Declining Commercial Prices Mark Good Investment Opportunities

All successful real estate investors strive to “buy low and sell high.” This mentality means that someone needs to purchase real estate when the market is low, holding onto the investment until the market increases, which allows investors to sell for a profit. The sign of any successful financial company is the goal to make a substantial profit.

With interest rates continuing to rise since the tide turned in May, commercial property prices have decreased by approximately 1-percent. This decrease is largely due in part to the costs involved in financing complicated commercial transactions.

With 4-percent gains since August 2007, the Green Street Commercial property Price Index reports that even though the real estate market has declined over the past six years, property values overall have steadily increased since 2012. However, with interest rates increasing, experts predict that the commercial real estate market will experience a delayed recovery.

With investors anticipating that the Federal Reserve may soon announce plans to scale back and decrease the stimulus’ economy injection, which was designed to fuel further economic recovery, experts predict that interest rates will continue to rise over the next several years.

The Federal Reserve is currently purchasing $45 billion in Treasuries and $40 billion in mortgage debt each month, with $5.75 billion in Treasuries set to mature between May 2018 and April 2019.

Financial experts predict that commercial real estate property values will likely remain consistent, or just slightly decline. These numbers relate directly to employment rates’ increasing, which boosts rent occupancy.

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