A few economists have likened the commercial real estate market of the 2000s to the housing cycle. In fact, the commercial and housing markets were fundamentally different.
As recently as last week Paul Krugman had claimed that the commercial real estate market followed a “bubble” much like that of the housing market, and thereby concluded that the housing bubble could not be blamed on anything unique to the housing sector.
Mr. Krugman observed that real estate prices went up, and then came down, in both the residential and nonresidential sectors. For example, he has presented the chart below comparing the Case-Shiller index for housing prices with a commercial real estate price index from Moody’s.
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Source: The New York Times
By CASEY B. MULLIGAN
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