Commercial real estate prices up

The MIT Center for Real Estate's transaction-based index (TBI) index shows that investment-grade commercial real estate rose 4.4 percent third-quarter in the third quarter – the first positive price change in the index in more than a year and the largest increase since the market downturn began in mid-2007. David Geltner, director of research at MIT/CRE, said in a statement: "One quarter does not a trend make and we are still well below normal trading volume. Nevertheless, this is the strongest sign of a bottom that we've had in two years." The price index at the third quarter stood at 36.5 percent below its 2007 peak, up from its 39 percent deficit seen last quarter, which now could be the trough and suggests the U.S. commercial property market may have finally found a price bottom. The delinquency rate of U.S. commercial real estate loans securitized into Commercial Mortgage-Backed Securities (CMBS) hit 4.8 percent in October, up from 4.36 the prior month and dwarfing
the 0.77 rate of a year earlier, according to Trepp, which tracks CMBS loans.

MBA – weekly survey

The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending October 30, 2009, and it increased 8.2 percent on a seasonally adjusted basis from one week earlier. The Refinance Index increased 14.5 percent from the previous week and the seasonally adjusted Purchase Index decreased 1.8 percent from one week earlier, while the unadjusted Purchase Index decreased 3.0 percent compared with the previous week and was 3.4 percent lower than the same week one year ago. The four week moving average for the seasonally adjusted Market Index is down 5.5 percent. The four week moving average is down 5.0 percent for the seasonally adjusted Purchase Index, and down 5.7 percent for the Refinance Index. The refinance share of mortgage activity increased to 66.1 percent of total applications from 62.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.1 percent from 6.9 percent of total applications f rom the previous week. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.97 percent from 5.04 percent, with points decreasing to 1.01 from 1.25 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

Job cuts more than expected

Some news organizations try to put lipstick on the pig by claiming the “pace” of job losses is slowing, but that doesn’t mean all that much this late in the recession. Automatic Data Processing, a payroll-processing firm, reports that private-sector employers cut 203,000 jobs in October. Economists surveyed by Briefing.com had forecast a loss of 198,000 jobs last month, so the October job loss was larger than expected. According to outplacement firm Challenger, Gray & Christmas Inc., the number of cuts announced in 2009 will soon exceed the total for 2008 – we’re only about 30,000 planned job cuts away from surpassing the total tally of 2008, which was 1,223,993. Challenger remained cautiously optimistic, citing an uptick in GDP, an increase in manufacturing activity and a surprise gain in home sales. "It appears that the light at the end of the tunnel is finally visible," Challenger said. "However, it is important to realize that, as deep and widespread as this
recession was, it is going to be a long and sometimes painful recovery."

Auto sales up from last month

Major automakers reported yesterday that their October sales are up about 12% from September, and on track to come in flat when compared to a year ago. General Motors, Ford, and Nissan reported that their sales were up from a year ago; Toyota and Honda said its sales were essentially unchanged from the same period last year; and Chrysler Group reported sales fell 30% from October 2008. "We are trending in the right direction," Jessica Caldwell, senior analyst at auto industry tracker Edmunds.com, said. "Anything that shows any kind of improvement in this economy is a positive." Caldwell added that it should be easier for auto companies to report year-over-year growth from this point on as sales at the end of 2008 and early 2009 were among the worst in decades. "If we can't top November 2008, we're in trouble."

Fannie Mae ups ante

Fannie Mae updated its eligibility requirements for lenders, according to its new selling guide. To do business with Fannie Mae, lenders now need to have a net worth of at least $2.5 million, or 10 times the previous required net worth, plus a dollar amount equal to 0.25% of the outstanding principal balance of any Fannie Mae portfolio it services. The announcements also include updates from reverse mortgage lender letters Fannie Mae and announcements incorporated into the Selling Guide. Fannie said most of the information was unintentionally omitted from the April 2009 Selling Guide, but was added to the October issue. Within the next two months, Fannie Mae plans to issue another update to the Selling Guide that incorporates any outstanding announcements and those made between now and the time of the update.
 

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