My Investing Muse

  News about Negative Equity (US homeowners) Source:  https://www.dailymail.co.uk/news/article-12275733/US-homeowners-lost-108-4-BILLION-home-equity-year.html Inside the negative equity timebomb: US homeowners lost $108.4 BILLION in equity this year - leaving more than 200,000 at risk of going 'underwater' if property prices fall another 5% Average US homeowner saw home equity drop of $5,400 in first quarter of 2023 Realtors say they are now seeing more homeowners in negative equity  It comes after mortgage rates reached an eight-month high of 6.81 percent   U.S. home equity changes year over year, Q2 2023 From CoreLogic’s 8 Sep 2023  report : In the second quarter of 2023, the total number of mortgaged residential properties with negative equity decreased by 6% from the first quarter of 2023 , representing 1.1 million homes, or 2% of all mortgaged properties. On a year-over-year basis, negative equity rose by 4% to 1.1 million homes, or 1.9% of all mortgag...

The smaller banks carry a bigger Commercial real estate (CRE) burden. Is the risk with only the smaller banks or is this a bigger concern across the banking & financial industry? This is a recent  extract  from Factset. A tale of two bank industries. Banks hold the majority of CRE mortgages by volume, with 61% of total CRE debt residing on their balance sheets (excluding multifamily). Within the industry, however, there is a dichotomy between large and small banks. As shown in Figure 15, CRE accounts for 24% of total industry loans outstanding, but CRE represents just 13% of total loans at large banks, while accounting for 44% at small banks. Figure 16 shows this at the individual bank level; the list of banks with the highest CRE/Total Loans ratios is dominated by small- and mid-sized banks.   As per the above, the smaller banks have a much higher exposure to CRE compared to the large banks like JP Morgan, Citibank, Bank of America & Wells Fargo (which I refer to...