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7/31/2019 REALTORS Confidence Index June
1/24
1
Realtors Confidence IndexReportandMarketOutlook
June2012EditionBasedonDataCollectedJune25July3,2012
NationalAssociationofRealtors
ResearchDepartmentLawrenceYun,SeniorVicePresidentandChiefEconomist
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2
Table of Contents
Summary Real Estate Markets Continue to Recover..... ..... .3
Realtor Confidence Index: Current Conditions..3
Realtor Confidence Index: Six Month Outlook..5
Section 1: Market Conditions
Single Family Properties: Confidence Stabilizes......7
Townhouse Properties: Confidence Continues to Build Up.....7
Condos: Confidence Heading Towards Moderate.....8
Sixty-four Percent of Realtors Report Constant or Higher Prices on Recent Transactions
Compared to a Year Ago ....8
Eighty-six Percent of Responding Realtors Expect Constant or Higher Residential Prices
in the Next Year9
Buyer Traffic is Rising. Seller Traffic is Flat...9
Time On the Market is Declining.....10
Distressed Sales at 25 Percent of Market ....11
Distressed Real EstateBelow Market Prices....12
Property Condition Also Affects Selling Price of Distressed Properties.....12
Section 2: Buyer and Seller Characteristics
Cash Sales: 29 Percent of Residential Sales........13
First Time Buyers: 32 Percent of Residential Buyers .........14
Relocation Buyers: 15 Percent of Residential Market..........14
Residential Sales to Investors: 19 Percent of Residential Market... 15
Second Home Purchases: 12 Percent of Residential Market............15
Mortgage Down Payments....16
Realtors Continue to Report Rising Rents for Residential Properties....16
International Transactions : Two Percent of Residential Market......17
Section 3: Current Issues
AppraisalsA Continuing Problem.17
Credit and Lending Conditions.....18
Section 4: Recent NAR Articles
Homebuilding in the Sweltering Summer Heat Lawrence Yun......20
Housing Foot Traffic -Ken Fears............22
Commercial Investments Advance in First Quarter 2011George Ratiu.23
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3
SUMMARY
Real Estate Markets Continue to RecoverGay Cororaton and Jed Smith
TheRealtors Confidence Index (RCI) report provides monthly indicators on current
conditions and the outlook for the residential real estate markets. The report summarizes
information pertaining to Realtor confidence, price trends and expectations, buyer/seller traffic,buyer profiles, and issues affecting real estate. The June edition is based on responses of over
3,400 Realtors to a survey conducted for the time period June 25 July 3, 2012.1 Given that all
real estate is local, conditions in specific markets may vary from the overall national trendspresented in this report.
The respondents comments generally indicate that the real estate markets around the country
are continuing their recoveries in terms of sales and price2.
Realtor confidence about current market conditions for all types of residential property wassustained in June after a rapid buildup earlier in the year.
The RCI-SF (single family) current index is at 57.9. The level of confidence in the markets for townhouses and condominiums is still generally
weak, but the indexes are trending up, which indicates that a greater proportion of Realtors
have moderate to strong expectations. An index of 50 reflects a medium level of confidence.
Prices continue to firm up with 64 percent of Realtors reporting constant or increasingprices compared to the same time a year ago.
Looking forward, 84 percent of Realtors expect constant or rising prices in theforthcoming year.
1Therewere3,415respondentstotheJunesurvey.
2Allreal estate is local, so comments were varied, diverse, and in some cases contradictory depending on the
respondents location.
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
June2012Realtors ConfidenceIndex
CurrentConditions
SF TH Condo
SF: 57.9 TH:37.5 Condo30.6
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4
There is strong buyer interest but not enough listings: buyer demand is reported to begrowing faster than supply, and many respondents are reporting multiple offers. The buyer
traffic index is at 60.01, with the seller traffic index at 41.22.
The percentage of Realtors reporting distressed (foreclosed and short sales) property saleswas stable at 25% , compared to approximately a third a year ago
However, a lack of inventory for sale, major problems in obtaining mortgages on a timely
basis, and appraisals that do not capture the current state of the market were reported as having a
negative impact on the housing recovery:
There is a reported lack of inventory in a number of areas around the country. The mortgage approval process is reported to be exasperatingly slow, and lenders continue to
impose substantial information requirements on potential borrowers, tending to delay the
process. The mortgage process is reported as especially protracted for short sales.
