REAL ESTATE REPORT - REDI-net.com

WINTER 2011 | VOL 39 | NO 4
Consumer Confidence
Index
After decreasing slightly in December, consumer confidence rose 7.2 points to 60.6
in January 2011. This is only the second time the index exceeded 60 since 2008.
This improvement might have been caused by tax cuts and improving labor market
conditions. While moods are looking up, there is evidence that consumers believe
the recession has not ended.
S&P 500
120
100
80
60
40
20
Dec-01
May-02
Oct-02
Mar-03
Aug-03
Source: The Conference Board.
Beginning of Month Adjusted Closing Price
1600
1500
1400
1300
1200
1100
1000
900
800
700
600
Source: S&P.
Dec-02
Apr-03
Aug-03
Dec-03
Apr-04
Index of Leading Indicators
Jan-04
Jun-04
Nov-04
Apr-05
Sep-05
Feb-06
Jul-06
Dec-06
May-07
Oct-07
Mar-08
Aug-08
Jan-09
Jun-09
Nov-09
Apr-10
Sep-10
Jan-11
Aug-04
Dec-04
Apr-05
Aug-05
Dec-05
Apr-06
Aug-06
Dec-06
Apr-07
Aug-07
Dec-07
Apr-08
Aug-08
Dec-08
Apr-09
Aug-09
Dec-09
Apr-10
Aug-10
Dec-10
The S&P 500 ended December 2010 at 1,257.64, up 0.07 percent from November.
Overall, the S&P 500 was less volatile during fourth quarter as it gradually
increased. Stocks in general are becoming more popular, though they are still considered
to be more risky than commercial real estate.
Percent Change Month Ago
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
-0.2
-0.4
Source: The Conference Board.
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
The Conference Board’s Index of Leading Indicators rose 1 percent in December
2010, indicating that the pace of recovery should increase in 2011. Compared to
a year ago, the index grew 5 percent, and is more broad-based than previously.
Economic growth has accelerated in recent months, and consumer spending is
expected to strengthen with help from reductions in payroll taxes.
© 2011 REAL ESTATE RESEARCH CORPORATION. ALL RIGHTS RESERVED.
120
100
80
60
40
20
1600
1500
1400
1300
1200
1100
1000
900
800
700
600
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
-0.2
-0.4
Existing Home Sales
RERC © REAL ESTATE REPORT - THE NATIONAL REAL ESTATE AUTHORITY
Housing Affordability
Index
Source: NAR.
190
180
170
160
150
140
130
120
110
100
Oct-07
Dec-07
Feb-08
Apr-08
The National Association of REALTORS® (NAR) Housing Affordability Index measures
whether or not a typical family could qualify for a mortgage on a typical home.
During fourth quarter 2010, the index increased until December, when it fell slightly
to 185.3. However this still indicates that a typical family is more than able to afford
a median-priced home.
Millions
8.0
7.0
6.0
5.0
4.0
3.0
Single Family Home Supply
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
Dec-01
Mar-02
Jul-02
Nov-02
Mar-03
Jul-03
Nov-03
Mar-04
Jul-04
Nov-04
Mar-05
Jul-05
Nov-05
Mar-06
Jul-06
Nov-06
Mar-07
Jul-07
Nov-07
Mar-08
Jul-08
Nov-08
Mar-09
Jul-09
Nov-09
Mar-10
Jul-10
Dec-10
Source: NAR.
Existing home sales jumped 12.3 percent in December 2010, at an annualized rate
of 5.28 million units. This is the strongest monthly gain since 1999. However, compared
to a year ago, sales are down 2.9 percent. Foreclosure processsing issues
persist, threatening demand and creating uncertainty. Home prices are expected to
decline further, before stabilizing in the second half of the year.
Months
13
12
11
10
Source: NAR.
9
8
7
6
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
During fourth quarter, the monthly home supply continued to steadily decrease,
with the December 2010 single-family home supply declining to 8.1 from the previous
month. This remains considerably higher than the normal rate of around 6.0
months, but demand for housing is expected to increase as job growth increases.
190
180
170
160
150
140
130
120
110
100
8.0
7.0
6.0
5.0
4.0
3.0
13
12
11
10
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