Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).
In Floyd Norris’ column this weekend titled Like Subprime Mortgages, Some Construction Loans Are Delinquent he observes that a profitable income source for banks is now starting to show strain as more of these loans become non-performing.
Figures compiled by the Federal Deposit Insurance Corporation and released last week show that both midsize and small banks had construction loans outstanding that were greater than their total capital. A decade ago, such loans were equal to only a third of capital for those banks.
In other words, the optimism fueled by easy credit was also found in the funding of construction.
Such problems are not spread evenly across all banks, of course. “When you look at the regional impact, the areas that were the booming condominium markets, like South Florida, have shown a surge in delinquency rates”