Capital Markets Briefing From ReisReports

Let’s take a deeper dive into 2012′s commercial real estate history.  What do we find?  Increases in commercial mortgage origination volume, strength in the apartment sector, and the gradual return of bank-owned properties to the post-crisis market are among the indicators highlighted by Reis Senior Economist Ryan Severino in today’s video from ReisReports.  Among the questions posed and answered:

  • Is capital flowing into the sector again?
  • How eager are investors to place capital?
  • Did 2012 outperform 2011?
  • Is mortgage performance still improving?
  • Are we now in another credit bubble?

Capital Markets Briefing Q4 2012 – Part One from Reis Reports

I enjoyed this clip and I find Severino a welcome voice.  A couple of observations:

First, recent changes to the GSEs policies regarding multifamily lending as mentioned here at The Source don’t seem to be reflected in the numbers, as Severino characterizes the GSEs in a more flat manner.  Fannie and Freddie’s declining participation in the multifamily market is an evolving story that bears a closer look.

Second, I think it’ s notable that Severino mentions that credit market dynamics once again appear to be distanced from the facts on the ground, even if he and I seem to have opposite views as to what drives some of those facts.  He characterizes payroll tax hikes as a factor, referring to a Wal-Mart VP declaring a sales disaster in the wake of new taxes.  I find this party-line blaming of tax policy for Wal-Mart’s customer base’s shyness at the cash register particularly ironic as it comes from no less than the nation’s largest private employer, whose decades-long record of aggressively holding down wages – wages that are spent at such cash registers –  is beyond argument.

High unemployment persists and the middle class remains more or less locked out of the wider recovery.   “It is almost as if there is a bit of a disconnect between the economy and the real estate capital markets,” says Severino. While he doesn’t call this disconnect a bubble, I think he’s right to consider the possibility, because the last credit bubble was an unmitigated disaster for all of us.

27. March 2013 by Wayne Grohl
Categories: Financial Analysis | Tags: , , | 2 comments

Comments (2)

  1. Hi Wayne, great article. Thanks so much for featuring our video. You do not need to publish this comment, but I just wanted to send a quick note correcting Ryan’s name (you have him as “John” in the first paragraph, it should be “Ryan Severino”. Also, feel free to publish the presentation materials as well, if you would like.

    Thanks again!
    Brice

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