Each month I participate in a real estate survey conducted by Bank of Americas Equity Research Department.
The purpose of this research is to provide "analysis of the latest trends in the largest real estate markets, thoughts on where we see markets' heading in the near term, and our favorite and least favorite homebuilding stock ideas." In this survey Bank of America polls '4,000 agents in 39 of the largest housing markets'.
"We survey real estate agents, as we believe that agents will provide an accurate assessment of housing market trends in both the new and existing home markets. Even though homebuilders sell new homes, we believe that it is crucial to have anunderstanding of the existing home market as the existing home market is substantially larger than the new home market (approximately 85%/15%) and trends in the existing home market dictate trends in the new home market."
I have omitted any reference to individual homebuilding stocks, and instead offer the results of this survey, in a summarized form, as a snapshot of current real estate trends in these 39 markets as reported by the 4000 real estate agents taking part in the survey.
BofA Monthly Real Estate Agent Survey
BofA Monthly Real Estate Agent Survey
Buyer Sentiment Shifts Further; Shift Could Lead to Prolonged Downturn
Consumers beginning to sour on the idea of buying, even aside from pricing issues.
Our August survey of 4,000 agents in 39 of the largest housing markets
revealed further declines in market conditions. Overall, it unfortunately seems that
consumers are shifting from a mindset of waiting for a better price to one where
they do not want to buy at this time, no matter what the price is. We think this
shift in sentiment is particularly worrisome, as it could take time before the
mindset shifts back and could lead the downturn to last longer.
Falling home prices seen in most markets.
Agents noted sequentially lower home prices in 82% of the markets we surveyed, up from 79% in July. In
addition, we saw a higher percentage of agents noting falling prices in each of the markets where we’ve seen declining prices in the past. Agents have now cited sequentially lower prices for each of the past 11 months.
Traffic below expectations of agents for 16th consecutive month.
While August is generally a slow time of year, traffic is below expectations once again.
Our homebuyer traffic index measured to 24.3, essentially flat with 23.7 in July.
Time needed to sell a home continues to lengthen.
Our “time to sell” index registered 11.7 in August (from 14.0 in July – a lower number indicates a
lengthening time needed to sell a home) and is generally a good leading indicator of future pricing trends.
Housing downturn likely to last longer than stocks reflect given record
inventory levels and worsening sentiment.
Survey Highlights from the 39 Markets
Atlanta, GA – Prices Weakening, Likely with Further to Go
-Traffic remains below expectations; buyers perceive homes as overpriced due to
oversupply.
-Agents see lower home prices.
Agents see more investors; “most traffic appear to come from
investors and people relocating from higher cost of living areas such as
Florida and California.”
“Relocation business is off - probably due to other markets
experiencing a more significant slow down.”
Austin, TX – Investor Demand Fueling Continued Price Appreciation
-Arizona and California investors boost traffic.
-Low inventory fuels strong price appreciation.
“Our market has had steadily lower inventory and higher demand in
resale market this year; new home builders are expanding their inventory
due to strong employment growth, less resale inventory, and strong
investor demand.”
“Inventories have steadily drifted lower.”
Charlotte, NC – Healthy Traffic with Buyer Relocations up,
but Inventories are Climbing
-Traffic modestly above expectations with healthy buyer relocations.
-Price appreciation remains steady.
“Large national builders are oversupplying the market with too much
inventory.”
Chicago, IL – High Inventory Levels and Low Affordability
-Traffic remains far below expectations due to a lack of urgency caused by excess inventories and low affordability.
-Home prices and incentives worsen as inventories build.
“As a sellers’ agent, I have been disappointed in the number of
prospective buyers coming to see my listings. I think that oversupply is the
main problem facing sellers today.”
Dallas, TX – Supply Outpacing the Demand; Lower Home
Prices and Less than Expected Traffic in August
-Similar levels of traffic, but more inventory.
-Home prices fell modestly in August.
“There are a high number of foreclosures in my area.”
“Steady supply of existing homes & new home inventory.”
Denver, CO – Risk of Large Write-downs Given Prolonged Weakness
-Traffic disappoints more agents.
-More agents see pricing and incentive trends worsen than previously.
“Some homebuilders are offering up to enormous incentives, creative
financing for the 1st year with low payments, and are slashing prices.”
“Now there are over 32,000 houses on the market and there has not
been any major increase in employment this year, so sales are just plain
down.”
Ft. Myers, FL – “This market is completely dead. There is no traffic.”
-Sharp deterioration in traffic and pricing.
-Further weakness in pricing and incentives/time to sell increased.
“The investors have left. There are too few buyers and too many
homes on the market.”
“The market is overpriced. Investors that got in at the tail end of
monster appreciation are now trying to cash out, and greedy sellers are
setting unrealistic prices. Inventory has shot up.”
“Examples of incentives include up to 40% off published prices, 4%
agent commission, free upgrades, and a 1.25% mortgage rate.”
