We’ve all been hearing and reading “gloom and doom” from the media.
But we know from history that turning points come while the masses are still moaning about how bad things are.
So are we at a turning point? Are we close enough to jump back into the market?
Here are a few facts investors can consider in refining their commercial real estate investment strategies on either the buy or sell side:
- The deleveraging process will take more time as we work through the process of restoring sanity to private and corporate finances. We’ve lived through a period of very high leverage which must be unwound. Habits and attitudes must change as investors take a more realistic view on risk, increase savings and reduce spending.
- Yes, there are economic “green shoots” being seen this spring. Witness the stock market rally and an upturn in existing single-family residential (SFR) real estate sales in February. Consumer Confidence rose slightly from March to April, according to the Conference Board. SFR affordability has reached a multi-year high due to collapsed prices and interest rates at their lowest levels since about 1971. The “transition point” (the inflection point at which prices fall slower than they had been) seems to have occurred in the SFR market, so there is evidence that SFR prices will find a bottom soon. Prices are typically at early-2004 levels or lower.