Q4 Sentiment Index Drops to 2009 Levels

WASHINGTON, DC-The Real Estate Roundtable’s Sentiment Index has fallen to a disconcerting low last seen in the fall of 2009. It is the second quarter in a row that the index has dropped, after turning a corner at the beginning of the year with a positive reading. 

After holding steady at 77, out of 100 points in Q2, the index tumbled to 69 in Q3 and then to 59 in the latest survey. The reasons for the drop are not surprising, Roundtable CEO Jeff DeBoer tells GlobeSt.com. “It is a reflection of confidence levels  -- and confidence is declining, not just in the real estate industry but throughout the economy.” The survey covered the time period when it was unclear whether a debt resolution would be reached in Europe, he noted. It also didn’t include the recent positive GDP numbers that posted this week.

Still, DeBoer expects to see the index flatline at this level for the foreseeable future. “People need to catch their breath and what policy settle in a particular direction,” he said.

The survey also captured increasing doubts about the availability of finance for real estate transactions. The percentage of survey respondents who said debt availability is “much better” today vs. one year ago shrank from 36% in Q3 to only 6% in the latest survey.  There was a corresponding spike  — from 2% in Q3 to 26% in Q4 — in the percentage of respondents who said debt availability today is “somewhat worse” than it was one year ago. For equity, 77% of Q3 survey respondents said conditions “today” are at least somewhat better than one year ago. In the latest survey, only 40% of respondents characterized current conditions as “somewhat” or “much” better than one year earlier. 

The survey was prepared on the Roundtable’s behalf by FPL Associates. Data collection was conducted Oct. 3–12. The next Sentiment Survey report will be released in February 2012.