Commercial Real Estate Foreclosures Surge by 48% in September
Commercial real estate foreclosures saw a significant 48% year-over-year increase in September, according to data from ATTOM. Despite this, some analysts predict a potential rebound in the market.
Commercial Real EstateForeclosuresReal Estate MarketAttomDelinquency RateReal Estate NewsOct 24, 2024
The biggest year-over-year increase in commercial foreclosures was seen in California, where foreclosures on commercial buildings soared by 238%. New York saw a 48% rise, and Florida experienced a 49% increase. The delinquency rate for commercial mortgages also saw a slight rise in the third quarter, with the percentage of loans that were 60-90 days late increasing to 0.3%, and the percentage of loans that were at least 90 days late rising to 2.7%. Outstanding loan balances that were less than 30 days late fell slightly but remained elevated at 96.8%.
Commercial real estate prices in the US dropped by 9% year-over-year in the first quarter, according to International Monetary Fund data. Real estate experts have been warning of more distress to come, particularly in the office segment. Demand for second-tier office buildings has fallen since the pandemic, leading to forecasts of a wave of forced sales and defaults as debt continues to mature in the sector.
Some property experts speculate that the sale of unused office space could result in a wave of conversions to apartments, which could help solve issues for office owners and add supply to a constrained housing market. However, such overhauls are difficult and costly for landlords.
Despite these challenges, some analysts are more optimistic. A Moody's analysis found that transactions in the commercial real estate market had already bottomed out, with sales volume rising for the first time in two years in September. This could indicate a potential rebound in the market.
Frequently Asked Questions
What is the percentage increase in commercial real estate foreclosures in September 2024 compared to the same period last year?
Commercial real estate foreclosures increased by 48% year-over-year in September 2024.
Which state saw the highest year-over-year increase in commercial foreclosures?
California saw the highest year-over-year increase in commercial foreclosures, with a 238% rise.
How did the delinquency rate for commercial mortgages change in the third quarter of 2024?
The delinquency rate for commercial mortgages increased slightly, with the percentage of loans that were 60-90 days late rising to 0.3%, and the percentage of loans that were at least 90 days late rising to 2.7%.
What is the predicted trend for commercial real estate prices in the US?
Commercial real estate prices in the US dropped by 9% year-over-year in the first quarter of 2024, according to International Monetary Fund data.
What potential solution do some experts propose for the issue of unused office space?
Some property experts suggest that unused office space could be converted into apartments, which could help add supply to a constrained housing market. However, this process is difficult and costly for landlords.
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