© Vladimir Voronin – Fotolia.com

Mark Zandi, chief economic analyst for Moody’s, ought to know better than most. Considered to be one of the nation’s leading economic authorities, he points to similarities between today’s “housing renaissance” and previous recoveries since World War II.

“A housing revival is key to any optimism about the broader economy and jobs,” explains Zandi to the Washington Post.

“Now that housing is finally getting its bearings, it will turn from an economic headwind into a tailwind and become a significant source of jobs. There will be more construction jobs, construction-related manufacturing jobs, transportation and distribution jobs, retailing jobs, financial services jobs and a range of service jobs from cable hookups to landscaping. A better housing market is the principal missing link to a better job market.”

That’s a pretty bold statement to make, even with the present signs of optimism all around us, but Zandi argues that driving this is the fact that owning a home hasn’t been so attractive in years, something that will tempt growing numbers of people to do what it takes to buy. While tight credit standards are holding some back (for now), those that can obtain are taking advantage of low housing prices and super-low interest rates. Zandi also points to another factor – increasing rents – that leads many to think that buying makes more sense from a financial perspective.

Young adults feel forced to move back home © Maridav - Fotolia.com

Recent data from the latest U.S. Census showed that young male adults in particular were finding moving back home a more enticing prospect than struggling on their own two feet, with 19% of males between the ages of 25 and 34 living at home. This marks a 5% increase on the number who loved with their parents in 2005. Meanwhile, 10% of women in the same age bracket also live at home, an increase of 8% on 2005.

Moody’s Analytic’s Mark Zandi said that the figures were cutting into the formation of new households significantly, and points out that an estimated 150,000 less households are being formed each year than what is considered to be a healthy number for the economy.

Housing markets are feeling this decline in new household formation, and in some areas this is thought to contribute to the ever decreasing home values, according to a report in CNN Money. The report points out that even the rental market could be doing a lot better if only young adults would rent homes instead of moving back in with their parents.

Lawrence Yun, the chief economist of the NAR said that things would be much brighter overall if these young adults would move out and rent:

“If more young adults were in the market for rentals, rents would rise and higher rents can tip some households [of all ages] into buying homes.”

Grown up child moving back home also has wider implications, reports CNN Money. With children shacking up with mom and dad for longer, those parents are being prevented from downsizing – selling up their current homes and moving into newer retirement homes.

Commerical property delinquencies rise to record 9.88%, say Trepp LLC. Image courtesy of awee_19

All of the ratings agencies have been reevaluating their ratings process and making changes. There is some concern that these changes may have a negative impact across the entire CMBS market, especially in light of the new data indicating that commercial delinquencies are trending upwards.

This data may have influenced a decision of Standard and Poor’s to downgrade a new CMBS offering planned by Goldman Sachs and Citibank. Goldman and Citibank decided to cancel the offering after the downgrade was issued. Moody’s is also reported to be planning a downgrade as well, though it is not clear whether it will target this particular offering or be wider in scope.

Earlier in the year it appeared that the commercial mortgage market might be trending toward a recovery, but now concern is growing over whether commercial borrowers will be able to find financing for mortgages that will be coming due over the next few years. There is a lot of concern that downgrades by Standard and Poor’s or Moody’s will have a negative impact across the entire CMBS market, though for now, the downgrades have been limited in scope.

Shopping malls like this one in Chesterfield County, Richmond, have been particularly hard hit. Image courtesy of barxtux

There is also speculation that the spike in commercial mortgage delinquencies is a by-product of the downward trend in consumer spending. When consumers don’t spend money, small businesses in shopping centers are not able to pay their rent, and many commercial tenants are struggling to generate enough sales to stay in business. This in turn affects the property owners, as it reduces their income from rents, thereby making it more difficult to make mortgage payments on time.

Many shopping centers are owned by smaller investors, rather than large corporations. These small investors do not have large sums of cash on hand to keep up mortgage payments when vacancies in their properties begin to rise. Lots of shopping centers in smaller towns and rural areas have been hard hit by the market downturn, and the decrease in consumer spending has resulted in the loss of tenants.

Smaller shopping center owners are having trouble attracting new tenants, once the vacancies begin to increase. A significant percentage of shopping centers and other types of properties funded by commercial mortgages have been operating well below capacity and lacking tenants for an extended period of time, which may be beginning to put more pressure on cash strapped property owners.