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Market Bottom or Year End Bump? February 25, 2010

Posted by Erik Swanson in Articles, Research/Data, Sale.
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Recently when the Moody’s/REAL All Commercial Property Price Indices, which track values, measured a 4.1% increase in December, we were surprised to hear some say that this was an indication of a market turn around.

CRE sales here in the Northwest are still few and far between and the picture isn’t clear. There’s plenty of indicators pointing to possible further decline.  For buyers and sellers the bid/ask gap remains and with few sales it’s difficult to determine where CAP rates sit. Furthermore, in the absence of credit many private sector investors remain reluctant to part with cash and continue to squirrel away dollars that if deployed could help revitalize the CRE market. Meanwhile, banks still work to extend loans that are covering their debt service but that are technically underwater,  further postponing the inevitable write-downs and market cleansing that seemingly has to occur before we can say we’ve hit bottom.

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