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- December 2010: Vol. 22 No. 11

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Buying Strategies: Is Pricing Right to Re-enter the Real Estate Market?

by Norm Miller

Like many of you, I am often asked a cycle-trend question: “Are we at the bottom yet?” My reply is always the same: “That depends on which bottom you are referring to.”

The fact is that there is a wide range of key indicators to observe — occupancy or rents or values or changes in these values, or even distress as a percent of sales. The answer can vary even more when the question is asked about the performance of specific markets, as some geographic markets may be well past their bottom and on the ascent, while others are still far from it. It is easy to play the spin game during such times as the sporadic recovery of late 2010.

Fundamentally, we are near a bottom based on such key market indicators as absorption or occupancy levels. But that does not mean we are at a bottom in terms of rents or projected net operating income. At the same time, we know prices lead fundamentals, and we also know that historically REIT prices tend to lead the direct market in

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