TUSCALOOSA, Ala. — State leaders in the residential and commercial real estate industries expect overall market conditions to improve for the second-consecutive quarter, according to the latest survey by The University of Alabama.
Why it matters: The Alabama Center for Real Estate’s survey’s registered Q2 2024 scores of 62.6 for the Residential Real Estate Index (RREI™) and 51.3 for the Commercial Real Estate Index (CREI™). This indicates that real estate professionals across the state expect an improvement in both residential and commercial market conditions. An index value of 50 indicates a neutral outlook. Scores below 50 indicate a contractionary outlook while scores above 50 indicate an expansionary outlook.
Residential panelists were strongly confident in the overall market improvement while commercial panelists were mildly confident. This is the second time both surveys recorded index values above 50 since its inception in June 2023.
By the numbers RREI™
- Interest Rates: The Q2 2024 index of 57.6 decreased 7.5 points from the prior quarter. Panelists were moderately confident that interest rates will improve (decrease) during the second quarter. Despite the optimism, only 38.4% of panelists believe interest rates will improve, while more than half of panelists (53.5%) expect them to stay the same in Q2 compared to the prior quarter.
- Sales: With a Q2 2024 index of 66.4, survey participants are strongly confident that home sales will increase. This indicator increased 4.0 points from the Q1 index. More than two-thirds of panelists (68.7%) expect sales to increase in Q2 compared to the prior quarter.
- Listings: With a Q2 2024 index of 69.9, survey participants are very strongly confident that listings will increase. This indicator increased 2.4 points from the Q1 index. More than three-fourths (77.8%) of panelists expect listings to increase in Q2 compared to the prior quarter.
- Sales Prices: With a Q2 2024 index of 56.1, survey participants are moderately confident that sales prices will increase. This indicator had a slight increase from Q1, rising 3.8 points. Approximately half of panelists (48.5%) expect no change in sales prices in Q2, but more panelists expect sales prices to rise than to fall.
Click here to read the full RREI™
By the numbers CREI™
- Statewide Outlook: With a Q2 2024 index of 55.2, survey participants expect an expansion of Alabama’s CRE market with moderate confidence. This is 0.6 points below the Q1 index. Only 12.1% of survey participants anticipate a worsening of the Alabama CRE market from Q1.
- United States Market Outlook: With a Q2 2024 index of 48.3, survey participants expect a contraction of the national CRE market with mild confidence. This is 0.4 points below the Q1 index. More than half of the panelists (58.6%) expect no change from Q1.
- Interest Rates: With a Q2 2024 index of 56.9, survey participants expect interest rates to decrease with moderate confidence. This is 1.5 points below the Q1 index. Only 1.7% of panelists expect interest rates to worsen (increase) from Q1.
- Construction Costs: With a Q2 2024 index of 44.8, survey participants expect construction costs to worsen (increase) with moderate confidence. This is 1.8 points below the Q1 index. Only 12.1% of panelists expect construction costs to improve (decrease) from Q1.
- An additional component of the AL CREI is the Owners, Brokers, and Developers Index (OBDI™). The OBDI™ registered a score of 50.8 in the Q2 2024 survey. The current score is 3.4 points above the Q1 2024 score of 47.4, indicating a shift from mild confidence in the contractionary forecast to mild confidence in the expansionary forecast.
What they’re saying: “Interest rates are a major topic of conversation in both the residential and commercial fields. The big question is when will rates begin to trend back down,” ACRE Associate Director, Stuart Norton said. “On the residential side, elevated rates have slowed sales activity back to levels seen in 2018 and resulted in properties spending more time on the market. Prices, however, have remained steady as inventory is still limited. On the commercial side, sales and leasing activity has slowed significantly in the current rate environment, but industry professionals are somewhat confident that a rate cut later in the year will boost market activity.”
Click here to read the full CREI™
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The University of Alabama, part of The University of Alabama System, is the state’s flagship university. UA shapes a better world through its teaching, research and service. With a global reputation for excellence, UA provides an inclusive, forward-thinking environment and nearly 200 degree programs on a beautiful, student-centered campus. A leader in cutting-edge research, UA advances discovery, creative inquiry and knowledge through more than 30 research centers. As the state’s largest higher education institution, UA drives economic growth in Alabama and beyond.
