realtors® confidence index: july 2014

8/11/2019 REALTORS® Confidence Index: July 2014

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The REALTORS® Confidence Index ( RCI ) Report provides monthly information aboutmarket conditions and expectations, buyer/seller traffic, price trends, buyer profiles, and issuesaffecting real estate based on data collected in a monthly survey of REALTORS®. The July2014 report is based on the responses of 3,901 REALTORS® about their transactions in July2014.1 Responses were received from August 1 -11, 2014. Questions about the characteristics of

the buyer and the sale are based on the REALTOR’S® last transaction for July , which on acombined basis are viewed to be representative of the sales for the month. All real estate islocal: conditions in specific markets may vary from the overall national trends presented in thisreport.

The Report also contains commentaries by the Research Department on recent economicdata releases and policies affecting housing.

Jed Smith, Managing Director, Quantitative Research

Gay Cororaton, Research Economist

Thomas J. Doyle, Director , Marketing and Communications

Meredith Dunn, Research Communications Manager

1 The survey was sent to 50,000 REALTORS® who were selected through simple random sampling. Toincrease the response rate, the survey is also sent to respondents in the previous three surveys and who providedtheir email addresses. The number of responses to a specific question varies because the question is not applicableto the respondent or because of non-response. To encourage survey participation, eight REALTORS® are selectedthrough simple random sampling to receive a gift card.



Page | 1

SUMMARY

The July 2014 survey indicates that REALTORS® continued to hold a modestassessment about current conditions and the outlook for the next six months. REALTORS®reported some uptick in inventory in some areas (in CA, FL, ME, MI, IN, ID, and VA), but

generally, supply remained tight relative to demand in many areas, especially for “lower” and“middle- priced” homes. Distressed sales continued to account for a smaller share of the market.REALTORS® continued to report about the restrictive effects of the current credit conditions,especially in relation to the credit score and downpayment requirements that will qualify buyersfor a mortgage. The home buying process was reported to be “long and difficult”even for

“quality borrowers”. Although the home price recovery has encouraged more listings, the strong price growth amid modest wage income gains has also made homes less affordable, creating ademand for lower-priced homes that are, unfortunately, in short supply. Changes in the FHAmortgage insurance premium regulations, the cost of obtaining flood insurance, and increases in property taxes were also reported to be having a negative impact on potential sales. FHAfinancing regulations continued to be reported as severely impeding condominium sales.

July 2014 REALTORS® Confidence Index Survey Highlights

July 2014 June 2014 June 2013

RCI –Current Conditions: Single Family Sales /1 60 62 68

RCI- 6 Month Outlook: Single Family Sales /1 60 63 69

RCI –Buyer Traffic Index /1 55 58 66

RCI-Seller Traffic Index /1 45 44 45

First-time Buyers, as Percent of Sales (%) 29 28 29

Cash Sales, as Percent of Sales (%) 29 32 31

Sales to Investors, as Percent of Sales (%) 16 16 16

Distressed Sales, as Percent of Sales (%) 9 11 15

Median Days on Market 48 44 42Median Expected price growth in next 12 months (%) 3.4 3.6 4.8

/1 An index of 50 delineates “moderate” conditions and indicates a balance of respondents having “weak”(index=0)

and “strong” (index=100) expectations or all respondents having moderate (=50) expectations. The index is notadjusted for seasonality effects.



Page | 2

I. Market Conditions

REALTORS® Confidence Continued to Moderate in July 2014

Confidence about current market conditions declined across all markets in July 2014

compared to June 2014 . In the single family market, the REALTORS® Confidence Index -Current Conditions for single family homes dipped to 60 (62 in June), indicating that a smaller percentage of REALTOR® respondents viewed the market as “strong” compared to a month

ago. The indexes for townhouses/duplexes stayed at 44 while the index for condominiums alsoremained at 39. An index above 50 indicates that more than half of REALTOR® respondentsviewed housing conditions as “strong”.

2

Confidence about the outlook for the next six months similarly declined in Julycompared to June. The six-month Outlook Index for single family homes fell to 60 (63 in June);the index for townhouses edged down to 45 (46 in June ); and the index for condominiumsdropped to 40 (41 in June).

