Moody’s Investors Service reported that recent improvements in the apartment market have leveled off, continuing a trend of weak performance as property prices fell 0.6 percent in April from the previous month, National Mortgage News reported June 20.
Moody’s tracks prices through its Real Capital Analytics Commercial Property Price Index, which measures value changes based on repeat sales.
According to April’s RCA CPPI, declines were due to an unexpected downturn in prices for apartment buildings, a market sector that had been recovering since commercial real estate prices hit bottom in late 2009, National Mortgage News reported.
Retail and industrial properties, however, continued to show slow improvements in April, while properties in major markets such as Boston, Chicago, Los Angeles, New York, San Francisco and Washington, D.C., have recovered to 91 percent of their peak levels. Prices in non-major markets, however, continued to decline despite improvements in performing property sale prices.
“Property price increases over the past year have been driven by major markets,” Barclays’ analyst Keerthi Raghavan told National Mortgage News. “These markets are already at fairly high levels and price increases here have slowed down.”
The index also showed that recovery for distressed properties in major markets has continued alongside performing properties over the past 18 months, National Mortgage News reported. As a result, the average distressed discount was reduced from 32 percent in mid-2011 to 22 percent this year.