Residential Market Improvement

Realtor® comments and replies to the latest Realtors® Confidence Index continued to indicate recovery in the residential markets. All real estate is local, so comments were varied depending on location. The problems noted in previous months continue. For example,

• Obtaining a mortgage is reported as difficult.
• Bargain hunters and low-price bids continue.
• Pricing continues to be a challenge.
• The appraisal process continues to be a problem.

However, fewer respondents noted major problems than had previously been the case, and a growing number of respondents in recent months have been indicating cases of multiple bidding, low inventories, a resurgence of buyer interest, and the rapid resolution of distressed property sales. There continues to be discussions of Shadow Inventory in the press. Realtor® respondents appear to believe that increased inventories of unsold homes will not be a problem. Many respondents cited an inventory shortage.

The health of the real estate market appears to be a function of location of the respondent, with some markets starting to trend upwards. The real estate markets are driven by jobs and the economy—and there the reports have been mixed. There has been relatively good job growth in recent months, but not enough to restore the economy to acceptable unemployment levels. We are still looking at possibly three to four years before unemployment reaches reasonable levels if job creation continues at its current pace. In addition, there are a variety of major uncertainties impacting the economy—jobs, gasoline prices, unemployment, budget deficits, and a variety of other potentially negative situation.

In spite of all the economic negativity in recent months, however, the comments in this month’s RCI show a market starting to turn. Overall, this month’s Realtors® Confidence Index seems to indicate a continued market recovery.