RISMEDIA, August 27, 2010—Real estate professionals surveyed for Point2 Technologies’ 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% versus the July reading, and a new record low.
Year-Over-Year (YOY), the drop represents a 17.18% 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% 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% 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 U.S. 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 sight.” 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.
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