Categorized | Commercial

United States Commercial Real Estate Experiences Gains

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Despite many reports reporting an anticipated decline in the United States commercial real estate market, prices increased for the fourth straight month. According to Moody’s, which may be the biggest real estate index, prices rose just over two percent in August when compared to July. The increase put the market up more than seven percent from a year earlier.

With the number of commercial foreclosures and short sales significantly reduced, prices were able to increase despite the down market. While the news of a fourth straight increase is good for investors, there is some uncertainty with respect to the coming months. Moody’s Index sees the most recent price gains leveling off, or possibly even declining in the next report. Part of the reasoning comes from additional reports that indicate that a serious decline in sales that took place during the third quarter.

One of the reasons why commercial property sales have declined is that investors are being very cautious in the current market. With the job market a constant uncertainty, and the economic outlook remaining bleak, most investors are opting to avoid the risks associated with commercial property.

Investors have good reason to be cautious about the current state of the market, as another real estate index showed a decline in the sales of commercial property. A third report showed no change in values from the previous month.

While the latest news from Moody’s is certainly welcoming and positive, it may be short-lived unless the economic situation improves. There have been very few indications that the trend of increases will continue, and in reality, the overall market may once again decline if recent sales do not start to improve

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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