Ideally,
when you sell your commercial property, you want to
do so at the
peak of the market, when property values are at
their highest
levels. The problem with this is that so many
people mis-time the
market, not observing it objectively,
and then years down the
road when looking into the rearview
mirror, the timing in
retrospect then seems more obvious to
them.
So in keeping this in mind, let’s take a look at how our real estate markets have performed nationally over the past 40-50 years or so. What we’ve generally observed is a runup of solid activity and property appreciation for specific periods of time, followed by a transitional cooling off period, then followed by an economic downturn. Then during the economic downturns, vacancy rates on commercial properties have risen, and property values have gone down.
In addition, as the lenders have become more concerned during these transitions, they then tend to tighten their lending criteria, requiring larger down payments, and raising their interest rates, too. This in itself then tends to exacerbate the situation, causing buyers to now demand lower prices, in order to compensate for these changes that have now taken place.
So in putting this together, we haven’t seen within the past 40-50 years or so a time when we’ve first had a solid real estate market, followed by a transitional cooling off period, where the market hasn’t then experienced an economic downturn first before emerging once again into a solid, robust commercial real estate market.
With this in mind, with what we’re now experiencing with the less frenetic pace of activity in most commercial real estate markets nationally, what do you believe we’re now more likely to experience next based upon our history? Will we be more likely to experience a resurgence and a heightened, increased level of activity within the real estate market? Or will we be more likely to experience a continued transition and more cooling off, leading into an economic downturn? Because if we’re moving towards an economic downturn, then now would be the best time for you to sell for years to come.
However, if you’re someone who intends to hold onto your property through any economic downturn, then now isn’t the time for you to sell. But if you’re someone who would like to sell before the next economic downturn hits us, while prices are still solid and good financing is still available for your buyers, then now may be the best time for you to sell.
So if you’d like more information on this, or if you’d like to discuss what your property would sell for right now in today’s market, give me a call.
