U.S. National Real Estate Confidence Index Drops 8.85 Percent in July
Highest monthly decline in forward outlook predicts slower home sales expectations ahead - reflects growing broker and agent concerns around foreclosures, lending, job market and expiry of federal stimulus program
Saskatoon, SK and Vancouver, BC – August 03, 2010 – Forward-looking real estate broker and agent confidence in the United States fell by 8.85 percent in July 2010 compared to June, and set a new low on Point2 Technologies’ (“Point2”) Real Estate Confidence Index (www.RealEstateConfidenceIndex.com), Point2 announced today.
The RECI, which surveys and tracks broker and agent forward-looking sentiment of the real estate market averaged 5.24 on the RECI scale of 1 – 10 (1 being ‘bad’ and 10 being ‘good’), versus 5.76 in June.
Year Over Year (YOY), the national Index declined 7.42 percent, reflecting overall decreasing confidence in the housing market and more specifically, compared to the same period last year.
Key concerns expressed in the July survey, completed by 1255 brokers and agents nationwide, include i) unabated pricing pressure caused by foreclosure and pre-foreclosure properties, ii) a general sense that shadow foreclosure inventory is significant and could materially prolong current market conditions, iii) a persistent tough job market keeping more potential buyers on the sidelines and, iv) the expired federal tax credit program that many respondents felt was a key catalyst to market activity but that also accelerated buying in the first half of the year possibly at the expense of the remainder of 2010. A firm lending environment was another critical and ongoing contributing issue cited by RECI respondents in most states.
Current Market Conditions, a key component of the RECI dropped from 5.12 in June, to 4.67 (-8.79%) in July, on the 1 – 10 scale, setting the variable back just below its June 2009 low of 4.76. The variable has held above the 5.0 median on the RECI scale for the previous four survey periods.
Short-Term Optimism/Pessimism, another RECI variable that tracks respondent outlook for the coming 3 – 6 months also took a significant step back, dropping from 5.64 in June to 5.07 in July, or 10.11 percent.
YOY, the 3 – 6 month outlook gauge declined 8.65 percent and also set a new record low.
The Long-Term Optimism/Pessimism (12 – 18 month outlook) barometer also hit a new low, dropping to 6.00 on the 1 – 10 scale, or 5.06 percent below the prior low recorded in February and May of this year.
The average of all three Index component readings is used to generate the national monthly RECI score.
Sentiment in the state of Arizona took a significant step back in July, dropping by 9.64 percent versus June, and 9.64 percent versus year ago. Colorado brokers’ and agents’ outlook declined by 18.03 versus last month and 16.78 versus July 2009. Other states that saw a relatively high decline in optimism in the July survey period versus June include California (-8.19%), Connecticut (-23.16%), Florida (-5.57%), Georgia, (-12.86%), Illinois (-8.55%), Michigan (-14.85%), Missouri (-6.07%), New York (-10.65%), North Carolina (-8.85%), Ohio (-4.12%) and Oklahoma (-30.53%). Pennsylvania dropped by 13.19 percent, Tennessee by 9.19 percent, Texas by 11.36 percent and Virginia by 12.48 percent. Forward looking confidence in the state of Washington also declined by 7.85 percent.
Despite the July 2010 drop in Illinois, Year Over Year, local brokers and agents were more optimistic than during the same period last year, with the RECI average for that state increasing 4.42 percent. Tennessee also showed some improvement with its RECI rising 0.36% versus year ago. Sentiment in Michigan also improved by 2.95 percent.
A heat map that features RECI scores for all states, as well as a random sampling of respondent feedback from various regions, are posted at www.realestateconfidenceindex.com. Additional respondent commentaries for each state, statistical data and high resolution images can also be requested by members of the media by writing to firstname.lastname@example.org.
A dynamically updated RECI score widget is also available, along with simple code for placement on third party websites, on the RECI site.
RECI Survey Instrument and Methodology
The Real Estate Confidence Index (RECI) is a predictive market barometer that tracks the real estate market opinions of tens of thousands of licensed real estate professionals, brokers and agents, across the United States, accounting for seasonality, on a scale of one to ten (1 being “bad” and 10 being “good”). The RECI also rates respondent sentiment for market conditions 3 – 6 months and 6 – 12 months into the future on a ten-point scale (1 being “pessimistic” and 10 being “optimistic”). The median across all three time periods represents the Index measure for the month.
The RECI is open to the Point2 Agent membership and to tens of thousands of additional licensed real estate professionals across the nation at the beginning of each month. Respondents complete a simple, four
question survey through the third party survey solution provider platform, Survey Monkey. The data is tabulated electronically, median averages surfaced for quantitative questions, and qualitative feedback and respondent commentaries captured and presented in Point2’s monthly RECI Summary at www.RealEstateConfidenceIndex.com.
About Point2 Technologies Inc.
Point2 Technologies (www.Point2.com) provides inventory management and online marketing software solutions to the real estate and heavy equipment industries across 120 countries.
More information about Point2 can be found at www.Point2.com. For ongoing news about Point2, please visit www.point2.com/news.asp.
Point2® is a trademark of Point2 Technologies Inc. All other company and product names may be trademarks of the respective companies with which they are associated.
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