Tight inventory, difficulties in obtaining mortgages, and weak job growth were the mainconcerns reported by REALTORS®. In some areas, the uncertainty about flood insurance rates,and the increase in property taxes were also cited as adversely affecting sales. FHAcondominium accreditation/financing regulations continued to adversely impact condominiumsales.

2 An index of 50 delineates “moderate” conditions and indicates a balance of respondents having

“weak”(index=0) and “strong” (index=100) expectations or all respondents having moderate (=50) expectations.The index is calculated as a weighted average using the share of respondents for each index as weights. The index isnot adjusted for seasonality effects.

60

44

39

0

20

40

60

80

2 0 0 8 0 1

2 0 0 8 0 5

2 0 0 8 0 9

2 0 0 9 0 1

2 0 0 9 0 5

2 0 0 9 0 9

2 0 1 0 0 1

2 0 1 0 0 5

2 0 1 0 0 9

2 0 1 1 0 1

2 0 1 1 0 5

2 0 1 1 0 9

2 0 1 2 0 1

2 0 1 2 0 5

2 0 1 2 0 9

2 0 1 3 0 1

2 0 1 3 0 5

2 0 1 3 0 9

2 0 1 4 0 1

2 0 1 4 0 5

REALTORS® Confidence Index - Current Conditions--

as of July 2014 RCI Survey

(50="Moderate" Conditions)

SF Townhouse Condo



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Buyer Traffic Index Dropped in July

The Buyer Traffic Index declined in July to 55 (58 in June). Meanwhile, althoughinventory is improving, supply is still broadly tight: the Seller Traffic Index is still below 50 andessentially stayed flat at 45(44 in June) 3. An index above 50 indicates that more than half ofREALTORS® view traffic conditions as “strong”.

REALTORS® reported some uptick in inventory (in CA, FL, ME, MI, IN, ID, and VA),

but supply remained tight relative to demand in many areas, especially for “lower” and “middle- priced” homes. There were reports that some potential sellers are hesitant to sell because ofconcerns that they will not find an affordable replacement home with adequate mortgagefinancing in a tight market. Other potential sellers are waiting for further price increases either toincrease the equity gain or to move out of a negative equity position.

NAR also tracks foot traffic using Sentrilock, LLC data. Lockboxes made by SentriLock,LLC. are used in roughly a third of home showings across the nation. This index rose to 54.8 inJuly (42.5 in June), which indicates that more than half of the roughly 200 markets tracked inthis panel reported an increase in foot traffic in July ( See Section IV Commentaries for adiscussion of this index.)

3 An index of 50 delineates “moderate” conditions and indicates a balance of respondents having

“weak”(index=0) and “strong” (index=100) expectations or all respondents having moderate (=50) expectations.

The index is calculated as a weighted average using the share of respondents for each index as weights. The index isnot adjusted for seasonality effects.

60

45

40

0

20

40

60

80

2 0 0 8 0 1

2 0 0 8 0 5

2 0 0 8 0 9

2 0 0 9 0 1

2 0 0 9 0 5

2 0 0 9 0 9

2 0 1 0 0 1

2 0 1 0 0 5

2 0 1 0 0 9

2 0 1 1 0 1

2 0 1 1 0 5

2 0 1 1 0 9

2 0 1 2 0 1

2 0 1 2 0 5

2 0 1 2 0 9

2 0 1 3 0 1

2 0 1 3 0 5

2 0 1 3 0 9

2 0 1 4 0 1

2 0 1 4 0 5

REALTORS® Confidence Index - Six Month Outlook--


(50="Moderate" Outlook)

SF Townhouse Condo



Page | 5

With inventory still generally tight and multibidding prevalent, approximately 14 percentof reported sales were at a net premium compared to the original listing price. In mid-2013,about 20 percent of REALTOR® respondents reported selling properties at a premium. About 70 percent of properties sold at a dicount compared to the listing price, with about half reporting adiscount of 0 to 10 percent.

