Alabama Center for Real Estate Alabama Center for Real Estate

Alabama Real Estate Confidence Index®Alabama Real Estate Confidence Index®  

2010 Winter Roundtable2010 Winter RoundtableACRE Leadership CouncilACRE Leadership Council

  Tom Brander, ACRE Council MemberTom Brander, ACRE Council MemberRudulph/Brander Real Estate ReportsRudulph/Brander Real Estate Reports

&&Grayson Glaze, Executive Director, ACREGrayson Glaze, Executive Director, ACRE

  Thursday, January 28, 2010Thursday, January 28, 2010  Burr Forman, Birmingham, AL  Burr Forman, Birmingham, AL  

Calculation of Survey ResultsCalculation of Survey Results

The economic and Industry indicators use a five-part scale with the following wording: much better, better, about the same, worse, much worse

These choices are weighted 100,75,50,25,0

Index = (Σ weighted responses/# surveys)

Index range is 0 to 100, with 50 as the neutral point, and 0 as much worse

Characteristics of ARECI Respondents Characteristics of ARECI Respondents Q4 2009Q4 2009

Region– North 18.2%– North Central 35.2%– South Central 18.4%– South 28.2%

Residential/Commercial– Residential 84.0%– Commercial 16.0%

A Quick Summary Q1 2010A Quick Summary Q1 2010

As we can see from the data table, at this time there is quite a bit of unanimity of outlook among different geographic regions, and even between the Commercial and Residential sectors. The Commercial sector has a more negative outlook than the Residential all fronts, except somewhat surprisingly, for credit availability! While both groups were negative in their outlooks on credit availability the Commercial market participants were marginally less negative.

Number Nat next Q Ala Next Q Next Q Sales Next Q inv NextQ Price Next Q Credit % of totalResidential 535 49.53 58.83 58.50 50.33 44.39 40.33 83.99%Commercial 102 42.40 46.57 49.51 41.42 36.52 41.18 16.01%

North 116 51.94 65.52 60.78 54.96 49.78 43.75 18.21%North_Central 224 46.21 53.13 54.35 46.99 40.63 39.40 35.16%South Central 117 47.22 56.20 58.33 49.15 42.09 42.31 18.37%South 180 49.58 56.39 57.22 47.22 42.64 38.47 28.26%

Total 637 48.39 56.87 57.06 48.90 43.13 40.46

ARECI Expectations for Q1 2010ARECI Expectations for Q1 2010

The overall survey score was 49 which indicates a slight negative bias for expectations.In general the group was negative on the outlook for the national market at 2 points below neutral at 48, and somewhat positive on the Alabama Market at 57.The group was also positive 57 on the outlook for Real Estate Sales in the 1st quarter.There is still an expectation of competitive conditions with a slight expectation for more inventory expected at 49.Pricing 43 was expected to be weak in light of the economy and continued lack of credit 40.The biggest extreme was the optimism of the North respondents for an improved Alabama economy 65. And on the low side the biggest divergence was the expectation for tough credit in the South 38 and pressured pricing in the commercial area at 36, the most negative sentiment expressed.

ARECI Survey TodayARECI Survey Today

This is our 1st report so we cannot compare it to any prior data to establish the degree of change in perceptions over time.

We also get some subjective information with an open ended text question which gives us additional color and flavor.

How does ABCI compare to ARECI?How does ABCI compare to ARECI?

Vs. Initial ARECI overall of 49.1

Origins of ARECI SurveyOrigins of ARECI Survey

In the Fall of 2009 ACRE proposed a statewide online survey of Real Estate sentiment, to be conducted quarterly and called the ARECI Real Estate Survey.Questions were developed in consultation with the Participation of the leadership board of the Alabama Center For Real Estate at The University of Alabama.Alabama all areas of the state have been solicited and sub specialties, such as Residential and Commercial.ACRE recruited participants, while the website, survey analysis, and results newsletter were managed by Tom Brander in conjunction with ACRE.This initial survey received 637 valid responses well distributed over the four regions of the state.

Survey DesignSurvey Design

The ARECI survey is forward-looking and asks during the month prior to a new quarter about expectations for change from the current to the upcoming quarter

There are two general economic indicators:– Real Estate conditions in the United States– Real Estate conditions in Alabama

There are four industry and location specific indicators:– Sales– Inventory– Pricing expectations– Credit Availability

ARECI panelistsARECI panelists

Participation is voluntary; panelists register on the survey websitePanelists recruited by target mailings, association contacts, events, etc.Total participation has begun with 637 participants from all four areas of the stateTargeted Real Estate Professionals; mostly Agents and Brokers, with some Developers and Financing sources

ARECI indicesARECI indices

Each quarter the overall index is calculated and a component index is computed for the six variables on the survey.

Composite indices are also derived for various industry sectors: Residential vs. Commercial

The index and component indices are calculated for the state’s four regions (North, North Central, South Central, South).

As our data deepens and we notice significant divergences more indices may be developed. (e.g. Rural vs. Urban)

ARECI ResultsARECI Results

Results are compiled in a newsletter that is distributed to panelists first and then posted on the ACRE website, http://www.acre.cba.ua.edu/

Survey results are also released to the media.

Presentations made to the ACRE events

We hope that the survey will raise the awareness of the public about ACRE and the importance of the Real Estate industry.

A Few Question & AnswersA Few Question & Answers

We did not provide options for multiple association membership, or make certain areas a separate region (such as Cullman) and or provide for a specific sub specialty (such as brokering rural land). In order to "fit" the data we were receiving into the most meaningful categories for overall analysis, providing too many options for fairly small exceptions would if anything confuse both survey takers and subsequent analysis. – So Multiple MLS members should choose the MLS they do the most

with and that would most represent their answers, and similarly for others who asked about this category of question. The chosen methodology will yield valid and easily interpreted answers. Given the fairly large number of respondents, there will be no distortions.

CommentsComments

CommentsComments

We received about 500 comments, which is outstanding for a survey of this type.While it is difficult to fully summarize the comments there was a general feeling of unease and frustration expressed. Not surprisingly, this was directed at the government for unease as to both doing too much, and not enough, or not the right things. There was a general feeling that many more problems remain to be worked through, specifically foreclosures, both residential and commercial. There was of course a general frustration with lack of credit availability, but a recognition that things cannot and should not return to the prior permissive policies that caused this problem.

Help Us Help YouHelp Us Help You

Send comments, questions and suggestions to:

Tombrander@tombrander.com or of course to gglaze@cba.ua.edu Participate in the survey If you have not signed up do so, the link to register is at the top of the ARCE home page.PLEASE answer the next survey, for which, you will receive a e-mail to you with a link to click on to take the survey. That is how we will know about your region and specialty.

Next SurveyNext Survey

Future: More AnalysisFuture: More Analysis