Investment property prices will fall much further

Implications: This article has the tenor of many articles written about the housing industry in say 2004. The initial tremors in the market are dismissed as a minor and temporary event to be followed by a steady rise thereafter.

Analysis:

I am a doubter of this point of view. My outlook is that energy costs, insurance premiums and real estate/real estate substitute taxes will overcome gains in incomes. Further, I think we are in for a period of interest rates 25% or more higher than the current market. Equity yields demanded will provide for positive leverage in tomorrow’s market. All of this portends tomorrow’s major readjustment of prices across the commercial real estate board is my forecast.