Appraisals are reported to be coming in at unrealistically low levels relative to the underlyingmarket conditions, not reflective of actual market values. Respondents reported thatappraisals do not recognize that market prices are increasing.
Respondents reported extended time requirements to close foreclosures and short sales.This monthsRCIsurvey results confirm the trends reported in the NAR data for Existing
Home Sales (http://www.realtor.org/topics/existing-home-sales/data ) and the NAR EconomicOutlook (http://www.realtor.org/sites/default/files/reports/2012/economic-forecast-2012-05-
30.pdf), which outlines an economy expected to grow at 2.2 percent in 2012 (3.0 percent in
2013), creating 2.1 million jobs in 2012 (3million jobs in 2013).
The graph for Total Home Sales on a twelve-month roll (i.e., total sales for the currentand previous 11 months reported monthly) shows a market with sales growth projections for
Existing Home Sales. In addition, a modest improvement in home prices is expected, based on
continued economic expansion.
0
2000000
4000000
6000000
8000000
1999
Dec
2000
Aug
2001
Apr
2001
Dec
2002
Aug
2003
Apr
2003
Dec
2004
Aug
2005
Apr
2005
Dec
2006
Aug
2007
Apr
2007
Dec
2008
Aug
2009
Apr
2009
Dec
2010
Aug
2011
Apr
2011
Dec
2012
Aug
2013
Apr
2013
Dec
ExistingHomeSales: ActualandForecast
Outlookfor2012: 4.7MillionHomeSales
TwelveMonthRoll Forecast
7/31/2019 REALTORS Confidence Index June
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5
Market Outlook
Realtors have moderate to strong expectations about the direction of the housing market
for the next 6 months. The sixmonth expectations index for single family home sales is above
50 while the indexes for townhouse and condominiums continue to rise. An index above 50indicates that respondents expressed moderate to strong expectations (strong=100; moderate
=50; weak=0) for the outlook.
0
50000
100000
150000
200000
250000
2000
Jan
2001
Jan
2002
Jan
2003
Jan
2004
Jan
2005
Jan
2006
Jan
2007
Jan
2008
Jan
2009
Jan
2010
Jan
2011
Jan
2012
Jan
2013
Jan
PricesbyMonth,NotStatisticallyAdjusted
OutlookProjectingImprovement
MedianPrice Forecast
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
June2012Realtors ConfidenceIndex
SixMonthOutlook
SF TH Condo
SF:
61.4
TH:41.6
Condo
35.9
7/31/2019 REALTORS Confidence Index June
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6
Continued increases in residential sales are projected along with continued priceimprovement, although both sales and prices will vary from market to market. There continue,
however, to be risks to the market outlook:
Potentially Positive Factors/News
Falling Inventories of homes for sale: Months supply of homes for sale as of May was at6.6 months compared to approximately 10 months in 2010.
The lower level of Distressed Sales continues, indicating continued if slow marketimprovement.
Home Affordability: Continued low interest and inflation rates contribute to highaffordability.
Demographics: The U.S. population has expanded substantially in the past 10 years, butsales are at a level of approximately 10 years ago.
Potentially Negative Factors/News
The economic recovery continues to proceed at a slow pace: job creation is positive but notsufficient to absorb new entrants and the unemployed; the economy has so far generatedabout 80,000 new jobs each month in the last 3 months, but the economy needs to generate
about 250,000 a month to get back to 5 % unemployment rate.
The slowdown in economic growth especially in the Euro countries and the possibility ofrecession in Europe is as much a political as an economic issue. Our housing market andeconomic projections are based on muddling through the problem.
The potentially adverse economic effect of the fiscal cliff(expiration of Bush tax cuts andmandated spending cuts in the absence of legislative action) is also a political as well as an
economic issue. Again, projections are based on muddling through the problem.
