The commercial real estate market is getting better. What we’ve sensed was happening has numbers to prove our thinking. There are two very insightful charts by SNL Financial that show the slow but steady decline in delinquency rates over time on commercial real estate loans.
U.S. commercial banks reported a delinquency rate of 5.28% on CRE loans compared to a high of 10.76% nine quarters ago. Oregon has fared even better with a delinquency rate of only 3.04% on CRE loans.
The asset quality of CRE loans has been improving at a faster pace than one-to-four-unit plexes (considered residential). However, residential loan delinquencies have also declined by about 200 basis points to 12.66% as of the end of the 2nd quarter of this year.
Looking at delinquency rates by state shows that the Northeast, the Plains states, Alaska and Hawaii have fared the best, while the Southeast and the state of Nevada have the highest overall delinquency rates.
Source: CRE delinquencies continue to plummet; by Harish Mali and Robert Clark, SNL Financial, August 29, 2012