Houston, TX – Traffic In-Line with Expectations; Price
Appreciation Moderates as Supply Increases
-Traffic meets agents’ expectations.
-Price appreciation moderates as supply increases.
“Buyers from California are not able to sell their homes as easy as last
year, and therefore, are not yet able to buy in Houston.”
Jacksonville, FL – Traffic Far Below Expectations Despite Increased Discounts
-Builders struggle to maintain sales activity.
-Home prices continue to fall and inventories climb.
“Builders such as Lennar, D.R. Horton, Centex, Mercedes, and
Collins are all offering price reductions, increased allowances towards
closing cost and some additional giveaways.”
Las Vegas, NV – Home Prices are Falling; Further Price Correction Necessary
-Traffic far below expectations across buyer segments; “Move-up buyers are rare,
first-time buyers are endangered, and investors are extinct.”
-“More sellers giving in on price; homebuilders are more aggressive with discounts.”
“There are too many homes on the market and no buyers.”
“Buyers know they now have the opportunity to negotiate good deals.”
Los Angeles, CA – “Lots of Inventory, But Not Too Many People Looking to Buy”
-Traffic falls further below expectations.
-96% of agents said the time needed to sell increased – home prices falling.
“Too many homes out for sale. The supply exceeds the demand.”
“Buyers are cautious because of possibility of falling home prices.”
Miami, FL – Agents Note “Wait and See Attitude,” But Affordability Concerns May be Longer Lived
-Traffic far below expectations due to affordability concerns and negative sentiment.
-Home prices and incentives continue to worsen.
“All condo conversions are offering free maintenance for one year or
cash back, no mortgage payments for one year, 17,000 credit, etc.”
“Builders are offering much higher commissions across the board
from 8-15%.”
Minneapolis, MN – Low Buyer Confidence Weighs on Traffic and Pricing;
“Market is Flooded with Homes”
-Agents see an “abundant amount of sellers” but few buyers.
-“The market is overloaded with homes for sale and much of the market is still overpriced.”
“New homes are for rent in our area, by pretty much every builder.”
“Too much inventory versus number of buyers.”
New York-Northern NJ – Shift Toward Buyers’ Market from Higher Inventories and Less Demand
-“Becoming a buyers market” – traffic still short of expectations"
-Higher inventories cause prices and incentives to worsen.
“Market supply is the highest in the past 8 to 10 years. There are the
fewest number of buyers in the last 15 years. Sales are off 60% despite the
fact that I’ve increased my marketing expenditures by 40%.”
“Many more homes on the market and buyers are waiting to see if
prices will come down even further.”
Orlando, FL – Prices Decline Due to “Massive Inventories”,
No Investor Demand
-Traffic still far below expectations; sellers not yet realistic with pricing.
-Price index reaches new low – longer time needed to sell indicates future price weakness.
“Higher commissions, bonuses to agents, gas cards for agents,
reduced prices for buyers, "make an offer" invitations to buyers, cars, big
screen TVs, upgraded appliance packages...these are common offers from
various builders.”
Phoenix, AZ – Boom Continues to Shift to Bust
-Buyers stay on the sidelines, watching prices fall.
-Prices and incentives worsen; further declines likely given the longer time needed to sell.
“I’ve seen incentives up to $100,000 off a $ 400,000 home.”
“Affordability is a factor. More first-time buyers are deciding to
rent.”
Riverside-San Bernardino, CA (Inland Empire) – Weak Traffic Due to Low Affordability; Prices Falling
-Nearly every agent cites affordability concerns.
-Home prices fall further.
“Correction in home prices means less confidence for buyers.”
“Buyers are waiting for home prices to go lower.”
Seattle, WA – Shifting from Sellers’ to Buyers’ Market
-Early stages of a shifting market; higher inventories but stubborn pricing.
-Price appreciation continues, but at a more moderate pace.
“Affordability has decreased due to constantly increasing asking
prices for homes. Second home buyers are delaying decisions and waiting
to see if the economy remains robust.”
“So much more on the market, especially in the higher price ranges.
Buyers over $650,000 have a LOT of choices.”
Tampa, FL – Prices Coming Down Quickly; Barely Any Traffic
-Traffic worsens from very low levels; negative outlook with fear of new tax assessments.
-Prices falling, but more downside expected.
“I deal in investor/second home market and these people are not willing to pay
top dollar for beach property any longer.”
“Emails and flyers came across my desk this week that offered 6%-15% commissions.”
Washington, D.C. – “So Much Supply, Many Listings Go Unseen”
-Traffic below expectations on buyer apprehension, low affordability.
-“Property values are dropping”
“Buyers are waiting to see how far prices will drop.”
“Investors are gone. People with money are not buying other people cannot
afford the prices.”
Baltimore, MD
-Traffic fell short of expectations.
-Prices fall modestly; incentives unchanged.
-Length of time needed to sell a home increased – a negative indicator for future pricing trends.
“Weak employment growth is contributing to lower traffic levels.”
