Have you ever wondered which is bigger — the residential real estate market or the commercial real estate market?
From an appraiser’s perspective, and maybe a broker’s, it would be easy to imagine that the market for commercial real estate is very small compared to the residential market. That’s because of the number of transactions we encounter, e.g., how many appraisals we perform, or how many sales we close. I’m in an office with two other appraisers who do primarily residential work, and they stay very busy. They easily do 3-4 residential appraisals for every commercial real estate appraisal I perform. So yes, the residential market is much busier than the commercial market, and there are far more appraisers and brokers employed on the residential side than on the commercial side.
In terms of dollars, however, there is less difference than you might imagine. As of May 1, 2015 loans on residential real estate equaled approximately $2.052 trillion, while commercial real estate loans totaled approximately $1.671. That a difference of around 22.8%. Granted, that’s still a lot of money, but it’s a much smaller difference than one might be led to believe based solely on the number of transactions.
So as to the question of residential v. commercial real estate? There’s a difference, in terms of dollars, it’s just not as big as many people believe.
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