Adjustments in Pricing Lag a Decline in Property Values
Valuation experts are still struggling to get a handle on current market conditions.
September 21, 2020 | Beth Mattson-Teig | National Real Estate Investor
One thing that buyers and sellers can agree on these days is that there has been a reset in property values across many sectors and geographic markets. Yet the sticking point that continues to stall transactions is determining exactly how much of a discount should be applied.
Pricing is relatively transparent when the market is gliding along with stable conditions, which makes it which makes it easy to gauge values. “The disconnect right now is that values have fallen much faster than pricing, but we’re not observing it yet because there has been a huge falloff in transaction volume,” says Anthony M. Graziano, MAI, CRE, chief executive officer at Integra Realty Resources (IRR).
Industry pricing indices have held up so far, but experts caution that is a reflection of many pre-COVID-19 deals getting completed along with some stabilized assets changing hands. They expect those indices to move more dramatically once lower-quality and distressed assets start trading.
