Last week’s update of the Moody’s/REAL Commercial Property Price Index (CPPI) measured a 3.1% decline in the national index of property prices. Following drops in both June and July, the index is now just 1% above its cyclical low. As note by MIT Professor David Geltner in his related commentary, the headline numbers mask lower price points for distressed asset sales. Similarly, prices for prized core assets in a handful of leading metros have registered robust improvements. Isolating New York, Washington DC, Boston, Chicago, San Francisco, and Los Angeles, the index climbed by 8% in July. Since touching bottom, the index for these six metros is up 19% , in clear contrast with the broader trend. Prices in these metros are supported by investor interest but also by healthier credit conditions supporting transaction activity and by scale in support of price discovery.

The Contribution of Distress to Price Indices

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