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’ Real Estate Confidence Index (RECI). 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 one to 10 (one being ‘bad’ and 10 being ‘good’), versus 5.76 in June. Year-over-year, 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 1,255 brokers and agents nationwide, include unabated pricing pressure caused by foreclosure and pre-foreclosure properties; a general sense that shadow foreclosure inventory is significant and could materially prolong current market conditions; a persistent tough job market keeping more potential buyers on the sidelines and; the expired federal first-time homebuyer 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 percent) in July, on the one to 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 three to six months also took a significant step back, dropping from 5.64 in June to 5.07 in July, or 10.11 percent.
Year-over-year, the three to six 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 one to 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 percent), Connecticut (-23.16 percent), Florida (-5.57 percent), Georgia, (-12.86 percent), Illinois (-8.55 percent), Michigan (-14.85 percent), Missouri (-6.07 percent), New York (-10.65 percent), North Carolina (-8.85 percent), Ohio (-4.12 percent) and Oklahoma (-30.53 percent). 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 percent versus year ago. Sentiment in Michigan also improved by 2.95 percent.
For more information, visit www.realestateconfidenceindex.com.