Are we nearing a peak in RE Values?
[{"id": "cx547lw", "text": "Maybe", "replies": [], "depth": 1}, {"id": "cx5514b", "text": "I think a few years down the road, we're in for a sizable downward correction. I think the interest rates play an indirect role in that. The seekingalpha article cited in the featured article does a good job of showing how cap rates have continued to compress through environments of both interest rate growth and interest rate decrease. Its conclusion, correctly, is that investors have just settled for a lower risk premium. In other words, investors settle for making less, and therefore continue to buy at higher prices. What that article doesn't address is that as the risk premium spread shrinks, many investors will take notice that real estate no longer yields as attractive of returns. All the sudden their capital goes elsewhere and the demand for these buildings drops. That drop in demand will coincide with a drop in prices. The question is when will that point occur. Due to the long history of that risk premium gap tightening, we have got to be getting to the point where capital looks elsewhere. I think interest rates will tip us over that edge.", "replies": [], "depth": 1}, {"id": "cx6tsgb", "text": "Probably one more year of mixed to positive growth", "replies": [], "depth": 1}]