Tuesday, October 19, 2010

Moody's: Commercial Real Estate Prices fall to 2002 Levels

by Calculated Risk on 10/19/2010 12:50:00 PM

Moody's reported today that the Moody’s/REAL All Property Type Aggregate Index declined 3.3% in August. This is a repeat sales measure of commercial real estate prices.

Below 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).

It is important to remember that the number of transactions is very low and there are a large percentage of distressed sales.

  • Commercial real estate prices (as measured by this index) fell over 10% over the last three months.

  • The index is now down 45.1% from the peak in October 2007.

  • The index is at a new cycle low - and these are the lowest prices since 2002.

    HousingWire has more:
    "The commercial real estate market in the U.S. has become trifurcated with prices rising for performing trophy assets located in major markets, falling sharply for distressed assets, and remaining essentially flat for smaller healthy properties," said Nick Levidy, managing director at Moody's.