C
ommercial real estate foreclosures surged in September, with a 48% year-over-year increase, according to ATTOM data. This marks the second consecutive month of rising foreclosures, following a sharp spike starting in June 2023. The recent surge suggests renewed financial stress or changes in commercial real estate dynamics.

    California saw the largest year-over-year increase in commercial foreclosures, with a 238% jump from the same time last year. New York and Florida also experienced significant increases, with foreclosures rising 48% and 49%, respectively.

    The delinquency rate for commercial mortgages rose slightly in the third quarter, with more loans becoming 60-90 days late or at least 90 days late. Meanwhile, outstanding loan balances that were less than 30 days late fell but remained elevated.

    Commercial real estate prices dropped 9% year-over-year in the first quarter, according to International Monetary Fund data. Experts warn of further distress for commercial real estate, particularly in the office segment, as demand has fallen since the pandemic and debt continues to mature. Some predict a wave of forced sales and defaults, while others see a rebound coming for the market.