Credit standards and information requirements imposed by financial institutions in mortgagelending continue to be excessively stringent, having a negative effect on closings and closingtimes.
What Does This Mean For Realtors?
The currently available data indicate that the residential real estate markets continue to
recover. Realtor confidence and price expectations are higher than was the case a few monthsago. Rising rental rates also have favorable implications for home sales. Time on market
continues to decrease. Prices and interest rates continue to be lower than has been the case in the
past. These are the reasons that we continue to view the outlook as favorable for home sales.
Given that the typical homeowner will occupy a house for approximately 8 years after
purchase and that home ownership is basically a lifestyle decision in addition to a financialcommitment, one can make a good case that this is a good time to buy a house, remembering thatstaying within a reasonable budget and prudent mortgage is important.
7/31/2019 REALTORS Confidence Index June
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7
I. Market Conditions
Realtor Confidence Remains Upbeat
TheREALTORS Confidence Index is an indicator of housing market strength based on a
monthly survey sent to over 50,000 real estate practitioners. Respondents indicate whetherconditions are, or are expected to be "strong" (100 points), "moderate" (50 points), and "weak" (0
points). A score of 50 for the index is the threshold between strong" and weak conditions.Realtor confidence in the market outlook is presented in terms of the current market and the
market outlook for the next six months for single family, townhouse, and condo markets. Across
all types of indexes, the RCI is either above moderate (i.e., greater than 50 for single familyhomes) or continues to move towards moderate (townhouses and condominiums).
Single Family Properties: Confidence Stabilizes, Remains Above Moderate in June
Townhouse Properties: Confidence Continues to Increase, Approaching Moderate in June
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
June2012Realtor Confidence
Currentand
Six
Month
Outlook:
Single
Family
Properties
CurrentConfidence Conf idence
in
Outlook
Current:57.9 Outlook: 61.4
0.0
10.0
20.0
30.0
40.0
50.0
June2012Realtor Confidence
CurrentandSixMonthOutlook:TownhouseProperties
CurrentConfidence ConfidenceinOutlook
Current:37.5 Outlook: 41.6
7/31/2019 REALTORS Confidence Index June
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Condo
Sixty-fo
Transac
supply.percent)
reported
iniums: C
r Percent
tions Com
ome prices
or the curror rising pri
seeing price
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
nfidence
f Realtors
ared to a Y
continue to
nt survey,es (34 perc
increases o
Currenta
Cur
eading To
Reported
ear Ago
firm up as
4 percent oent). An in
f 10 percent
une2012
ndSixMon
rentConfiden
8
ards Mod
Constant o
emand is re
respondentreasing pro
or more.
ealtor Co
hOutlook:
e Co
Curr
rate as of
r Higher P
ported to b
s to theRCportion of r
fidence
CondoPro
nfidenceinO
nt:30.6
Out
une
rices on Re
increasing
reported cospondents (
erties
tlook
look:35.9
ent
faster than
nstant price5 percent)
s (30
7/31/2019 REALTORS Confidence Index June
9/24
Eighty-s
in the N
E
the next
constant
Buyer T
Bsupply.
compare
the indepossibly
responde
significa
ix Percent
xt 12 Mon
ighty-six pe
year. Since
or rising pri
raffic is Ri
uyer and sehe buyer tr
to May. H
at 41.22. Pstill recover
nts comme
ntly lower t
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
f Respondi
hs as of Ju
rcent of res
the last qua
ces has bee
ing While
ller traffic iffic index i
owever, the
otential selling from th
ted on an i
an would n
200801
200804
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200810
ng Realtor
e 2012
ondents re
ter of 2011,
consistentl
eller Traff
dexes are pabove mod
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rs appear tohousing m
balance bet
rmally be t
200901
200904
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Indexesof
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9
Expect
orted the ex
the proport
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c is Flat as
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index has
be holdingrket of the
ween suppl
he case.
