A legend before the fall
Written by David E. Lakvold, MAI, SRA on August 25, 2023
Picture investors huddled around their spreadsheets, nervously eyeing those escalating rates. The once-comfortable risk-reward teeter-totter turns into a wild seesaw, throwing even the most stalwart investors into a frenzy. As rates rise, property values nosedive, and suddenly, those prized pieces of real estate start feeling as valuable as a anchor on a sinking ship.
Are you prepared for a real estate rollercoaster ride that would make even the bravest souls reconsider their investment choices? Capitalization rates, those mischievous numbers, are donning their climbing boots and plotting their ascent. Brace yourselves for chaos, the crime of capital loss, the dark night of the sold.
Oh, the tragedy! Property values, once ascending into the heavens find themselves plummeting to the pit like fallen angels. The sin of perpetual growth exposed, speculators now quiver under the pressure of rising rates. It's as if these investments have flown into the Bermuda Triangle and equity is forever lost at sea never to be seen again.
Meanwhile, in the land of lost, bargain hunters rejoice! An oversupplied market of distressed sellers and desperate developers creates an abundance of investment deals that can only be described as a whimsical wonderland of opportunity. The higher the rates, the lower the asking prices, and suddenly, even the strongest bend under the weight of change and succumb to the reality of rising rates.
