WSJ- Commercial Real Estate "bottom near' as foreclosures surge?!

 

WSJ

An article from the Wall Street Journal suggests a “bottom is near” given a surge in foreclosures.

WEITZ – I’m dictating this as I’m reading so I don’t know what this article entails, but the title alone is so intriguing, I know it’s a post worthy. I can’t wait to see how this journalist spins that a ‘surge in foreclosures’ somehow is a good thing….
here we go….

Highlights from the article:

“Banks and other lenders are seizing control of distressed commercial properties at the highest rate in nearly a decade, a sign that the sector’s punishing downturn is entering its next phase and approaching a bottom”.

In Q2, portfolios of foreclosed and seized office buildings, apartments and other properties reached $20.5 B according to MSCI. That’s a 13% increase from Q1 and the highest since 2015.

Defaults and other ‘kinds’ of distress have been steadily building and near historic levels because of interest rates and slow return of workers to office buildings.  

 “It is possible that commercial property values could deteriorate even further if the US economy falls into recession and companies start to lay off works and want less office space”.

Office is by far the most troubled property class. In Q2, the volume of office property seized in foreclosures and other action was up about $5B from Q2 of 2023.

Weitz: I have to say journalism these days, even at a reputable place like the WSJ, has gone to absolute sh*t. Name one thing about these facts that would indicate a market bottom. Foreclosures are increasing so we must be close to a bottom?! Sorry…. until we see a decrease in distress assets and even a scintilla of evidence that market conditions are improving, I don’t see how anyone could remotely indicate we are ‘at or near a bottom’.

If any, this is the beginning of what I’ve been calling for on this blog…. I think this party is just getting started and the time to build your ‘war chest’ is now. As the old saying goes, don’t try and catch a falling knife. There will be many opportunities in the coming years. Every local market can be different, but for the most part, the macro-economic conditions are not good and getting worse by my estimation. It seems crazy to say that as the stock market is reaching all time highs, but the disconnect is obvious to me. Perhaps I’m wrong, but I haven’t been this confident in down turn since 2007/ 2008.

For  more information on investing in Snohomish County Commercial Real Estate, you can find me at Scott@WeitzCommercial.com or send me a text at 206.306.4034.