James Lambert
Real Estate downturn - - a troubling reality
By James Lambert
Many of today's major news sources are continuing to ignore one economic reality that is starring many Americans in the face: the real estate downturn.
Most of today's major banks have for the last several years been encouraged by oversight agencies like the Fed and Commerce Department to not shed their huge amount of RE delinquent loan holdings they have. Why so? Bureaucrats are worried that releasing a flood of these bank owned RE properties would significantly depress the RE market. They anticipate that such a move would create far too much supply (of properties for sale) thus adversely effecting RE values.
The Wall Street Journal reports that there are over 7 million foreclosures that have been held back by lenders and banks. You might be asking yourself: what do I mean by being 'held back.' Typically, after an owner is 3 months arrears in his / her payments, their lender will begin the foreclosure process. Traditionally, the process continues after the borrower is three months past due on his monthly mortgage payments. In time past, lenders and banks will complete the (foreclosure) process and 'take back' the property after the loan is 6-7 months past due, unless of course if the borrower 'brings current' his/her past due payments.
I know a little bit about this. During an earlier time in my life I worked for Crocker Bank and as a branch lender I sometimes participated in this process. (Crocker Bank, based in San Francisco, was once the 11th largest bank in the country with over 350 branches in California). The whole foreclosure process would typically take us 6-9 months to complete. That process is a far cry from the process that is occurring today. Today, banks have alarmingly permitted themselves in keeping these 'non-performing assets' much longer than their accounting offices would like.
Today, it is not uncommon to find abandoned residential properties throughout most communities around the country. CNN-Money recently reported that 13% of all residential property throughout the country is now vacant. Even if the homeowner cannot make their payments, the banks /lenders are allowing some borrowers to stay in their delinquent properties based on their assumption that the past due borrower will continue to maintain the care of their home.
Sadly, real estate market is in a real crisis today. Over the last 15 months, I have been in 7 states around the country and all of these states are suffering economically in this area. In my hometown of San Diego, I am seeing commercial vacancies in areas that I have never witnessed before in my lifetime. In Los Angeles, there are plenty of large commercial vacancies along the 405 and Interstate 5 corridor. Last fall, I traveled around Southern California as a spokesman ( www.MarijanaHarmsFamilies.com) for No on 19. I was stunned to witness the reality of what was occurring in the commercial real estate market around Los Angeles and other parts of the region.
The same scenario is playing out in other states as well. In February I was in Western Oregon and I noticed that there were massive commercial vacancies in close to a 1/3rd of the many small towns near and on the Oregon coast. Nevada and Arizona have been hit hard too. There are large sections of Las Vegas where huge apartment and condo complexes have been closed effecting commercial vacancies in shopping malls and retail centers close by. In Phoenix and Tucson similar occurrences are occurring in these residential RE markets too. Other states like Indiana and Kentucky are feeling the pinch of the real estate downturn. The community of Evansville (Indiana) has been hit hard by the closing of a Whirlpool plant that was moved to Mexico. In Louisville, KY, I noticed a lot of commercial vacancies there also. In several well known tourist towns in Montana there appears to be a high degree of commercial vacancies also. Even in Hawaii, I was told by several informed locals that there that their economy is being negatively impacted by troubles in the local real estate market too.
All this does not bode well for small business. Traditionally, it's small business that provides employment for close to 70% of all new jobs in our country. Commercial vacancies tell me one thing: that small businesses are having a hard time coping in today's economy. They are either closing their operations or downsizing their businesses during these tough economic times.
It time to tell our political leaders in Washington that: now is not the time to levy a federal tax on RE sales. Now is not the time to levy a 'cap and trade' tax on energy use in our homes. Now is not the time to heighten environ-mental requirements for home sales or re-sales. All these proposals by Harry Reid, President Obama and other members of the House or the Senate need to die immediately!
© James Lambert
May 15, 2011
Many of today's major news sources are continuing to ignore one economic reality that is starring many Americans in the face: the real estate downturn.
Most of today's major banks have for the last several years been encouraged by oversight agencies like the Fed and Commerce Department to not shed their huge amount of RE delinquent loan holdings they have. Why so? Bureaucrats are worried that releasing a flood of these bank owned RE properties would significantly depress the RE market. They anticipate that such a move would create far too much supply (of properties for sale) thus adversely effecting RE values.
The Wall Street Journal reports that there are over 7 million foreclosures that have been held back by lenders and banks. You might be asking yourself: what do I mean by being 'held back.' Typically, after an owner is 3 months arrears in his / her payments, their lender will begin the foreclosure process. Traditionally, the process continues after the borrower is three months past due on his monthly mortgage payments. In time past, lenders and banks will complete the (foreclosure) process and 'take back' the property after the loan is 6-7 months past due, unless of course if the borrower 'brings current' his/her past due payments.
I know a little bit about this. During an earlier time in my life I worked for Crocker Bank and as a branch lender I sometimes participated in this process. (Crocker Bank, based in San Francisco, was once the 11th largest bank in the country with over 350 branches in California). The whole foreclosure process would typically take us 6-9 months to complete. That process is a far cry from the process that is occurring today. Today, banks have alarmingly permitted themselves in keeping these 'non-performing assets' much longer than their accounting offices would like.
Today, it is not uncommon to find abandoned residential properties throughout most communities around the country. CNN-Money recently reported that 13% of all residential property throughout the country is now vacant. Even if the homeowner cannot make their payments, the banks /lenders are allowing some borrowers to stay in their delinquent properties based on their assumption that the past due borrower will continue to maintain the care of their home.
Sadly, real estate market is in a real crisis today. Over the last 15 months, I have been in 7 states around the country and all of these states are suffering economically in this area. In my hometown of San Diego, I am seeing commercial vacancies in areas that I have never witnessed before in my lifetime. In Los Angeles, there are plenty of large commercial vacancies along the 405 and Interstate 5 corridor. Last fall, I traveled around Southern California as a spokesman ( www.MarijanaHarmsFamilies.com) for No on 19. I was stunned to witness the reality of what was occurring in the commercial real estate market around Los Angeles and other parts of the region.
The same scenario is playing out in other states as well. In February I was in Western Oregon and I noticed that there were massive commercial vacancies in close to a 1/3rd of the many small towns near and on the Oregon coast. Nevada and Arizona have been hit hard too. There are large sections of Las Vegas where huge apartment and condo complexes have been closed effecting commercial vacancies in shopping malls and retail centers close by. In Phoenix and Tucson similar occurrences are occurring in these residential RE markets too. Other states like Indiana and Kentucky are feeling the pinch of the real estate downturn. The community of Evansville (Indiana) has been hit hard by the closing of a Whirlpool plant that was moved to Mexico. In Louisville, KY, I noticed a lot of commercial vacancies there also. In several well known tourist towns in Montana there appears to be a high degree of commercial vacancies also. Even in Hawaii, I was told by several informed locals that there that their economy is being negatively impacted by troubles in the local real estate market too.
All this does not bode well for small business. Traditionally, it's small business that provides employment for close to 70% of all new jobs in our country. Commercial vacancies tell me one thing: that small businesses are having a hard time coping in today's economy. They are either closing their operations or downsizing their businesses during these tough economic times.
It time to tell our political leaders in Washington that: now is not the time to levy a federal tax on RE sales. Now is not the time to levy a 'cap and trade' tax on energy use in our homes. Now is not the time to heighten environ-mental requirements for home sales or re-sales. All these proposals by Harry Reid, President Obama and other members of the House or the Senate need to die immediately!
© James Lambert
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