According to National Real Estate Investor, an industry tracker, the climate among buyers and sellers of commercial real estate is a chilly one to say the least. With the credit crunch at full throttle, you have to be Warren Buffett in order to secure financing, and he doesn’t really need it.
Denise Kalette of NREI writes, “Commercial and multifamily mortgage lending slowed to a trickle in the fourth quarter,” said Jamie Woodwell, vice president of commercial real estate research at MBA, in a statement. “Originations for all of 2008 were down approximately 60% from 2007 levels. Between the worsening economy and the continued credit crunch, lenders are extremely cautious about lending and borrowers are likely to hold onto the assets and the loans they already have.”
In short, if you own commercial real estate – hold it if you can and if you want to buy – come with cash in hand.
Compared to Q407, the 80% decline in loans for all property types breaks down as follows:
- 99% decrease for hotel
- 82% decrease for retail
- 76% decrease for industrial
- 72% decrease for office
- 62% decrease for multifamily
- 47% decrease for health care
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