201001
201004
201007
Buyerand
affic Sel
Buy
onstant or
pectation o
ion of respo
of June
rds an imb1, although
ot budged
back from lGreat Reces
y and dema
201010
201101
201104
201107
SellerTraffi
lerTraffic
er:60.01 Sell
Higher Re
constant or
ndents has e
lance betweessentially
nd is below
isting theirsion. A nu
d, with ava
201110
201201
201204
c
r: 41.22
idential P
higher pric
xpecting
en demandunchanged
moderate,
roperties,ber of
ilable invent
ices
s in
and
ith
ories
7/31/2019 REALTORS Confidence Index June
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Time O
were on
improve
Market C
ore homeshe market f
onversely,
ent over a
ntinues to
are being soor less than
4 percent o
year ago.
Decline
ld in less tha month wh
homes we
10
n a month.n sold, and
e on the ma
Approxima58 percent
rket 6 mont
tely a thirdwere sold w
s or more
of propertieithin 3 mon
hen sold, a
hs.
7/31/2019 REALTORS Confidence Index June
11/24
Distress
Twesales), u
Approxi
Distrthe actua
the prop
Thesold at si
reported
paid casdistresse
purchase
withoutpreferabl
for cashobtain a
Distress
propertie
property
d Sales at
ty-five perchanged fr
ately 42 p
.
essed salesl foreclosur
rty, freque
xisting Hognificant di
to be popul
in 72 perc), in comp
s. In the ca
aiting for te buyer. R
ven whenmortgage.
d Real Est
istressed prs; the disco
condition.
oreclosuress of June 2
hort Salesf June 201
5 Percent
ent of respom May figu
rcent of dis
o through sby the fina
tly by Realt
e Sales macounts to m
r with inve
nt of their orison to firs
e of distres
he buyer tospondents r
first-time p
teBelow
operties typint level flu
have been12.
ave been se.
f Market i
ndents repores, but low
ressed sales
everal stagencial institu
ors throug
rket is bifurarket, frequ
tors seekin
verall purcht-time buye
ed properti
btain a moported a nu
rospective
Market Pr
cally sell btuates depe
elling at ap
lling at app
11
June
rted sellinger than last
were for ca
sthe initition unless
h the MLS.
cated, withntly in sub
bargain pri
ases of pros who over
s with a sel
tgage, an inmber of ins
uyer had of
ices
low the manding on sa
roximately
oximately 1
istressed pyears figur
sh.
l overdue stold in a sho
istressed par conditio
ces. In the
erties (bothll paid cash
ler who wo
vestor is reances of in
fered a high
ket price ofes location,
20 percent
5 percent b
operty (forof 30 perc
atus for mort sale, and
operties fren when goin
urrent surv
distressed ain 10 perce
ld like to cl
orted as soestors purc
er price, but
similar, notype of pro
below mark
low market
closed andnt.
tgage paymhe final sal
uently beig to market
ey, investor
nd non-nt of their
ose a transa
etimes binasing a pro
with the ne
-distressederty, and
t: 18.3 pe
: 14.8 perc
short
ents,of
g, and
tion
g theperty
ed to
cent
nt as
7/31/2019 REALTORS Confidence Index June
12/24
Propert
T
physical
for proppresente
above av
significa
Condition
he discount
condition.
rties in poofor the tim
erage condi
ntly depend
0.0
10.0
20.0
30.0
40.0
U
Affects the
to market e
ell mainta
condition.e periods Ju
ion are disc
ng on prope
15.4
13.5
1
Aboveaverage
ercentPr
weighted
Selling Pri
perienced
ined propert
The un-weily 2011 thro
ounted at a
rty deterior
17.613.4
2
Average
iceDiscou
veragefor
Forecl
12
ce of Distr
y distressed
ies tend to s
ghted averaugh June 2
out 13 18
tion.
