Rise! CMBS Continues To Struggle Under Biden/Harris (Delinquency Rate For Office Space Hits 10.4%)

CMBS delinquencies are on the rise.

The delinquency rate for commercial mortgage-backed securities (CMBS) tied to office properties reached 10.4 percent in November 2024, approaching the 10.7 percent peak reached during the 2008 financial crisis. The ascent is the fastest two-year increase on record, with rates climbing 8.8 percentage points since late 2022, significantly outrunning the 6.3-point rise seen during the financial crisis nearly 15 years ago.

The office real estate sector has been grappling with a severe downturn for several years now, but are accelerating recently as they are driven by persistently high vacancy rates and declining rents. Property values, particularly for older office buildings, have plummeted, with many losing 50 to 70 percent of their market value and in some cases becoming effectively worthless. Those conditions have left real estate portfolio managers and building owners unable to borrow, refinance or sell properties, contributing to rising delinquencies and foreclosures. (Mortgages become effectively delinquent when payments are missed beyond a standard 30-day grace period.)

On the CMBS front, there have been no upgrades in 2023 and 2024.

Efforts to convert office buildings into residential spaces are increasing but remain limited by structural and economic constraints. Many office towers are unsuitable for conversion due to their large floor plates or prohibitively high retrofitting costs which often exceed the cost of demolition and rebuilding. In 2024, 73 office-to-residential conversions were completed, with an additional 30 underway. Despite plans to increase the pace in 2025, the cumulative impact remains minimal, addressing just 7.9 percent of the 902 million square feet of vacant office space nationwide.

Milton Waddams personifies the disastrous progressive politics of Biden/Harris.

Crypt Keeper Jobs Report! November Household Jobs Report Shows -355k Jobs Lost, “Not In Labor Force” Increases By 368k

While Biden travels to Africa giving away money (and looking like the crypt keeper), the November jobs report was released.

The Establishment report showed a gain of 227k jobs. But the household survey showed a staggering loss of -355k jobs.

But not in labor force increased by 368k

Biden, the economic crypt keeper.

Like A Great White Shark! Bitcoin Breaches $100k, Gold Had A Tremendous Run Under Biden/Harris

Like a Great White Shark, Bitcoin has breached $100k!

Gold, a competitor to the US Dollar, is down a bit today, but has been rising with the prospect of Trump deregulating the hamstrung US economy. Gold rose under Biden/Harris (and McConnel/Schumer’s) gross fiscal mismanagemment.

Here is a picture of Bitcoin breaching the surface. And why it pays not to surf near seals or sea lions.

Existing Home Sales Drop, Worst Drop Since 2013

The last gasp of the Biden/Harris reign of (economic) error!

After existing home sales unexpectedly ticked up in October, analysts expected new home sales to slow after their recent resurgence (-1.8% MoM). They were right… BUT… the magnitude is mind-boggling!

New Home Sales collapsed 17.3% MoM in October. That is the largest MoM drop since July 2013.

Source: Bloomberg

That MoM plunge dragged sales down 9.4% YoY to 610k SAAR – the lowest since Nov 2022

Source: Bloomberg

Of course, all the revisions are lower…

Hurricanes Helene and Milton, which tore through parts of the Southeast, delayed sales in the nation’s biggest housing region and dragged down sales overall.

Sales in the South decreased 28% to 339,000, the slowest pace since April 2020. Sales also fell in the West, but rose in the Northeast and the Midwest.

Source: Bloomberg

Finally, we note that the median sale price of a new home increased to $437,300 in October, the highest in 14 months.

Does this mean November’s data will see a massive surge in new home sales? …even as rates have increased significantly?

Case-Shiller Home Prices Rise 3.9% YoY In September (Only NYC And Cleveland Top 7% YoY)

Rolling into Cleveland to the lake.

NEW YORK, NOVEMBER 26, 2024: S&P Dow Jones Indices (S&P DJI) today released the
September 2024 results for the S&P CoreLogic Case-Shiller Indices. The leading measure of U.S.
home prices recorded a 3.9% annual gain in September 2024, a slight deceleration from the previous annual gains in 2024.

YEAR-OVER-YEAR
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 3.9% annual return for September, down from a 4.3% annual gain in the previous month. The 10-City Composite saw an annual increase of 5.2%, down from a 6.0% annual increase in the previous month. The 20-City Composite posted a year-over-year increase of 4.6%, dropping from a 5.2% increase in the previous month. New York again reported the highest annual gain among the 20 cities with a 7.5% increase in September, followed by Cleveland and Chicago with annual increases of 7.1% and 6.9%, respectively. Denver posted the smallest year-over-year growth with 0.2%.

Table 2 below summarizes the results for September 2024. Cleveland and New York top 7% YoY.

