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?
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.