22.5
17.0
3
Belowaverage
ntbyPro
uly2011t
osed Shor
ssed Prope
property is
ell at a low
ge price dis12. Prices
percent, wi
29.4
24.0
4
Well
beloave
ertyCon
June2012
tsale
rties
affected by
r discount t
ounts to maor distresse
h the disco
36.7 37
w 5
Bottom
ition
Surveys
the propert
an is the ca
rket ared houses wi
nt increasin
.3
1%
s
se
th
g
7/31/2019 REALTORS Confidence Index June
13/24
Propert
Cash Sa
T
The prop
housing
mortgagfrequentl
Discounts
es: 29 Per
he percenta
ortion of ca
arket in 2
/underwritiypay cash,
2
3
4
1
as a Functi
II. Bu
ent of Resi
e of cash s
sh sales is s
08. The hig
ng standardossibly edg
-Average
-Below ave
-Well belo
M
ouse Con
-Above av
on of Cond
er and
dential Sal
les was 29
bstantially
h preponder
, and purching edged o
rage
ave
F
an Percen
June 2
ition
rage
13
itionJun
eller Ch
s
ercent in J
higher than
ance of all-
ses by invet buyers ne
reclosure
13.3
16.0
18.4
29.3
Below Ma
12 RCI Su
Data
aracteri
ne, compar
the rate prio
ash sales a
stors and seeding to sec
1
1
2
rket Value
rvey
Shor
1
tics
ed to 28 per
r to the dow
pears to be
cond homeure a mortg
.3
.8
.1
Sale
.3
ent in May
nturn of the
due to strict
uyers, whoage.
.
er
7/31/2019 REALTORS Confidence Index June
14/24
First Ti
FMay figu
total resi
of first-tiof first ti
with dist
sellers hpropertie
making
Buyers
purposescash.
3 In
e Buyers:
irst time hore of 34 per
ential sales
me homebume buyers i
ressed sales.
ve crowdeds. Unsucce
number of
ue to Relo
ealtors re
, i.e., a job
the2011sur
32 Percent
e buyers acent. Norm
, according
yers hit a pepart reflec
Realtors
out first-tisful first-ti
bids before
ation/Job
ort that 15
ove, retire
ey,firsttime
of Residen
counted folly first tim
to NARs P
ak of appros the diffic
have also n
e buyers ine buyers t
securing a p
hanges: 1
ercent of r
ent, etc.
omebuyersa
14
tial Buyers
32 percentbuyers are
rofile of Ho
imately 50lty of secur
ted that that
some casespically cont
roperty.
Percent o
sidential sa
pproximat
ccountedfor3
of total buyin the neig
e Buyers a
percent in 2ing mortgag
investors o
, particularlinue their p
Residenti
les were to
ly 13 perce
7percentofa
rs, slightlyborhood of
nd Sellers3.
009. The ree financing
ffering all-c
in the caseroperty sear
l Market
uyers for re
nt of relocat
llbuyers.
lower than t40 percent
The proport
atively lowand/or the d
ash sales to
of distresseh, sometim
location
ion buyers
hef
ion
levelelay
des
ay
7/31/2019 REALTORS Confidence Index June
15/24
Residen
I
May. In
propertie
distresseApproxi
Second
Second
of secon
ial Sales to
vestors acc
estors have
s to rental u
propertiesately 72 p
ome Purc
ome purcha
home buy
Investors:
ounted for 1
reported tha
nits. Realto
coming ontrcent of inv
ases: 12 P
ses account
rs paid in c
19 Percent
9 percent o
t in many c
rs have be
the marketestors pay c
rcent of R
d for 12 pe
sh.
15
of Residen
total reside
ses they ca
en reportin
, with salesash.
sidential
rcent of resi
tial Marke
ntial sales i
obtain a p
that the m
to investors
arket
dential sale
June, up fr
sitive cash
rket could a
or first tim
. Approxim
om 17 perc
flow conver
bsorb additi
buyers.
ately 53 per
nt in
ting
onal
ent
7/31/2019 REALTORS Confidence Index June
16/24
Mortga
Down pa
mortgag
Realtors
Realtors
by 17 pe
homeow
e Down Pa
ortgages wyments of 1
s.