We Got Fooled Again! Federal Debt Is UP 236% Since Obama/Biden Were Sworn-in In 2009, Federal Spending Is UP 121% (Unfunded Liabilities [Promises] Now At $221 Trillion)

Meet the new boss, same as the old boss. We did get fooled again!

The problem with the national debt can’t be fixed with Mitch McConnell still in the Senate and too many Obama-era political hacks still in Washington DC.

The Obama/Biden era began in 2009 and it still exists despite Trump winning the Presidency for 2025. The Obama/Biden regime along with Congressional assistance drove up US Federal Debt to around $36 TRILLION. That is an increase of a staggering 236% since Obama/Biden were sworn into office in January 2009. And Federal spending is up 121%.

Unfortunately, Trump cannot pull a Javier Milei (Argentina’s libertarian President) and obliterate the bloated carcas of Federal bureaucracy. Democrats and RINOs like Mitch McConnell will work overtime thwarting Trump’s efforts to control the bloat.

And don’t forget the $221 TRILLION in unfunded liabilities (promises) that Congress had made to get elected. That will eventually become Federal debt.

Going Down! UMich Inflation Expectations Jump To 16-Year-High, Housing Buying Conditions Remains Depressed

To quote Freddie King, the US is going down.

Longer-term inflation jumped to their highest since June 2008, according to the latest UMich Sentiment survey, while short-term inflation expectations dropped to four year lows…

Housing sentiment (buying conditions for housing) remains depressed under Biden/Harris
“Reign of (economic) error.”

Here is a picture depicting the assassination of the US housing market.

Slow Down? Existing Home Sales Rise YoY For First Time Since July 2021 (Near 2010 Levels, So Barely Rising)

Its a slow down in the housing market.

Existing Home Sales were expected to rebound modestly in October (+2.9% MoM) after dropping for 6 of the last 7 months to the lowest levels since 2010, and they did. Sales rose 3.4% MoM (a beat) but thanks to a downward revision for September from -1.0% to -1.3% MoM. What is most shocking about the shift is that it pushed the YoY change for existing home sales positive (+2.9% YoY) for the first time since July 2021…

Source: Bloomberg

…but in context, that shift up to 3.96mm SAAR homes sold is nothing…

Source: Bloomberg

High borrowing costs have led to a shortage of previously owned homes on the market, discouraging many would-be home sellers from listing their properties for sale and having to part with their current low financing costs.

“Additional job gains and continued economic growth appear assured, resulting in growing housing demand,” NAR Chief Economist Lawrence Yun said in a prepared statement.

“While mortgage rates remain elevated, they are expected to stabilize.”

Last month, the inventory of available homes edged up 0.7% to 1.37 million, continuing to trend higher although well below pre-pandemic levels.

Despite the weakness in sales, tight inventory is keeping prices elevated, yielding one of the least affordable housing markets on record. The median sale price last month increased 4% from a year earlier to $407,200, the highest ever for any October, the NAR figures show.

Contract signings rose in all four US regions, led by a 6.7% jump in the Midwest.

Sales of single-family homes increased 3.5% in October; purchases of condominiums and co-ops were up 2.7%

Finally, while that’s all very exciting – a scintilla of growth off almost record lows – the fecal matter is about to strike the rotating object as rising mortgage rates lagged impact threatens…

Source: Bloomberg

In October, 59% of homes sold were on the market for less than a month, compared with 57% in September, and 19% sold above the list price. Properties remained on the market for 29 days on average, compared with 28 days in the previous month. First-time buyers made up 27% of purchases, still historically low.

Already Gone! Mortgage Applications Rise Since Last Week, But Mortgage Purchase Applications Down -60% Under Biden/Harris

Fortunately, the Biden/Harris administration is winding down. On the mortgage side, the mortgage market is already gone under Biden/Harris where mortgage purchase applications are down a whopping 60%.

Mortgage applications increased 1.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 15, 2024.

The Market Composite Index, a measure of mortgage loan application volume, increased 1.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 1 percent lower than the same week one year ago. And down -60% under Biden/Harris.

The Refinance Index increased 2 percent from the previous week and was 43 percent higher than the same week one year ago.

Slowing economy, rising rates, too expensive housing. Not a good sign for the mortgage market.

US Housing Starts & Building Permits Slump Back Near COVID Lockdown Levels

As Biden/Harris approve of Ukraine launching missiles against Russia risking nuclear war, we are witnessing a slow down in the US economy. This time, housing starts and permits.

US Housing Starts and Building Permits disappointed in October with the former dropping 3.1% MoM (-1.5% exp) and -0.6% MoM (+0.7% exp) respectively. This is the second straight month of declines for both measures of housing activity.

Source: Bloomberg

That pulled the SAAR totals down to four month lows – hovering just above COVID lockdown levels…

Source: Bloomberg

Under the hood, it was very mixed with Single-family permits rising and multifamily permits dropped. Single-family Starts plunged while multi-family Starts jumped…