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What Is Really A Return To Normal?

Measuring against 2007 prices is irrelevant and ignores today's reality.

By Joel Ross | Updated on April 11, 2011

There is a continuing stream of articles and panels discussing how far have values declined and when they will once again be back to “normal”. Green St and Moody’s continue to provide differing indexes of how far down values are. Various pundits opine as to when we will be normal again. It is my contention that everyone is measuring the wrong metrics.

I recently reviewed what purported to be a series of hotel values over the past ten years and a projection of where they will be in 2014. What was most striking was that values trended upward over the period until 2006, and then they just took off into the classic hockey stick as we all know. The 2008 value number was still way high due to transactions in the early part of that year. The general value increase was about 25%-30% during the bubble years of 2005-2008. Then the number settled right back to close to where it had been early in the decade. In short, it reverted to the mean.

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