by Calculated Risk on 1/12/2009 03:55:00 PM

From Dow Jones: Apartment-Complex Developers Falling Behind On Loan Payments (hat tip Robert)

The rapid reversal of fortunes in commercial real estate is taking down yet another sector: multifamily housing.
...
While sharp declines in retail and office sectors of commercial real estate have commanded attention in recent months, some analysts say deterioration in the multifamily sector is quickly catching up. ... Much of the multifamily sector's problems center around troubles in converting apartments to condominiums, as is the case in Miami, or the challenges in converting rent-controlled units to market-rate apartments, as in Manhattan.

In Florida, California, Arizona and Nevada, the flood of unsold condominiums is entering the apartment market and the excess supply is lowering rents in those areas, Barclays Capital analysts say. That's resulted in lower revenues for owners, which in some cases is making it more difficult to keep up with mortgage payments.
...
In November, the delinquency rate on securitized loans to apartment and condominium properties rose to 1.9%, a dramatic jump from the 0.9% at the start of the year, according to Realpoint LLC ...

This is a great follow up to my post last Friday: The Residential Rental Market. I noted that despite the increase in demand for rentals, rents are now falling because of the rapid increase in supply due to condo "reconversions", builders changing the intent of new construction (started as condos but became rentals), and other reasons. And falling rents means rising delinquencies for properties purchased with overly optimistic pro forma projections.