70%

17%

14%

0%

20%

40%

60%

80%

100%

120%

2 0 1 2 1 2

2 0 1 3 0 1

2 0 1 3 0 2

2 0 1 3 0 3

2 0 1 3 0 4

2 0 1 3 0 5

2 0 1 3 0 6

2 0 1 3 0 7

2 0 1 3 0 8

2 0 1 3 0 9

2 0 1 3 1 0

2 0 1 3 1 1

2 0 1 3 1 2

2 0 1 4 0 1

2 0 1 4 0 2

2 0 1 4 0 3

2 0 1 4 0 4

2 0 1 4 0 5

2 0 1 4 0 6

2 0 1 4 0 7

Percentage Distribution of the Price Discount /Premium

On the Original Listing Price of Properties Sold by

REALTORS® --as of July 2014 RCI Survey

Sold at Net discount Sold at Original Listing Price Sold at a Net premium

2.2%

2.9%

2.3%

5.6%

11.1%

19.6%

25.8%

16.8%

7.3%

3.8%

1.4%

0.4%

0.4%0.2%

0.2%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

net discount of greater than 23%

net discount of 20-23%





net discount of greater than 0 to 3 %

0% net discount or net premium

net premium of greater than 0 to 3%

net premium of 4-7%

net premium 8-11%

net premium 12-15%

net premium of 16-19%net premium of 20-23%

net premium of greater than 23%

Percentage Distribution of Net discount or Net Premium From the

Listing Price of Sales Reported By REALTORS®--

July 2014 RCI Survey



Page | 6

REALTORS® Expect Prices to Increase Modestly in the Next 12 Months

REALTORS® responding to the survey expect home prices to increase modestly in thenext 12 months, with the median expected price increase at 3.4 percent4. The expected pricechange is modest compared to the strong price growth in 2012-2013. Local conditions vary, butconcerns about how borrowers are finding it difficult to obtain a mortgage and weak jobrecovery appear to be underpinning the modest price expectation.

The map shows the median expected price change in the next 12 months by state ofREALTOR® respondents in the May – July 2014 surveys. Respondents from Florida and Texaswere the most upbeat. Tight inventory and the strong growth in Texas metro areas may accountfor the optimistic outlook. Expected price growth is more modest in other states.

Median Expected Price Change of REALTORS® in Next 12 Months, By State

Based on May 2014-July 2014 RCI Surveys

4 The median expected price change is the value such that 50 percent of respondents expect prices to changeabove this value and 50 percent of respondents expect prices to change below this value. A median expected pricechange is computed for each state based on the respondents for that state. The graph shows the range of these statemedian expected price change. To increase sample size, the data is averaged from the last three survey months.



Page | 7

Properties Typically Sold Within 48 Days in July

Properties typically sold within 48 days in July (44 days in June)5. Short sales were onthe market for the longest, at 93 days (120 days in June), and foreclosed properties were onmarket at 58 days (54 days in June). Non-distressed properties were on the market at 45 days

(42 days in June). Conditions varied across areas. Approximately 40 percent of respondentsreported that properties were on the market for less than a month when sold, and about 14 percent were on the market for more than six months.

5 This is the median days on the market. A median of say 30 days means that half of the properties were onthe market for less than 30 days and another half of properties were on the market for more than 30 days.

0

50

100

150

200

2 0 1 1 0 5

2 0 1 1 0 7

2 0 1 1 0 9

2 0 1 1 1 1

2 0 1 2 0 1

2 0 1 2 0 3

2 0 1 2 0 5

2 0 1 2 0 7

2 0 1 2 0 9

2 0 1 2 1 1

2 0 1 3 0 1

2 0 1 3 0 3

2 0 1 3 0 5

2 0 1 3 0 7

2 0 1 3 0 9

2 0 1 3 1 1

2 0 1 4 0 1

2 0 1 4 0 3

2 0 1 4 0 5

2 0 1 4 0 7

Median Days on Market of Sales Reported By

REALTORS®--as of July 2014 RCI Survey

All Foreclosed Short Sales Not distressed

Source: NAR, RCI Survey

All: 48 Foreclosed: 58 Shortsale: 93 Not distressed: 45

40%

17%12%

9%5% 4% 5% 4% 5%

0%

10%

20%

30%

40%

50%

<1 mo 1-2 mo 2-3 mo 3-4 mo 4-5 mo 5-6 mo 6-9 mo 9-12 mo >=12

mo

Distribution of Sales Reported by REALTORS by Time On

Market--July 2014 RCI Survey

201307 201406 201407



Page | 8

II. Buyer and Seller Characteristics

Sales to First Time Buyers: 29 Percent of Sales

Approximately 29 percent of REALTORS® reported that their last transaction in July

