Friday, August 14, 2009

SF Fed Branch Issues Report on Commercial Real Estate

The San Francisco Federal Reserve branch issued a new report on residential and commercial markets. The message is "There are some positive signs in housing markets, although pressures on homeowners will not abate for some time. CRE is further from a bottom than housing. Income property markets are starting to struggle from the weak economy, pressures on rents & steep value declines. The CMM model suggests rising loss rates over the next several years for longer-maturing loans, but also predicts loss rates should remain relatively moderate. Refinance risk of maturing CRE loans, on the other hand, remains high. Unless the economy and credit markets recover more quickly than expected, CRE credit losses on some of these loans could become significant."

I am including a link to the report for all to see.

July CPI Numbers Released

The CPI numbers for July have been released and the year over year continues to show a decrease. For July it was 2.6% for the Los Angeles-Riverside-Orange County MSA that covers Santa Barbara. The month to month numbers from June to July show a slight increase and that continues the trend starting in April.

Investors who have been worried about possible inflation should remain comfortable for the time being. Even though the economy appears to be stabilising there haven't been enough indicators to make the Fed adjust rates and the markets haven't seen a lot of price pressure. This bodes well for the remainder of the year but at some point we will have to see the Fed make the decision to begin raising rates in order to stave off a fast rise in prices as the markets turn around in 2010.