- the source for market opinions


May 23, 2023 | Commercial RE: Mean Reversion in Progress

Robert Campbell

Robert Campbell is a real estate analyst and economist. He's been publishing The Campbell Real Estate Timing Letter since 2002. His book (Timing the Real Estate Market) presents a clearly defined method for predicting the peaks and valleys of real estate cycles.



Of course we do not live in the future, but investors have to be prepared for it. 

Commercial RE prices fell 37% during the last downturn as investor expectations became too high in Sept 2007.

And as is usually the case, when overly optimistic expectations are met with the reality that prices don’t go to the moon and stay there – a reversion to the mean occurs to bring valuations down to more earthly levels.

The above chart from shows that commercial RE prices are currently off 15% from their May 2022 peak. 

Will the same 37% mean reversion  occur during this downturn?

No one can accurately make that prediction because no two cycles are exactly like. 

But from the lofty levels that were reached in May 2022, a -37% (or more) decline would come as no surprise.  That’s the nature of cycles.

But what we do know is that every battle for RE success is won before it’s fought.  

To do that – and whether prices are going up or down – investors have to study history, be prepared for what is likely to happen next, and be more skilled than 90% of your competitors

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the Weekly Recap.

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site


This site uses Akismet to reduce spam. Learn how your comment data is processed.