Continu
igher resid
. Lower r
rcent of Rea
ership.
yments wit
ith a down p1-19 percen
to Report
ntial rents c
nts were re
ltors. The
20 Percen
ayment oft have rema
Rising Ren
ompared to
orted by 10
continued t
16
t Down Ac
0 percent oned in the
ts for Resid
a year ago
percent of
rend of risi
ount for 3
more wereeighborhoo
ential Pro
ere reporte
ealtors.
g rents incr
% Residen
36 percentd of 4 to 5 p
erties
by 54 perc
Constant re
eases the va
tial Sales
f all mortgercent of all
ent of
ts were rep
lue of
ges.
rted
7/31/2019 REALTORS Confidence Index June
17/24
Internat
Sof total t
May figu
http://w
Apprais
keepingout-of-to
Appraisarefinanci
T
past 3 m
percent r
ional Tran
ales of U.S.ansactions
re of 71 per
w.realtor.o
lsA Con
ppraisals c
ace with thwn appraise
ls are also cng applicati
hirty-five p
nths. App
eported a d
actions: T
residentialn June. Ap
cent. Infor
g/research/
tinuing Pro
ntinue to be
e appreciatirs who have
oming in slons.
rcent of Re
oximately 1
lay, and 15
o Percent
eal estate toroximately
ation on int
esearch/rep
III. C
blem
a problem.
n in markelittle know
wly and on
altors rep
0 percent o
percent rep
17
f Resident
foreigners81 percent
ernational a
ortsintl.
rrent Is
Several res
values. Reedge of the
responden
rted having
the respond
rted that th
al Market
not residingof internatio
tivities is a
ues
ondents re
spondents aneighborho
t noted that
had a probl
ents report
appraisal p
in the U.S.nal clients
vailable at
orted that a
lso reportedod/local con
appraisers a
em with an
d contract c
roblems led
were at 2 peay cash, up
ppraisals ar
encountersditions.
re busy wit
ppraisal in
ancellation,
to lower pr
rcentfrom
not
with
the
11
ices.
7/31/2019 REALTORS Confidence Index June
18/24
Tight C
credit co
lenders a
borrowe
S
on makia numbe
now per
other ext
efforts aand com
to the Rreported
the pre-bapplican
on their
estimatediscusse
edit Condi
ne of the mnditions. R
re taking to
s is excessi
ome respon
g loans onlof financia
eived as ha
reme in so
d/or imposiunity ban
compariso
Isurvey ov
for Fannie
oom housins appears to
nderstandi
. Overall tin detail b
ions and Sl
ost frequentespondents
long in ap
e.
ents expres
to individul institution
ing been to
e cases, res
ng unrealists as well as
of FICO ser the Febru
ae and Fre
g market ofhave declin
g of the bu
e data seeRealtors
ow Lendin
commentsindicated th
roving an a
sed frustrati
als with thehave weak
o loose. Th
lting in so
ically highcredit unio
ores for loaary through
die Mac si
a few yearsed substanti
ers credit s
to substantresponding
18
Process
y Realtorst credit con
pplication,
on that fina
highest levloan portfol
lending pe
e institutio
redit standas were pote
n transactioJune time s
gle family
ago shows tally. Realt
ituations; in
iate relativeto the surve
was a conditions cont
nd that info
cial institut
ls of creditios due to p
ndulum app
s decreasin
rds. Respontial alterna
ns as reportpan compar
home loans
hat credit ars provid
many case
ly tight credy.
ern over uninue to be t
rmation req
ions appear
scores. It isrevious lend
ears to have
g their over
dents notedtive sources
d by Realtod with FIC
for the lend
ailability tod FICO inf
the inform
it condition
reasonablyo tight, that
uired from
to be focusi
well knowing standar
swung to t
ll lending
that regionof mortgag
rs responscores
ng conditio
lower scorirmation ba
tion was
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IV. Recent NAR Articles
Homebuilding in the Sweltering Summer Heat
On June 29, 2012, in Economist Commentaries, by Lawrence Yun, Chief Economist
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The weather heat map is all red today across the country. The best course is to stay indoors with
the air conditioner on, and postpone lawn mowing for another day.
Yet, there are construction workers with hard hats and hammers pounding away outside. In
reviewing home construction activity by each month, there is no discernible trend of holdingback construction in the summer in very hot places like Phoenix or Dallas. Homebuilding is
more impacted by market conditions of bubble and collapse, but not heat.
