Alabama Real Estate Confidence Index, University Of Alabama


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This presentation presents the methodology and results of the 1st Alabama Real Estate Confidence Index (ARECI) looking at the expectations for the 1st quarter of 2010 for 4 Alabama regions, Conducted by the Alabama Center For Real Estate

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Alabama Real Estate Confidence Index, University Of Alabama

  1. 1. Alabama Center for Real Estate Alabama Real Estate Confidence Index®   2010 Winter Roundtable ACRE Leadership Council   Tom Brander, ACRE Council Member Rudulph/Brander Real Estate Reports & Grayson Glaze, Executive Director, ACRE   Thursday, January 28, 2010   Burr Forman, Birmingham, AL  
  2. 2. Calculation of Survey Results <ul><li>The economic and Industry indicators use a five-part scale with the following wording: much better, better, about the same, worse, much worse </li></ul><ul><li>These choices are weighted 100,75,50,25,0 </li></ul><ul><li>Index = ( Σ weighted responses/# surveys) </li></ul><ul><li>Index range is 0 to 100, with 50 as the neutral point, and 0 as much worse </li></ul>
  3. 3. Characteristics of ARECI Respondents Q4 2009 <ul><li>Region </li></ul><ul><ul><li>North 18.2% </li></ul></ul><ul><ul><li>North Central 35.2% </li></ul></ul><ul><ul><li>South Central 18.4% </li></ul></ul><ul><ul><li>South 28.2% </li></ul></ul><ul><li>Residential/Commercial </li></ul><ul><ul><li>Residential 84.0% </li></ul></ul><ul><ul><li>Commercial 16.0% </li></ul></ul>
  4. 4. A Quick Summary Q1 2010 <ul><li>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. </li></ul>
  5. 5. ARECI Expectations for Q1 2010 <ul><li>The overall survey score was 49 which indicates a slight negative bias for expectations. </li></ul><ul><li>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. </li></ul><ul><li>The group was also positive 57 on the outlook for Real Estate Sales in the 1st quarter. </li></ul><ul><li>There is still an expectation of competitive conditions with a slight expectation for more inventory expected at 49. </li></ul><ul><li>Pricing 43 was expected to be weak in light of the economy and continued lack of credit 40. </li></ul><ul><li>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. </li></ul>
  6. 6. ARECI Survey Today <ul><li>This is our 1 st report so we cannot compare it to any prior data to establish the degree of change in perceptions over time. </li></ul><ul><li>We also get some subjective information with an open ended text question which gives us additional color and flavor. </li></ul>
  7. 7. How does ABCI compare to ARECI? Vs. Initial ARECI overall of 49.1
  8. 8. Origins of ARECI Survey <ul><li>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. </li></ul><ul><li>Questions were developed in consultation with the Participation of the leadership board of the Alabama Center For Real Estate at The University of Alabama. </li></ul><ul><li>Alabama all areas of the state have been solicited and sub specialties, such as Residential and Commercial. </li></ul><ul><li>ACRE recruited participants, while the website, survey analysis, and results newsletter were managed by Tom Brander in conjunction with ACRE. </li></ul><ul><li>This initial survey received 637 valid responses well distributed over the four regions of the state. </li></ul>
  9. 9. Survey Design <ul><li>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 </li></ul><ul><li>There are two general economic indicators: </li></ul><ul><ul><li>Real Estate conditions in the United States </li></ul></ul><ul><ul><li>Real Estate conditions in Alabama </li></ul></ul><ul><li>There are four industry and location specific indicators: </li></ul><ul><ul><li>Sales </li></ul></ul><ul><ul><li>Inventory </li></ul></ul><ul><ul><li>Pricing expectations </li></ul></ul><ul><ul><li>Credit Availability </li></ul></ul>
  10. 10. ARECI panelists <ul><li>Participation is voluntary; panelists register on the survey website </li></ul><ul><li>Panelists recruited by target mailings, association contacts, events, etc. </li></ul><ul><li>Total participation has begun with 637 participants from all four areas of the state </li></ul><ul><li>Targeted Real Estate Professionals; mostly Agents and Brokers, with some Developers and Financing sources </li></ul>
  11. 11. ARECI indices <ul><li>Each quarter the overall index is calculated and a component index is computed for the six variables on the survey. </li></ul><ul><li>Composite indices are also derived for various industry sectors: Residential vs. Commercial </li></ul><ul><li>The index and component indices are calculated for the state’s four regions (North, North Central, South Central, South). </li></ul><ul><li>As our data deepens and we notice significant divergences more indices may be developed. (e.g. Rural vs. Urban) </li></ul>
  12. 12. ARECI Results <ul><li>Results are compiled in a newsletter that is distributed to panelists first and then posted on the ACRE website, </li></ul><ul><li>Survey results are also released to the media. </li></ul><ul><li>Presentations made to the ACRE events </li></ul><ul><li>We hope that the survey will raise the awareness of the public about ACRE and the importance of the Real Estate industry. </li></ul>
  13. 13. A Few Question & Answers <ul><li>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). </li></ul><ul><li>In order to &quot;fit&quot; 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. </li></ul><ul><ul><li>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. </li></ul></ul>
  14. 14. Comments
  15. 15. Comments <ul><li>We received about 500 comments, which is outstanding for a survey of this type. </li></ul><ul><li>While it is difficult to fully summarize the comments there was a general feeling of unease and frustration expressed. </li></ul><ul><li>Not surprisingly, this was directed at the government for unease as to both doing too much, and not enough, or not the right things.  </li></ul><ul><li>There was a general feeling that many more problems remain to be worked through, specifically foreclosures, both residential and commercial. </li></ul><ul><li>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. </li></ul>
  16. 16. Help Us Help You <ul><li>Send comments, questions and suggestions to: [email_address] or of course to </li></ul><ul><li>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. </li></ul><ul><li>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. </li></ul>
  17. 17. Next Survey
  18. 18. Future: More Analysis