Recession Rising Like Phoenix With Property Delinquencies Surging Fivefold

[Purveyor]

By Brian Louis

Oct. 1 (Bloomberg) -- Drive up to the Peaks Corporate Park in north Scottsdale, Arizona, and the only person you’ll encounter at the luxury office complex is a security guard.

The development was planned to offer executive suites with views of the McDowell mountains, neighbors such as General Electric Co. and a location just minutes away from Jack Nicklaus’s Desert Mountain golf courses. Plans to lure tenants haven’t materialized and today the complex in this city next to Phoenix is empty, the entrance blocked by a traffic barricade.

Delinquencies in the Phoenix area on loans backed by office, industrial, retail and apartment properties have risen more than five-fold since March, according to data compiled by Bloomberg. The Phoenix region has the second-worst U.S. delinquency rate, behind Detroit’s 10 percent. In Phoenix, the economic recovery looks a lot like a recession.

“A commercial recovery in markets that are heavily dependent on construction will be slow, which means the overall recovery will lag the nation as a whole,” said Susan Wachter, a real estate professor at the University of Pennsylvania’s Wharton School in Philadelphia. “These are more volatile markets and getting back to normal could take years.”

Phoenix and other southern and western cities such as Atlanta, Houston and Dallas grew because they offered an affordable lifestyle to middle-class Americans, said Edward Glaeser, an economics professor at Harvard University in Cambridge, Massachusetts. That growth has slowed.

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BLOOMBERG: http://www.bloomberg.com/apps/news?pid=20601109&sid=ak__6D.HTBQM

[Subdivisions]

1. That this was coming is old, old news for anyone who's been paying attention. A second

wave of foreclosures is upon us and the commercial real estate and credit card markets have yet to crash, but they surely will.

The entire banking system is insolvent.

[marew]

2. My ex, not the sharpest knife in the drawer, bought four central Florida

condos minimum down at the height of the bubble. All four are in foreclosure. He gambled and lost big time.

[aint_no_life_nowhere]

3. Has our Congress acted yet to regulate the banking and securities industries?

If so, what? Are mortgages continuing to be bundled, sold, and backed by highly leveraged and dubious instruments?