Elgin Area Chamber Of Commerce: Commercial Property Price Growth Slowed In January After Robust 2021

Press release from the Elgin Area Chamber of Commerce:

February 28, 2022

The rapid rise in commercial property prices late last year lost pace in January in what is typically a slower period for sales, according to the latest CoStar data.

Transaction volume fell to its lowest level in eight months, according to the CoStar Commercial Repeat Sale Indices.

CoStar monitors repeat sales when a property is sold more than once, with the difference in prices used to create an index that tracks movement in what investors are paying. The volume of such sales tends to be a broad measure of pricing trends across property types and U.S. geographic regions.

Growth of repeat sales prices slowed through January, but buyer demand continued to keep property values rising.

“The average time on the market for for-sale properties fell by 2.4% over the 12-month period that ended in January,” said Christine Cooper, chief U.S. economist for CoStar and lead author of the repeat-sales data report. “This is the fifth month of declines and the lowest level since June of 2020.”

Meanwhile, the share of properties withdrawn from the market by discouraged sellers fell by 4.4 percentage points, according to Cooper.

“The combination of these indicators suggest that buyers and sellers are reaching, and concluding, deals more quickly,” she said.

The more numerous but lower-priced property sales typical of secondary and tertiary markets posted the strongest gains in January. These sales tabulated in the equal-weighted U.S. composite index, advanced by 1.3%, a slowdown from December’s gain of 2%. This index is up by 17.7% for the 12 months that ended in January and is now 24.8% higher than its pre-COVID value.

Larger-dollar property sales common in major core markets recorded lower gains in January. These sales, tabulated in the value-weighted U.S. composite index, rose just by 0.6%, compared to its 1.7% gain in December. The index is up 18.1% in the 12 months that ended in January and is now 27.8% higher than in February 2020, before the onset of the COVID-19 pandemic.

Distressed sales as a percentage of all pair counts fell to 1.2%, its lowest level on record going back to January 2008.

“This was largely due to the fall in the share of investment-grade distressed sales but suggests that the market may have been less liquid given the slim transaction volume overall,” Cooper said.

The latest indices are based on 1,469 sale pairs in January and more than 264,069 repeat sales since 1996.

Source: www.CoStar.com

This press release was produced by the Elgin Area Chamber of Commerce. The views expressed here are the author’s own.