CMBS Crisis: 11.7% Default Rate
Commercial mortgage-backed securities are hitting historic distress levels, with office building loan defaults reaching 11.7%—worse than even the 2008 financial crisis peak.
This commercial real estate crisis is part of a broader housing market under pressure, as residential mortgage delinquencies have climbed steadily from 0.89% to 1.27% over the past two years.
Meanwhile, regular home buyers have stayed on the sidelines for three years, waiting for better prices and lower rates that haven’t materialized.
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Office CMBS Delinquency Rate Spikes to Record 11.7%, Much Worse than Financial Crisis Peak. Multifamily Delinquencies also Spike
The delinquency rate of office mortgages that have been securitized into commercial mortgage-backed securities (CMBS) spiked to 11.7% in August, the worst ever, a full percentage point above even the peak meltdown rate of the Financial Crisis (10.7%).
Top 10 Metros with the Highest Zombie Foreclosure Rates in Q3 2025
The top 10 metros with the highest zombie foreclosure rates include: Wichita, KS (12.7% of properties in the foreclosure process are vacant); Peoria, IL (12.3%); Youngstown, OH (10.1%); Cleveland, OH (9.5%); Toledo, OH (8.8%) and Indianapolis, IN (8.6%).
Rising Payment-to-Income Ratios Flagged as Early Warning for Mortgage Delinquencies
Serious consumer-level delinquency rates (60+ DPD) for mortgage loans have progressively increased from 0.89% in Q2 2023 to 1.14% in Q2 2024 and 1.27% in Q2 2025. Payment-to-income (PTI) ratios and mortgage delinquency are directly correlated.
Mortgage Rates Tick Up, Demand in Deep Freeze, Supply Surges
This buyers’ strike, which started in mid-2022, has now completed its third year. They’re waiting for prices to come down, they’re waiting for their household incomes to rise, and they’re waiting for rates to come down.
With Buyers Sidelined, Affordable Listings Climb to Highest Level Since 2022
The most buyer-friendly markets can be found across the Sun Belt. Compared to a year ago, the share of affordable listings has grown the most in Austin (+7.9 percentage points), Phoenix (+6 percentage points) and Orlando (+4.9 percentage points).
Pending home sales tick lower in July as canceled contracts spike
The monthly pending home sales index from the National Association of Realtors dropped 0.4% in July from June, but was still 0.7% higher from July of last year.
