As the owner of C-Loans.com, the largest of the commercial mortgage portals, I sit in a somewhat unique location to observe the commercial real estate loan market. From my point of view, commercial mortgage activity seems to be picking up nicely.
- At Blackburne & Sons, the private money commercial mortgage company, we maintain a board listing all of the loans we have in process. That board seems fuller right now than at any time in the past six years.
- A large number of participating banks reported that they had commercial mortgage loans in process for C-Loans this month.
- Our "big hitters" (former lead buyers who earned their listings on C-Loans by closing at least five loans for us) are reporting a nice number of closed deals for the month.
It makes sense. The housing market has been roaring back over the past year. My oldest son, George IV, is trying to buy his first home in Sacramento; but speculators, paying all cash, are paying 120% of asking price for homes under $200,000. He just can't move fast enough.
It therefore makes sense that banks are becoming more confident about making commercial real estate loans. If residential property is enjoying a bull market, its not hard to see the commercial property market rebounding from its 40% drubbing. My hard money mortgage company lost a $1 million commercial loan to a credit union last month. The credit union made the loan at 4.5%, with no appraisal and no toxic report.
Hopefully this is the start of a commercial loans frenzy, where several hundred new banks will enter the commercial mortgage market and start to make a serious volume of deals. There is six years of fruit that has ripened in the commercial real estate market. A bank would be smart to try to book some commercial real estate loans right now at 5.5%, before competition forces them to drop their commercial loan rates down to 3.75%.