Delinquency rates

[bart]

A selection of most of the quarterly delinquency data from the Fed.

Having both residential & commercial rates be tracking so closely is a bit odd, since commercial real estate usually trails residential.


http://www.nowandfutures.com/images/delinquency_rates1.png


http://www.nowandfutures.com/images/delinquency_rates2.png

[zoog]

Interesting in the early 1990's commercial real estate delinquency was much higher than residential. I wonder if that will be true this time or if they will continue to track together.

A little surprised the agricultural loan delinquency is low. As commodity prices have been so low, I have figured that farmers are reluctant to sell anything they can store. If they aren't selling, how are they paying their loans? I guess they are selling enough to make the payments.

[bart]

Best guess on commercial real estate getting much worse - yes. It tends to lag residential by 2-4 quarters, which is what surprised me about it being so close to residential currently. It doesn't look good that it roughly matches residential now.


I think the ag rate being so low is reflective of prices being much higher than average. For example, even though corn is "only" about $3.60 now, it was around $2.00 in 2005, $3.10 in 2006 and is well above the average price since 2000.
Farmers are pretty wily too and know the various games that the USDA and futures markets can play, and can also read the handwriting about food inflation.

[aaron]

Is there a good etf or reit index to short in order to take advantage of the commercial real estate crash that is coming?

[BiscayneSunrise]

SRS seems to be working well so far. I'm not sure if they track residential or commercial more closely, though.

[zoog]

Is there a good etf or reit index to short in order to take advantage of the commercial real estate crash that is coming?

I guess you didn't like FRED's response a couple months ago?


Originally Posted by aaron http://www.itulip.com/forums/images/buttons/viewpost.gif (http://www.itulip.com/forums/showthread.php?p=72013#post72013)
Is the advice to short commercial real estate still applicable, or is it too risky to go into the market now?
Thanks!
By the time Paul Craig Roberts is talking about it (http://vdare.com/roberts/090121_real_estate.htm), the trade is done.

SRS would probably be the vehicle if you want to play in traffic. Or puts on URE which is the double-long partner to SRS.

SRS seems to be working well so far. I'm not sure if they track residential or commercial more closely, though.

SRS is based on the Dow Jones US Real Estate Index, which is comprised (http://www.djindexes.com/mdsidx/index.cfm?event=components&symbol=DJUSRE) of mostly REIT's. There are some residential in there but most is commercial, industrial, retail, hospitality, etc.

google finance comparison chart (http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1236293683440&chddm=98923&cmpto=INDEXDJX:.DJUSRE;NYSE:URE&cmptzos=-18000;-18000&q=NYSE:SRS&ntsp=0) of DJUSRE, SRS, URE

[aaron]

Thanks.

I did follow Fred's advice and have not done anything since. However, these graphs make it appear the commercial real estate crash is yet to come.

[bart]

I did follow Fred's advice and have not done anything since. However, these graphs make it appear the commercial real estate crash is yet to come.

True, but the stocks have probably priced most of the move in already due to their forward looking nature.

[cjppjc]

SRS seems to be working well so far. I'm not sure if they track residential or commercial more closely, though.

Yes it's working great. See my thread "What's wrong with this picture." I didn't pull the trigger.

[bart]

Charts updated with first quarter data just released today.

[Chris]

Is there a good etf or reit index to short in order to take advantage of the commercial real estate crash that is coming?

you could just wait for the S&P to tank and then short the REITs themselves. SPG has a high level of debt that needs rolling and there are others.

That's not investment advice btw, especially as the guvmint could put their hands in again and postpone the inevitable, but it's one play I'm looking at.