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REALTOR®: REALTOR® Confidence Index Gauges Market Trends and Current Conditions

Wednesday, December 9, 2009

A National Association of REALTORS® survey of more than 50,000 REALTORS® shows real estate professionals continue to be concerned about foreclosures and short sales, and note the first-time homebuyer tax credit helped turn the market around in 2009.

Twenty nine percent of recent buyers purchased a home in foreclosure or through a short sale, according to the latest REALTORS® Confidence Index. The RCI is a key indicator of housing market strength based on a monthly survey of more than 50,000 REALTORS®. Practitioners are asked about their expectations for home sales, prices and market conditions, as well as their insights regarding buyer preferences and financing options and how those factors are influencing real estate markets nationwide.

"REALTORS® are on the front lines with buyers and sellers in today's market and have valuable insights into real estate trends," according to Charles McMillan, NAR's 2009 president. "The volume of distressed sales that our members are reporting underscores the importance of the recent tax credit extension. By putting cash in the hands of financially healthy home buyers, the credit will continue to help draw down inventory and stabilize home prices to encourage a strong and sustainable housing recovery."

REALTORS® reported that their buyers are encountering various challenges associated with distressed sales. Buyers who present a short sale offer can wait months before hearing whether their offer will be accepted, there is increased competition for foreclosed properties, and multiple bids are sometimes driving sales prices over list prices.

REALTORS® are also observing more buyers are increasingly interested in a home's energy efficiency and proximity to transportation corridors, which reflect greater concerns about rising energy costs. They also report a growing preference among buyers for smaller homes, as people look to downsize and cut expenses.

Mortgages insured by the Federal Housing Administration are the primary lending vehicle for many buyers; 24 percent of recent buyers used an FHA loan to finance their purchase. However, more than one in five recent buyers – 21 percent – paid all cash.

"The concerns REALTORS® raise are valid," said Julia Truesdale Keady, president of the Silicon Valley Association of REALTORS®, the local trade association with over 4,000 REALTOR® and affiliate members on the Peninsula and in the South Bay. "As advocates of private property rights and homeownership, REALTORS® want the best for their clients. REALTORS® and their clients have faced many challenges this year, with new laws and regulations dictated by the changing market. They have expressed their frustration in the delay and falling through of some transactions, especially short sales, due to the process by which lenders have handled these transactions. The Home Valuation Code of Conduct resulted in problems with questionable appraisals and also impacted transactions this year."

Keady praised the government's efforts to spur recovery with the recent extension and expansion of the home buyer's tax credit and the extension of the conforming loan limits. "As we enter into 2010, thanks to efforts by our lawmakers, who understand that economic recovery is rooted in real estate, our expectations for the market next year continues to be positive, especially in our local region,"
Keady said.


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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