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Commercial property values have started to fall

On Behalf of | Dec 8, 2022 | Risk Management

Along with residential property values, commercial property values have climbed in recent years. For some, this may have been a dramatic increase in value. But it does appear that things are beginning to change.

For example, a report that came out just last month showed that property values had fallen 13%. It was noted that there had not been a bigger drop than this during the entire global financial crisis. It will be very interesting to see if it predicts future declines in the months and years to come, or if property values will recover.

Why are they falling?

As is usually the case, there are numerous reasons why property values are falling. One is that interest rates have been rising, which tends to make property less affordable, and that takes people out of the market. For those who remain, this can reduce the value of the other properties because demand is lower.

Additionally, those who may have invested could be facing financial constraints. It is unclear if the United States is going to enter a full-blown recession, but there are certainly business owners who have encountered reductions in income and who may be concerned about the future. Additionally, many workers have been laid off and may simply be looking for new jobs, rather than buying commercial properties and intentionally leaving to start their own businesses. 

Is this a good time to buy? 

As a result, if you’re looking to invest in commercial properties, it may be worth watching this decline carefully. This could be a prime time to buy property as the values fall, anticipating a return to form in the future. Be sure you know exactly what steps you’ll need to take.