Traverse City Market Up Date

Market update for October 31, 2010

This week saw an increase in activity with declining inventory levels.

Another indicator of market confidence is in the investment real estate sector. I reviewed the market activity of commercial properties in the TAAR MLS system from 1/1/2010 to 10/31/2010. This would be both owner occupied commercial real estate and investor owned commercial real estate, not including lease activity. There are currently 606 active listings; there have been 56 sales with a value range of 12,000 to $649,290. The mean value was $157,954 the median value was $130,875 with only 4 sales over $500,000 reported this year in the entire MLS for commercial properties. At the current rate of market absorption at 4.7 sales per month and 606 listings there is a 128 year supply of inventory. Lease rates have fallen 30-50% depending upon location for office tenants. I believe values have also fallen 30-50%, thus the lack of market sales.  I say all this not to spew doom and gloom, quite the contrary. There is always opportunity in adversity and commercial real estate will likely over correct in value by going too low creating a big opportunity for buyers. The table seems to be set for rising interest rates which will lead to rising rental rates and rising values of commercial real estate. Buyers who get in near the bottom of the S curve will be rewarded handsomely. All commodities have economic cycles of being over value then under valued then over valued again, buy low sell high, well I can see the opportunity coming in investment real estate.

This report is compliments of SetPoint Property Tax Consultants in Traverse City Michigan