by Calculated Risk on 4/16/2009 04:08:00 PM

Elizabeth Warren on the Daily Show talking about the TARP.

"That is the first time in probably six months to a year that I felt better. Something - I don't know what it is you just did right there - but for a second that was like financial chicken soup for me."
Jon Stewart

For Canadians

Part 1:



Part 2:

by Calculated Risk on 4/16/2009 02:54:00 PM

From South Florida Business Journal: BankUnited given 20 days to strike deal (ht FFF)

In a prompt corrective action directive, posted on the Office of Thrift Supervision’s Web site Thursday and issued two days earlier, Florida’s largest bank was ordered to submit a binding merger or acquisition agreement to the OTS within 15 days ...

BankUnited’s $5.89 billion in option ARMs accounted for 51 percent of its loan portfolio on Dec. 31.

The bank ended 2008 with $13.95 billion in assets, 1,098 employees, $8.61 billion in deposits in 86 branches, and 11 percent of its loans noncurrent.

Here is the corrective action: PROMPT CORRECTIVE ACTION DIRECTIVE

Just a tease for BFF (Bank Failure Friday).

by Calculated Risk on 4/16/2009 02:04:00 PM

From DataQuick: Bay Area home sales continue climb, median still below $300K

The number of homes sold in the Bay Area rose for the seventh month in a row in March, the result of continued bargain hunting in the East Bay and other foreclosure-discounted communities. ...

A total of 6,325 new and resale houses and condos closed escrow in the nine-county Bay Area last month. That was up 25.7 percent from 5,032 in February and up 29.1 percent from 4,898 in March 2008, according to MDA DataQuick of San Diego.

Last year's March was the slowest in DataQuick's statistics, which go back to 1988. Last month was the third-slowest March of all time, ahead of last year and 6,210 sales in March 1995. March sales have averaged 9,025 and peaked in March 2004 at 12,645 sales.
...
"For now, the extent to which prices have fallen in the upscale markets is more difficult to gauge," he added, "because many of those areas are essentially in hibernation, with scant sales."
...
The use of government-insured FHA loans - a common choice among first-time buyers - represented a record 25.4 percent of all Bay Area purchase loans in March, up from 1.5 percent a year ago.
...
Last month 51.2 percent of all Bay Area resale homes had been foreclosed on at some point in the prior 12 months, down from 52.0 percent in February and up from 23.2 percent a year ago. By county it ranged from 11.5 percent in San Francisco to 70.0 in Solano.
...
Foreclosure activity is nearing its 2008 peak ...

Once again, ignore the median price - it is distorted by the mix.

This is the same story as SoCal - the sales activity is mostly in foreclosure ravaged areas, and the high end areas are in "hibernation".

by Calculated Risk on 4/16/2009 01:05:00 PM

More bad news for CRE today. General Growth (2nd largest mall owner) filed bankruptcy this morning. And Cushman & Wakefield reported the downtown office vacancy rate increased sharply in Q1.

And for lodging, occupancy and RevPAR (Revenue per available room), are off sharply year-over-year.

From HotelNewsNow.com: STR reports U.S. data for week ending 11 April 2009

In year-over-year measurements, the industry’s occupancy fell 17.9 percent to end the week at 52.6 percent (64.1 percent in the comparable week in 2008). Average daily rate dropped 12.5 percent to finish the week at US$96.60 (US$110.36 in the comparable week in 2008). Revenue per available room for the week decreased 28.1 percent to finish at US$50.85 (US$70.76 in the comparable week in 2008).
emphasis added

Click on graph for larger image in new window.

This graph shows the YoY change in the occupancy rate (3 week trailing average).

The three week average is off 13.7% from the same period in 2008.

The average daily rate is down 12.5%, so RevPAR is off 28.1% from the same week last year.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 4/16/2009 11:22:00 AM

Note: This report just covers downtown areas. The REIS report covers more area and shows the nationwide U.S. office vacancy rate at 15.2% in Q1.

From Bloomberg: U.S. Office Vacancies Rise to Three-Year High, Cushman Says

Office vacancies in U.S. downtowns increased to 12.5 percent in the first quarter, the highest in three years, as companies cut jobs and new buildings came onto the market, Cushman & Wakefield said.

The national [downtown] office vacancy rate climbed from 11.2 percent in the fourth quarter and 9.9 percent a year earlier ...

“This will be a very difficult year for commercial real estate and for office markets in particular,” said Maria Sicola, executive managing director and head of Americas Research for Cushman & Wakefield ...

You think?

On falling rents:

Downtown office landlords cut their asking rents by an average of 2.2 percent in the first quarter ... “We are just entering into what will be a very strong market for the tenant. We can see rents come down 10 or 15 percent or even 20 percent before this is over.” [Sicola said]

CRE is getting crushed.