Real Estate Delinquencies Continue to Decline
Digested from The Wall Street
The long-awaited bust in the commercial sector still has not arrived.
For a while now, analysts have been predicting a bust in the commercial property sector, including apartments. So far, valuations have stayed strong and recent data indicates that market conditions may even be improving.
“The delinquency rate for securitized loans in the commercial real-estate industry has dropped for eight consecutive months, defying the expectations of recent years for a wave of defaults,” writes Esther Fung of The Wall Street Journal.
Real-estate data provider Trepp reported that the delinquency rate for real-estate loans in commercial mortgage-backed securities came in at 4.51 percent in February, which was down from 5.31 percent in the same period a year earlier.
“Investors had been expecting an increase in defaults in 2016 and 2017 as the large volume of CMBS packaged loans issued during the 2006 to 2007 period reached maturity,” Fung writes. “But rising real-estate values, low-interest rates and a surge of debt capital from insurers and other sources have allowed property owners to refinance or restructure their debts.”