was by a first time home buyer (28 percent in June )6. Access to financing remains a major issuefor most buyers, specifically in relation to meeting the credit score and downpaymentrequirements to be granted a mortgage (which many REALTORS® cite as 740+ and 20 percentdown). The process was reported by respondents to the survey as “long,” “complicated”, anddifficult” even for high quality borrowers. Also, strong home price appreciation has outpacedwage growth and have made homes less affordable. The effective increases in the FHA mortgageinsurance premiums were also reported to be putting an additional strain on buyers.REALTORS® commented on the difficulty of obtaining FHA financing for condominiums,which are typically the starter homes for first-time buyers.

Cash Sales: 29 Percent of Sales

Approximately 29 percent of REALTOR® respondents reported that their lasttransaction was a cash sale (32 percent in June). 7 Investors, foreign clients, and buyers ofsecond homes and distressed properties are more likely to pay cash than first – time home buyers.

About 10 percent of reported sales to first-time buyers were cash sales compared to about 50 to70 percent of buyers of property for investment purposes and international buyers. Buyers

6 First time buyers accounted for about 38 percent of all homebuyers based on data from NAR’s 2013 Profile

of Home Buyers and Sellers. NAR’s survey of buyers and sellers in general does not capture investor purchases but

does cover both existing and new home sales.7 The RCI Survey asks about the most recent sale for the month.

29%

0%

10%

20%

30%

40%

50%

60%

2 0 0 8 1 0

2 0 0 9 0 1

2 0 0 9 0 4

2 0 0 9 0 7

2 0 0 9 1 0

2 0 1 0 0 1

2 0 1 0 0 4

2 0 1 0 0 7

2 0 1 0 1 0

2 0 1 1 0 1

2 0 1 1 0 4

2 0 1 1 0 7

2 0 1 1 1 0

2 0 1 2 0 1

2 0 1 2 0 4

2 0 1 2 0 7

2 0 1 2 1 0

2 0 1 3 0 1

2 0 1 3 0 4

2 0 1 3 0 7

2 0 1 3 1 0

2 0 1 4 0 1

2 0 1 4 0 4

2 0 1 4 0 7

First Time Buyers as Percent of Market--




Page | 9

paying all cash are reported to be winning bids over first-time buyers who generally obtainmortgage financing.

Most First time Home Buyers Pay Low Down Payment

Among first-time buyers who were reported to have used mortgage financing in themonths of May – July 2014, about 66 percent made a downpayment under 6 percent. Still, this isa decline from the 74 percent figure in 2009. Higher down payments , typically at 20 percent,may be required to compensate for the weak aspects of a borrower’s credit profile. This presents

a barrier to the purchase of a home since the typical renter’s savings may be substantially lessthan the downpayment and closing costs. On the other hand, for buyers with sufficient savings

29%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2 0 0 8 1

0

2 0 0 9 0

1

2 0 0 9 0

4

2 0 0 9 0

7

2 0 0 9 1

0

2 0 1 0 0

1

2 0 1 0 0

4

2 0 1 0 0

7

2 0 1 0 1

0

2 0 1 1 0

1

2 0 1 1 0

4

2 0 1 1 0

7

2 0 1 1 1

0

2 0 1 2 0

1

2 0 1 2 0

4

2 0 1 2 0

7

2 0 1 2 1

0

2 0 1 3 0

1

2 0 1 3 0

4

2 0 1 3 0

7

2 0 1 3 1

0

2 0 1 4 0

1

2 0 1 4 0

4

2 0 1 4 0

7

Cash Sales as Percent of Market--


10%

69%

57%

20%

65%

49%

0%

10%

20%

30%

40%

50%

60%

70%

80%

FTHBuyer Investor Second home Relocation International Distressed Sale

Percent of Sales Reported by REALTORS® That are All-Cash,

by Type of Buyer-- July 2014 RCI Survey



Page | 10

or financial resources, a higher downpayment enables them to save on the monthly mortgageinsurance premium payments.

