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Moody’s recently conducted a conference call to summarize the changes to their Commercial Property Price Index (CPPI).
The major enhancements to the index include:
Minor tweaks include:
What will remain the same?
So, what do these changes look like when compared to the prior index and its methodology?
They’ve also better formalized their Major Market Index, which was previously called the Six City Index.
All-in-all, fabulous improvements to a fabulous index.
By JW Najarian
I would like to thank CRE Console for posting this story.
I am glad to see the CPPI is back. I used to get this information via the MIT site.
Many predictions of future growth were made using the old method and with all the changes it seems to show that growth is at more like 15% or better as opposed to the old graph which showed more of a 3% growth rate over time.
With the inclusion of more filters and better data I would have predicted a slower growth rate, not faster?
This would be good news. If this new graph is less gamed than the last then we have to ascertain that this new growth makes the commercial markets very hot.
Although this is not the news I hear from the trenches?
From 1984 till early 2000 there was an average appreciation of around 8%, (see the Transactional Based Index (TBI) graph below) then it went crazy… then it went bust.
Yes I know there is a difference between TBI and CPPI, but I wanted to show the years in full and I have not seen a CPPI Graph that covers this many years.
The TBI graph is very interesting as it shows that we back on track and that transactions are growing at around 19%. According to history this means either a leveling out or the start of another bubble.
Does the CPPI graph, with it’s high rate of growth predict another bubble, even before we recover from the last one?
I would like to hear everyone’s thoughts
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