A recent column in National Real Estate Investor posed an excellent question: “Is the Gap Between Residential and Commercial Values Structural or Cyclical?” Victor Calanog, the columnist, points out that usually, the values of residential and commercial properties tend to mirror each other. But lately, commercial real estate is showing signs of improvement, albeit slow, while home prices have stayed extremely low. According to Canalog, the head of research and economics for New York-based research firm Reis:

bStandard theory from urban economics suggests that the same basic forces influence demand for both housing and commercial real estate, according to seminal papers written by economists Sherwin Rosen and Jennifer Robackb&.b

But recently, the values of commercial real estate, including office properties, have been modestly increasing, although home prices are dancing near the bottom. So, why this difference now and what does it mean? Head over to NREI to read the whole article, and share your thoughts.

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