Monday, December 21, 2009

Moody's: CRE Prices Off 1.5% in October

by Bill McBride on 12/21/2009 12:23:00 PM

From Bloomberg: U.S. Commercial Real Estate Index Falls 1.5%

The Moody’s/REAL Commercial Property Price Indices fell 1.5 percent in October from September, according to data compiled by Bloomberg. Prices fell 36 percent from a year ago and are 44 percent below the peak in October 2007.
Here is a comparison of the Moodys/REAL Commercial Property Price Index (CPPI) and the Case-Shiller composite 20 index.

Notes: Beware of the "Real" in the title - this index is not inflation adjusted. Moody's CRE price index is a repeat sales index like Case-Shiller - but there are far fewer commercial sales - and that can impact prices.

CRE and Residential Price indexes Click on graph for larger image in new window.

CRE prices only go back to December 2000.

The Case-Shiller Composite 20 residential index is in blue (with Dec 2000 set to 1.0 to line up the indexes).

CRE prices peaked in late 2007 and have fallen 44% from the peak and are now back to September 2002 levels. The pace of the price declines has slowed.

Notices that CRE trails residential (this is usually true for activity, but also for prices here), and that CRE prices fall quicker than residential (residential prices tend to be sticky).