RISMEDIA, June 15, 2010—Forward-looking confidence in the real estate market in the United States dropped for the month of May 2010, according to Point2 Technologies’ Real Estate Confidence Index (RECI) survey results released by Point2.
The national RECI, a monthly survey that tracks forward-looking market sentiment of over 50,000 real estate professionals across the United States slipped 1.72% compared to April 2010, with all three Index variable components retreating.
On the RECI scale of 1-10 (1 being ‘bad’ and 10 being ‘good’), the Index score came in at 5.72 for the May period, compared to 5.82 the prior month.
Opinion on the market’s Current state, one of the three Index components, dropped to 5.22 (-1.51%), after surging by 5.16% for the April period, which reflected expectations for solid market activity ahead of the now expired government tax credit incentive program that ended on April 30, 2010.
The 3-6 month Short Term optimism/pessimism variable dropped 2.26%, to 5.61, indicating a higher level of uncertainty across most markets for the spring and summer seasons.
The Long Term 12-18 month optimism/pessimism variable also retreated, dropping by 1.71%, to 6.32 on the 1-10 scale.
Long term concerns regarding the end of the government tax incentive program permeated RECI respondent feedback in most markets around the country in the May survey, with a number of brokers and agents reporting and relating sudden retreat in market activity to the expiry of the latest incentive program at the end of April.
Exceptions included Nevada, which continued to report multiple offer situations on low to mid price range properties, and Virginia, as well as most regions with significant military personnel relocation activity.
A persistent, tough ending environment remained one of the primary obstacles to foreclosure inventory absorption and market recovery, according to survey participants in most states.
‘Shadow’ foreclosure inventory was referred to by a number of respondents to describe foreclosed properties currently thought to be held back by lenders and expected to trickle into the market over the coming months. Respondents expressed concern that lenders could be manipulating market prices by holding onto such inventory, a practice also expected to dampen markets and home prices for an extended period of time.
High jobless rates and the risk of rising interest rates were also frequently cited as reasons for long term concern.
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