Commercial Foreclosures Are Now Entering the Scene
February 4th, 2009
Till now the problem had been around residential foreclosures but now commercial foreclosures are entering the scene.
In Hennepin County foreclosure of commercial buildings – office complexes, apartments, warehouses etc increased noticeably in 2008. This trend is being mimed across the metro regions and will have a grave negative impact on the budgets of Minnesota cities as well as the counties.
Even up to 2008 the assessors in the metro regions depended on the property value of the commercial buildings to mitigate the financial losses suffered by the residential mortgage crisis. But if commercial units pick up the pace in 2009 then the values of these properties will begin to rapidly fall as well.
The price of residential houses began to decrease following the increase in foreclosures. 4,184 homes had been foreclosed upon in Hennepin County – calculating to a 34% increase. In comparison to this there were 51 commercial foreclosures. But it is an increase by 60% from the previous year of 2007. These units can mean anything from the shop on the street to office towers as well as warehouses. Hence the impact of a single commercial foreclosure is of far greater import than a lone residential house.
The foreclosures on commercial building in Hennepin County increased in 2008 from 16% to 87%.
Slowly but surely the commercial real estate in the Twin City region as well as across American has been reacting to the credit freeze since the last couple of years. Prices of all kind of buildings as well as land targeted for commercial development have tumbled. The investors who had taken loans at the height of the construction boom are now struggling to refinance and are often ending up in foreclosure.
Foreclosures on commercial property have led to vacant office space and land. The numbers will increase, as more business units will shut down. This will decrease the income of the building owners making it difficult for them to meet mortgage commitments.
Hotels in Minneapolis are facing sharp drop in clients because of the recession. People are not travelling as before. The jumbo clients like the corporate sector have cut down on meetings and conferences.
As yet no public agency is keeping track of commercial foreclosures in the Twin City area. Proper classification of the types of building has not been completed also. Hennepin County started on this in the previous year but its data starts only from 2007.
- The Consequences of not Paying Mortgages Can be Grim
- White Plains Foreclosure Case Ruling is Sending out Stern Warnings to Lenders
- Foreclosures are Victimizing Apartment Dwellers
- Fewer Foreclosures Among Low-cost Brooklyn Homes
- What is the Difference Between a Foreclosure and a HUD Home?
- Foreclosures waiting in the sidelines have not surfaced as yet
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