The following chart shows the raw counts of housing permits issued by each month in theGreater Phoenix area. Note that the big swings in data are over several years, such as the sharp
rise from 1982 to 1984 and the sharp decline from 2005 to 2010. The small month-to-month
changes are all but invisible in the bigger multiyear trend. A closer inspection of the monthly
data shows more building in March in some years, but also more building in July in other years.
There is nothing to indicate that workers want to cool off during summer.
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The same type of phenomenon of long-term dominating short-term weather trends is alsoobserved in Houston and Atlanta. If anything, there appears to be more activity in summer
compared to winter.
Though construction workers evidently can take on the heat, they are unwilling to freeze. There
are definite big seasonal swings in housing permits in cold weather cities such as Minneapolis,
Milwaukee, and Buffalo. Much more activity occurs in late spring to autumn before pretty much
going into hibernation in winter.
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CommercialInvestmentsAdvanceinFirstQuarter2011
ByGeorgeRatiu,Manager,Quantitative&CommercialResearchCommercialrealestatetransactionspostedgoodfirstquarterperformance.Salesvolume
totaled$51.4billion,a40percentincreaseofthefirstquarter2011.Retailpropertiesprovided
astrongboosttotheupwardtrend,rising89percentfromayearago. Capratesmovedlower
forapartment,retailandCBDofficebuildings.
DealscontinuedtoflowduringAprilandMay.Salesvolumetotaled$14.8billioninApriland
closedat$17.9billioninMaysecondhighestmonthlyvolumeoftheyear.However,Mayalso
representedthefirstyearoveryeardeclineinsalessinceNovember2009,down10percent.
Privateinvestorsremainedthedominantbuyerinthemarketduringthefirstquarter,
accountingfor42percentofacquisitions.Inatellingsignofthemarketsrebound,institutional
andequityfundswerethesecondmostactivebuyergroup,makingup24percentofdeals,
followedbyREITs,with15percentoffirstquartersales.Crossborderinvestorswerealso
active,with10percentofthemarket.
Thetopmarketsforinvestmentdealswerecoastal,withafewexceptions.NewYork
maintaineditsnumberonespot,followedbySanFranciscoandWashington,DC.
MostActiveMarkets
Market Vol.($Bil.) Caprate
1 NYCMetro $38.00 6.05%
2 SFMetro $15.30 5.94%
3 DCMetro $15.10 6.11%
4 LAMetro $15.00 6.33%
5 Chicago $10.60 6.69%
6 Houston $7.30 6.91%
7 Dallas $7.10 7.09%
8 Boston $7.10 6.81%
9
So.
Florida
$6.90
7.21%10 Atlanta $6.10 6.85%
Basedonlivedata;dealsvaluedat$10Morgreaterreportedincontractorclosedinpast12months
Source:RealCapitalAnalytics
Overthepastyear,distressedcommercialpropertieshavedeclined,duetoalargervolumeofworkouts
versusinflows. Apartmentsandhotelspostedthelargestdeclinesofoutstandingdistress. Justas
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importantly,withtheexceptionofCMBS,alltheotherlendergroupsmanagedtoreducedtheir
distressedbalancesoverthepast12months. Giventhat2012isapeakyearformaturingcommercial
debt,especiallythatoriginatedin2007,thetrendsareencouraging.
Top25PropertySalesbyInvestmentVolume 2012.Q1
Transaction
Location
InvVol
($M)*
SF/Units
PPSF/Unit
1BankofAmericaBuilding Boston,MA 615.0 1,305,000 $471
2530FifthAvenue NewYork,NY 390.0 537,800 725
3fmrReliantEnergyPlaza Houston,TX 334.8 837,130 400
410East53rdStreet NewYork,NY 257.0 388,000 662
5HomerBuilding Washington,DC 252.0 421,901 747
6PerrySouthBeach MiamiBeach,FL 230.0 589 390,492
7350WMartCenterDr Chicago,IL 228.0 1,243,000 183
8TowersatWilliamsSquare Irving,TX 226.1 1,395,980 162
92FederalReservePlaza NewYork,NY 207.5 623,000 333
10FairmontSanFrancisco SanFrancisco,CA 200.0 676 295,858Source:RealCapitalAnalytics|ParalInterest