Multifamily Property Prices Show Signs of Decline
- Jul 31, 2008
By Anuradha Kher, Online News EditorNew York–Multifamily property prices, while down 2.3 percent for the March/April period, reported the highest value change at 5.7 percent compared to a year ago, according to Standard and Poor’s April results for the S&P/GRA Commercial Real Estate Indices.“There has been a 5.7 percent gain in multifamily property prices in the entire year, but a 2.3 percent loss in less than two months, which is not a good sign,” David Blitzer, chairman of the Index Committee Standard & Poor’s, tells MHN. “There are increasing concerns about the employment market so apartments are not going to continue to fetch high rents.”Blitzer says while one month does not make a trend, commercial real estate, which so far has sat out the difficulties in the housing sector, will not likely sit it out forever.The indices measure the change in commercial real estate prices by property sector and geographic region in the U.S. The Indices comprise 10 commercial real estate indices, a national composite, five geographic regions and four national property sectors.Nationally, commercial real estate property prices were also up 3.1 percent versus April 2007. The National composite reported an annual price appreciation of 3.1 percent, versus April of 2007, down from the +5.1 percent reported in March’s data, a further deceleration from this cycle’s peak of +14.5 percent reported in June 2006. Three of the regions reported positive monthly returns, while two regions reported negative returns. The National composite was negative, down 0.9 percent in April versus March.“The year-over-year growth in the National price index continues to slow, reflecting concerns about the economy and developments in residential real estate”, explains Blitzer. “The picture is getting very spotty and diverse. Six months ago, everything was going up, now it’s a mixed picture. Different sectors and different regions are beginning to get negatively affected by the slowing economy.”The National Index was down, returning -0.9 percent for the April/March Period. Two of the regions, the Pacific West and Mid Atlantic South, and one of the property sectors, Apartments, were down more than 2 percent over the month. Only the Midwest was up more than 1 percent.