Tag Archives: S&P

Commercial Real Estate Market compared to Residential (case shiller)

This is a great visualization from calculatedrisk blog.  The commercial real estate market is tracking about 18 months behind residential.  Commercial Property Price Index vs. Case Shiller.  So what my question is:  In order for the Residential Market to recover, we need jobs. The primary purpose of Commercial property is commerce aka Jobs.    So which market will recover first?  Residential or Commercial??   Thoughts?

Also another question comes to mind – had we not interfered with the residential market (government intervention) would the Case Shiller index bottomed out like the CPPI?  Was it really worth it?

CPPI vs. Case Shiller (calculatedrisk blog)


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MN one of few states with S&P’s highest credit rating

Close-up of the head of a Common Loon (Gavia i...

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Well this is Good News!  It was touch and go there for awhile…  The State of Loons keeps it’s credit rating.  The scary part of this is that only 13 out of 50 States have a AAA rating…

Story from Mpls/St Paul Business Journal: 

While the federal government no longer has Standard & Poor’sbizWatch Standard & Poor’s Latest from The Business Journals Up we go; Market closes sharply higherDow rallies 423 points ThursdayHow Florida kept its AAA rating Follow this company AAA rating, Minnesota can brag that it is still one of only 13 states to have the credit rating agency’s highest mark.

There are three major credit-rating agencies: S&P, Moody’s Corp.bizWatch Moody’s Corp. Latest from The Business Journals Moody’s may cut defense contractor ratingsGeorgia among few states with triple AAAsMassHousing bond sale will free up M for new loans Follow this company and Fitch RatingsbizWatch Fitch Ratings Latest from The Business Journals Column: Ohio credit rating boost bucks national trendSMUD bond rating upgraded by FitchSMUD bond rating upgraded Follow this company . While S&P still gives Minnesota’s its highest AAA rating, Fitch lowered its rating for Minnesota last month to AA+, while Moody’s has had a AA+ rating on the state since 2003, though it changed its outlook for Minnesota debt to “negative”. Both the Fitch and Moody changes came in reaction to the Minnesota state government shutdown and the final deal, which relies on the use of tobacco bonds.  READ MORE

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NAR Chief Economist talks impact of S&P Downgrade of Federal Debt

National Association of Realtors Chief Economist, Lawrence Yun speaks on the topic of S&P Downgrade of Federal Debt.

* unfortunately he has not commented yet on the Downgrade of Fannie and Freddie *

The impact on your wallet of the Standard & Poor’s downgrade of the nation’s credit rating is similar to what would happen if your own credit score declined: The cost of borrowing money is likely to go up,” the Washington Post explained in the aftermath of S&P’s decision. 

S&P downgraded the U.S.’s top-notch AAA credit rating for the first time in history, moving it down one notch to AA+; the rating reflects a downgrade in S&P’s confidence in the U.S. government’s ability to repay its debts over time. It’s not clear, however, whether S&P’s downgrade will instantly effect rates, analysts say.

The 10-year Treasury note is considered the basis for all other interest rates. And “the downgrade could increase the yields on those bonds, forcing the government to spend more to borrow the same amount of money,” the Washington Post article notes. “Many consumer loans, such as mortgages, are linked to the yield on Treasurys and therefore would also rise.”

Mark Vitner, senior economist at Wells Fargo Securities, told the Associated Press that he doesn’t expect the downgrade to drive up interest rates instantly since the economy is still weak and borrowers aren’t competing for money and driving rates higher. However, he expects in three to five years, loan demand will be much higher and then the downgraded credit rating might cause rates to rise.

Analysts are still waiting to see if the other rating agencies, Moody’s and Fitch, follows S&P’s lead in its downgrade of the U.S. credit rating. If so, the aftermath could be much worse, analysts say.

As insane as this seems, I think he is right.  We will likely see a small drop in mortgage rates for the short term.  The long term we will likely see increasing interest rates as a result of this.

The wildcard is going to be the fallout from the downgrade of Fannie Mae & Freddie Mac.


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