The Arizona real estate market is sending out mixed messages to international investors considering buying property in the region. The market reports an increase in sales in the condo resale sector whilst at the same time a bank that has expanding into the area records big losses due to the slump in real estate sales.
Despite a troubled housing market in the United States, the low price (< $200,000) condominiums in the Arizona southeast Valley is keeping sales strong. According to data compiled by Arizona State University, resale condos are going quicker than resold single-family homes, and a 40% increase in sales for resold housing was seen in February, up 21% from this time last year
The Milwaukee-based parent company of Marshall & Ilsley Corp continues to take a pounding from its real estate investments, announcing today that its first quarter net income dropped 32.5 percent to $146.2 million from $216.8 million in the same period a year ago. M&I Bank reported quarterly per share net income of 56 cents, down from 83 cents a year earlier.
“The continued stress on M&I’s construction and development portfolio led to further elevated charge-offs and provisions. M&I posted first quarter net charge-offs of $131 million and a loan loss provision of $146 million,” the company said in statement.
Speaking to a conference call with analysts this morning, Greg Smith, chief financial officer, said the company’s quarterly results reflect the “challenging” environment faced by the banking industry today. He said the company expects to continue to see “nonperforming loans” escalate in the commercial and residential real estate markets.
M&I is incurring real estate losses in its Arizona and Florida markets, where the company has been expanding in recent years. Those markets also were among the most distressed in the bursting housing bubble.
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