Sales for Investment Purposes: 16 Percent of Sales

Approximately 16 percent of REALTOR® respondents reported that their last sale wasfor investment purposes (same since May). Since January this year , the share of sales forinvestment purposes appears to be on the decline from the historical average of about 20 percentin recent years. For investors intending to rent out the property, rising home prices are cutting

into profits even if rents continue to rise.

74% 66%

50%

55%

60%

65%

70%

75%

80%

85%

90%

2 0

0 9 0 6

2 0

0 9 0 9

2 0

1 0 0 2

2 0

1 0 0 5

2 0

1 0 0 8

2 0

1 0 1 1

2 0

1 1 0 2

2 0

1 1 0 5

2 0

1 1 0 8

2 0

1 1 1 1

2 0

1 2 0 2

2 0

1 2 0 5

2 0

1 2 0 8

2 0

1 2 1 1

2 0

1 3 0 2

2 0

1 3 0 5

2 0

1 3 0 8

2 0

1 3 1 1

2 0

1 4 0 2

2 0

1 4 0 5

Percent of First-time Buyers Obtaining a Mortgage Who

Put in 0% to 6% Down Payment--as of July 2014

Source: NAR RCI Surveys. Computations are based on rolling 3 months of data.

16%

0%

5%

10%

15%

20%

25%

30%

2 0 0 8 1 0

2 0 0 9 0 1

2 0 0 9 0 4

2 0 0 9 0 7

2 0 0 9 1 0

2 0 1 0 0 1

2 0 1 0 0 4

2 0 1 0 0 7

2 0 1 0 1 0

2 0 1 1 0 1

2 0 1 1 0 4

2 0 1 1 0 7

2 0 1 1 1 0

2 0 1 2 0 1

2 0 1 2 0 4

2 0 1 2 0 7

2 0 1 2 1 0

2 0 1 3 0 1

2 0 1 3 0 4

2 0 1 3 0 7

2 0 1 3 1 0

2 0 1 4 0 1

2 0 1 4 0 4

2 0 1 4 0 7

Sales to Investors as Percent of Market--




Page | 11

Second-home Buyers and Relocation Sales: Still Weak

Purchases for vacation/second home purposes and for job/business relocation purposeshave been reported as relatively constant since 2010. About 15 percent reported a sale forrelocation due to a job change or business move purposes , and 11 percent reported a sale to a

vacation home buyer. REALTORS® reported that the economy has not improved enough tosupport a strong demand from buyers for relocation and second /vacation home purposes.

15%

0%

2%

4%

6%

8%10%

12%

14%

16%

18%

2 0 1 1 0 4

2 0 1 1 0 6

2 0 1 1 0 8

2 0 1 1 1 0

2 0 1 1 1 2

2 0 1 2 0 2

2 0 1 2 0 4

2 0 1 2 0 6

2 0 1 2 0 8

2 0 1 2 1 0

2 0 1 2 1 2

2 0 1 3 0 2

2 0 1 3 0 4

2 0 1 3 0 6

2 0 1 3 0 8

2 0 1 3 1 0

2 0 1 3 1 2

2 0 1 4 0 2

2 0 1 4 0 4

2 0 1 4 0 6

Relocation Buyers as Percent of Market--


11%

0%

2%

4%

6%

8%

10%

12%

14%

16%

2 0 1 0 0 9

2 0 1 0 1 1

2 0 1 1 0 1

2 0 1 1 0 3

2 0 1 1 0 5

2 0 1 1 0 7

2 0 1 1 0 9

2 0 1 1 1 1

2 0 1 2 0 1

2 0 1 2 0 3

2 0 1 2 0 5

2 0 1 2 0 7

2 0 1 2 0 9

2 0 1 2 1 1

2 0 1 3 0 1

2 0 1 3 0 3

2 0 1 3 0 5

2 0 1 3 0 7

2 0 1 3 0 9

2 0 1 3 1 1

2 0 1 4 0 1

2 0 1 4 0 3

2 0 1 4 0 5

2 0 1 4 0 7

Second-Home Buyers as Percent of Market--as of July 2014 RCI Survey



Page | 13

International Transactions: Less than 2 Percent of Residential Market

Approximately 1.6 percent of REALTOR® respondents reporting on their last sale wasof a purchase by a foreigner not residing in the U.S. International buyers frequently pay cash aswell as purchase properties above the median price of the domestic buyer. For the 12 monthsending March 2014, NAR estimated that sales to non-resident international clients and

