7.23% drop in sentiment pushes Index below the median level for first time – Indicates possible further homes sales downside ahead
Saskatoon, SK and Vancouver, BC – August 25, 2010 – Real estate professionals surveyed for Point2 Technologies’ (“Point2”) monthly national Real Estate Confidence Index (“RECI”) continued to exhibit concern over the future of the market, in August, and sent the Index below the median of 5.0 on the RECI scale of 1 – 10 (1 being “Bad” and 10 being “Good”), for the first time since Point2 launched the forward looking sentiment barometer in June 2009.
The RECI averaged 4.87 in the August survey on the 1 – 10 scale, a drop of 7.23 percent versus the July reading, and a new record low.
Year Over Year (YOY), the drop represents a 17.18 percent decline in confidence.
As a forward looking real estate market barometer, a negative RECI score indicates real estate brokers and agents currently expect further downside in home sales.
The prior RECI low was recorded last month, when the Index reading came in at 5.24 out of 10, a drop of 8.85 percent versus June.
On a seasonally adjusted basis, Current Market Conditions, one of the RECI’s three key variable components, dropped to 4.35 in August, on the 1 – 10 scale, or 6.85 percent below the July reading.
The 3 – 6 month Short Term Optimism/Pessimism outlook gauge also ended below the 5.0 median for the first time, to 4.66 on the 1 – 10 scale, 8.09 percentage points versus last month.
Long Term Optimism/Pessimism ( 12 – 18 months), the RECI’s third key component, remained in relatively stronger territory above the 5.0 median. However, the variable also recorded a new low, sliding to 5.60 (-6.67%) on the 1 – 10 scale.
The average of all three variables makes up the RECI score for the month.
Concern over increase in real estate inventory was played back by RECI survey participants virtually in every state in the US and was a key issue blamed for continued downward pressure on the market along with the lack of buyer incentives, a bleak employment outlook and lending difficulties.
Real estate professionals in a number of states however remained optimistic. Some survey respondents in California (San Diego), Hawaii, Michigan, North Carolina and Utah felt that the market was holding up well in the face of increasing foreclosures, and in some cases improving, albeit in a declining market, with prices showing some stabilization.
Lack of inventory in San Diego was seen as an issue by one of the real estate agents upbeat on the market, while a counterpart in Hawaii saw a positive upswing in home sales as an indication that “the bottom might be in”. One North Carolina agent highlighted the expected entry of some major employers to the area as a future business driver and reason for an optimistic outlook. In Mississippi, an agent reported never having been as busy.
Bank owned properties and foreclosures however remained a major issue respondents around the country felt may also be intensifying. Layoffs and concern over potential tax increases also kept a number of survey participants cautious about the future.
In Florida and Mississippi, several agents pointed to the BP oil spill as yet another cause for slower sales.
1055 brokers and agents from the Point2 Agent (www.Point2Agent.com) user community completed the survey in August.
For respondent commentaries and RECI readings per state, along with national data archives, please visit www.realestateconfidenceindex.com.
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 third party survey solution providers, Survey Monkey. The data is tabulated electronically, median averages surfaced for quantitative questions, and qualitative feedback and respondent commentaries are captured and presented in Point2’s monthly RECI Summary at www.RealEstateConfidenceIndex.com.
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