Could it be that California’s banks are healing? According to a recent study by the California Bankers Association, the answer is yes. The California economy appears to be improving! This is good news for Orange County home buyers and sellers, as healthy banks lead to more lending at good rates.
In the third quarter of 2011, the loan volumes of California-based banks who have to date survived the Great Recession was up by over 8% since lending hit bottom in 2010 Q1. Additionally, tier 1 capital-to-asset ratios reached 13% by 2011 Q3, which was actually higher than during the housing bubble and above the 11% national average — another sign of improvement as this ratio indicates the extent to which banks can withstand unforeseen loan losses.
Naturally, some divisions of California-based lending are doing better than others. Commercial and Industrial loans are at the top of the pack, increasing 15% since the bottom. While on a year-over-year basis, real estate lending was down overall (mostly led by substantial declines in construction and land development lending and loans to individuals), multi-family lending was up by over 9%.
Perhaps the most compelling statistic is that overall delinquencies in the California banks has dropped smartly. Delinquencies on total loans dropped to 1.18% in 2011 Q3 from 1.74% the year before. Commercial real estate delinquencies in 2011 Q3 dropped from 1.4% in 2010 to 1.1%. Furthermore, delinquencies for multi-family real estate declined from 2.5% to 1.8% during the same time period. Even delinquency rates for individuals dropped slightly, from 2.62% in 2010 Q3 to 2.33% in 2011 Q3.
At the Marquis Group, we will continue to track signs of an improving Orange County real estate market and bring you information that you need when making your buying or selling decisions.
For more Orange County real estate news and happenings, follow Cheryl on Twitter @CherylSellsOC!
