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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Perspective who wrote (237703)2/9/2010 9:16:18 PM
From: John VosillaRead Replies (1) of 306849
 
Over a long period of time land values and costs to construct tend to rise along with rents more than offsetting depreciation, obsolesence and rising operating costs. Of course this last cycle since about 2003 has been like no other.

I do believe the strong survivors will have strong headwinds against them due to rising rates. CRE for sure is not out of the woods yet on many fronts. Cap rates in establishing market value start with a premium to the risk free 10 year rate. So if rates rise 2% that takes cap rates up 2% everything else being equal shrinks the multiple to cash flow a good 15-20%
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