2 percent. The New Orders Index increased 2.7 percentage points to 41.6 percent, and the Employment Index decreased 0.1 percentage point to 34.4 percent. The Prices Index increased 6.4 percentage points to 42.5 percent in January, indicating a decrease in prices from December. According to the NMI, two non-manufacturing industries reported growth in January. Respondents are concerned about the global economy and the continued decline in business and spending."

This is a weak report. The service sector is still contracting but at a slightly slower pace than in December. The employment numbers remain especially weak.

by Calculated Risk on 2/04/2009 09:23:00 AM

From the WSJ: Condo King Corus Weighs Its Options (hat tip James)

Corus Bankshares ... reported a $260.7 million quarterly loss late Friday and said that more than one-third of its $4.1 billion in outstanding loans were nonperforming. Amid what it called a "precipitous decline" in property values, the Chicago lender also warned that banking regulators may soon strip Corus of its standing as a well-capitalized bank and impose higher cash requirements.
...
Corus is one of the few lenders to report that the Treasury Department intends to reject the bank's application for funds from the ... TARP.
...
While it has been clear for months that thousands of condo projects were doomed, the full impact on financial institutions is only now being felt. Construction loans were structured with "interest reserves," provisions that gave developers funds to pay interest until the projects were complete. Now that projects are completed and failing to sell, the loans are going into default.
...
Corus has about $2 billion in unfunded construction commitments and that in the event of a federal takeover, regulators wouldn't be obligated to fund these commitments.

Another candidate for Bank Failure Fridays. Corus is heavily exposed to condos and Construction & Development (C&D) loans. When the interest reserves run dry, these deals blow up. And down goes the lender ...

by Calculated Risk on 2/04/2009 12:10:00 AM

An open thread and a few posts today you might want to read:

Q4: Homeownership Rate Declines to 2000 Level

With graphs on the rental vacancy rate, homeowner vacancy rate, and homeownerhip rate.

Looking for the Sun

The economic outlook is grim. The unemployment rate will rise all year, house prices will fall, commercial real estate (CRE) will get crushed ... but a few areas will probably finally hit bottom.

Update: Tanta Scholarship Fund

An update from bacon_dreamz. Check it out. And check out the map of where the Mortgage Pigs have gone!