Real estate prices on U.S. commercial properties dropped 4 percent in June, according to data released by ""Moody's Investors Service"":http://www.moodys.com Thursday.[IMAGE]
The decline followed two months of price increases, illustrating that ""performance remains choppy"" in the commercial real estate sector, the New York-based ratings agency said. In the first half of 2010 the index has risen in three months and fallen in the other three.
The Moody's/REAL Commercial Property Price Indices (CPPI) is now 41.4 percent below the peak that was recorded in October 2007, after the June price drop. But[COLUMN_BREAK]
commercial values have bounced back from this cycle's trough. Moody's says the June reading is 4.2 percent above the recession low that occurred in October 2009.
The dollar volume of repeat sales transactions, on which the CPPI is based, has increased significantly over the course of the second quarter, though. In April of this year total dollar volume was $800 million. It rose to $1.5 billion in May and $2.1 billion as of the end of June.
""The increase in dollar volume in each of the past two months, taken together with this month's 43 percent increase in the number of repeat sale transactions, may be an early indication that buyers and sellers are starting to agree on market-clearing prices,"" said Moody's Managing Director Nick Levidy.
According to Levidy, if buyers and sellers are in fact coming to terms on pricing, the commercial sector can expect transaction volumes to rise steadily and price volatility to ebb in the months to come.
Moody's latest report also includes quarter-to-quarter price comparisons for each of the four national property types. In the second quarter, prices for apartment and office properties increased by 4 percent and 3.9 percent, respectively. Retail and industrial properties, though, weren't as fortunate. Retail prices dropped 10.9 percent, while industrial prices declined 2.9 percent.