Total Real Estate Lending Contracts!

As a further indication that we are currently experiencing reasonably unprecedented economic trends, the total of all real estate loans for all commercial banks has just registered its first nominal annual decline on record.

This is particularly notable given that the series stretches all the way back to 1947 and thus captures a host of trying economic times including eleven separate recessions.

October 2009 registered a 1.70% annual decline followed by a tepid 0.06% increase in November and then a 0.38% decline in December bringing the total real estate loans held by commercial banks to just over $3.80 trillion.

The following chart (click for full-screen dynamic version) plots real estate loans at all commercial banks since 1947 along with the annual percent change of real estate loans. The light yellow bands indicate U.S. recessions.

Aside from reduced demand, if you want to know what might be keeping banks on the sidelines tightfisted and unwilling to lend take a look at the following chart (click for full-screen dynamic version) that plots nonperforming total loans for all commercial banks.

Notice that as of Q3 2009 the nonperforming loan ratio reached 5.03%, the highest percentage of delinquent or nonaccrual loans to total loans seen in at least twenty years.