“Higher rates and home prices further stretched affordability.”
Charleston, SC
-Traffic fell short of expectations.
-Prices fall modestly; homebuilders increase incentives.
-Length of time needed to sell a home increased – a negative indicator for future pricing trends
“Housing affordability is the main factor affecting traffic levels, and
most buyers are “waiting to see” what is going to happen with prices.”
Cincinnati, OH
-Traffic fell short of expectations.
-Prices and incentives deteriorate
-91% of agents said the time needed to sell increased
“Layoffs and oversupply are leading traffic levels and prices lower.”
Columbus, OH
-Traffic improves but remains below agents’ expectations
-Pricing and incentives worsened
-Length of time needed to sell a home increased – a negative indicator for future pricing trends
“Job layoffs are negatively impacting traffic levels.”
Detroit, MI
-Traffic remains weak
-Pricing and incentives continue to worsen
-Time to sell lengthens once again
“The primary factor leading to a decrease in home sales and potential
buyers is the current economic climate in Detroit. With increases in layoffs
and cutbacks in industries across the board, our market has seen a dramatic
decrease in demand.”
Nashville, TN
-Traffic fell below agents’ expectations
-Home prices increased in August
-Time to sell lengthens
“Traffic levels have been below expectations because consumer
confidence is lower; people are getting a bit scared!”
“Employment growth and buyer relocations are at healthy levels.”
Philadelphia, PA-Southern NJ
-Traffic fell short of expectations
-Pricing and incentives deteriorated
-Nearly all agents noted an increase in the time needed to sell a home
“There is buyer hesitation due to the uncertain market and fear of
falling prices.”
Port St. Lucie, FL
-Traffic disappointed agents in August
-Pricing and incentives worsen
-The time needed to sell a home lengthened and points to further weakness in prices.
“Area prices are still inflated. Generally, the real estate economy is
very slow in all of Florida.”
Portland, OR
-Traffic fell short of expectations
-Home prices fell relative to July
-Longer time needed to sell a home should lead to less price appreciation
“Clients have indicated that they have difficulty in purchasing
because of the higher cost of ownership, higher interest rates and home
prices.”
Raleigh, NC
-Traffic modestly below agents’ expectations
-Home prices appreciate
-Length of time needed to sell a home increased – a negative indicator for future pricing trends
“Relocation from the Northeast and West has slowed as homes are
taking much longer to sell in those markets.”
“It’s a buyer’s market here.”
Richmond, VA
-Traffic remains below expectations
-Pricing and incentives worsen
-Nearly every agent noted an increased in the time needed to sell a home
“Most homes are priced out of buyers’ affordability ranges.”
“People buying a second home or an investment property are no
longer active in the market.”
Sacramento, CA
-Traffic remains far below agents’ expectations
-Pricing and incentives worsen; no stabilization
-Length of time needed to sell a home increased – further price erosion likely
“There is an extreme glut of properties available, and a perception that
market is going to continue to fall. Rents are 1/2 the cost of ownership, so
first time buyers don't feel a pressing need to buy until they find the "right"
deal.”
“Buyers are waiting to see if prices drop further.”
San Antonio, TX
-Traffic lightens but still exceeds agents’ expectations
-Price appreciation remains strong
-Length of time needed to sell a home increased modestly – a negative shift
San Diego, CA
-Traffic fell far short of expectations
-Pricing and incentives worsen
-Length of time needed to sell a home increased – a negative indicator for future pricing trends
“Buyers are hesitant to buy when the market is falling, and sellers are
unrealistic in their asking prices.”
“Low affordability and buyer expectations of lower prices are leading
to lower traffic levels.”
San Francisco, CA
-Traffic fell well short of expectations
-Pricing and incentives worsened
-Length of time needed to sell a home increased – a negative indicator for future pricing trends
“Buyers fear prices will continue to drop.”
“There has been a tremendous increase in resale inventory.”
Sarasota, FL
-Traffic falls short of expectations
-Pricing and incentive trends deteriorated
-Longer time needed to sell compared with July
“There is too much inventory chasing too few buyers – buyers are on
the sidelines hoping for price cuts.”
Tucson, AZ
-Traffic far below expectations
-Pricing and incentives worsen
-Longer time needed to sell a home in August versus July
“Houses are flooding the market. Sellers haven't caught up with the
fact that prices are dropping. There are not enough buyers and the ones that
are there are very selective.”
“Second home demand has softened due to economic uncertainty.”
Virginia Beach, VA
-Traffic fell short of expectations
-Pricing and incentives worsened
-Length of time needed to sell a home increased – a negative indicator for future pricing trends
“There is a lack of qualified buyers due to the areas low
affordability.”
Wilmington, NC
-Traffic fell short of expectations
-Pricing and incentives worsen
-Length of time needed to sell a home increased – a negative indicator for future pricing trends
“Affordability and investor demand have decreased.”
“Buyers are reluctant to purchase due to economic uncertainty.”
