Largest Monthly U.S. CRE Decline ….
By: Myles, July 22nd, 2008
As we have said on many occassions, commercial real estate is a lagging economic indicator. We have seen the strain in other areas like residential property (sub-prime crisis), rising food and gas prices, and a tightening of consumer finance options (Home Equity Lines Of Credit (HELOC), Credit Card Defaults, etc.).
Now the tail is finally starting to wag the dog (as we indicated in our recent Blog post — What the Fed Did NOT Say : US commercial real estate prices have registered their largest monthly decline since the inception of the Moody’s/
Moody’s said the Index stood at 174.97 in May 2008, down 3.5% from the previous month, and 5.7% below the same period last year. This represents three consecutive months of negative returns, and the largest one-month drop since the inception of the index.
Nonetheless, the CPPI still logs an increase of 3.9% over a two-year time period.The index now stands 8.8% below the peak in October 2007. Moody’s also noted that the average transaction price is steadily falling as transaction activity continues to shift to lower priced assets.
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