20

145

10

15

20

25

30

2 0 0 9 0 2

2 0 0 9 0 5

2 0 0 9 0 8

2 0 0 9 1 1

2 0 1 0 0 2

2 0 1 0 0 5

2 0 1 0 0 8

2 0 1 0 1 1

2 0 1 1 0 2

2 0 1 1 0 5

2 0 1 1 0 8

2 0 1 1 1 1

2 0 1 2 0 2

2 0 1 2 0 5

2 0 1 2 0 8

2 0 1 2 1 1

2 0 1 3 0 2

2 0 1 3 0 5

2 0 1 3 0 8

2 0 1 3 1 1

2 0 1 4 0 2

2 0 1 4 0 5

Mean Percentage Price Discount of

Distressed Sales Reported by REALTORS® (in %)--


Foreclosed Shortsale

%

%

13 14

20

910

14

0

5

10

15

20

25

Above average Average Below average

Mean Percent Price Discount by Property Condition

of Distressed Sales Reported by REALTORS® --

Unweighted Average for Aug 2013 - Jul 2014

Foreclosed Short sale



Page | 14

foreigners who are temporarily residing in the U.S. amounted to $ 92.2 billion, as reported in the2014 Profile of International Homebuying Activity.10

Rising Rents for Residential Properties

Based on rent trends, the demand for rentals remains strong. Among thoseREALTORS® involved in a rental, 52 percent reported higher residential rents compared to rentlevels 12 months ago. About 22 percent of REALTORS® reported conducting an apartmentrental, and about 3 percent reported a commercial rental transaction.

10 http://www.realtor.org/topics/profile-of-international-home-buying-activity

1.6%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

2 0 1 0 0 3

2 0 1 0 0 5

2 0 1 0 0 7

2 0 1 0 0 9

2 0 1 0 1 1

2 0 1 1 0 1

2 0 1 1 0 3

2 0 1 1 0 5

2 0 1 1 0 7

2 0 1 1 0 9

2 0 1 1 1 1

2 0 1 2 0 1

2 0 1 2 0 3

2 0 1 2 0 5

2 0 1 2 0 7

2 0 1 2 0 9

2 0 1 2 1 1

2 0 1 3 0 1

2 0 1 3 0 3

2 0 1 3 0 5

2 0 1 3 0 7

2 0 1 3 0 9

2 0 1 3 1 1

2 0 1 4 0 1

2 0 1 4 0 3

2 0 1 4 0 5

2 0 1 4 0 7

Sales to International Clients* as Percent of Market--


* Refers to foreigners with residence abroad and excludes foreigners temporarily residing inthe U.S.

52%

0%

10%

20%

30%

40%

50%

60%

70%

2 0 1 0 1 2

2 0 1 1 0 2

2 0 1 1 0 4

2 0 1 1 0 6

2 0 1 1 0 8

2 0 1 1 1 0

2 0 1 1 1 2

2 0 1 2 0 2

2 0 1 2 0 4

2 0 1 2 0 6

2 0 1 2 0 8

2 0 1 2 1 0

2 0 1 2 1 2

2 0 1 3 0 2

2 0 1 3 0 4

2 0 1 3 0 6

2 0 1 3 0 8

2 0 1 3 1 0

2 0 1 3 1 2

2 0 1 4 0 2

2 0 1 4 0 4

2 0 1 4 0 6

Percent of REALTOR® Respondents Reporting Rising Rent

Levels Compared to 12 Months Ago--




Page | 15

III. Current Issues

Reasons For Not Closing A Sale

Tight supply and the difficulty in accessing credit were often cited as deterrents to home buying. About 14 percent reported having clients who could not obtain financing. About 11 percent of REALTORS® who did not close a sale in July reported that the buyer and sellercould not agree on the price, and 8 percent reported the buyer lost the bidding competition.Appraisal issues were reported as accounting for 4 percent of failures to close a sale. “Other”

reasons include responses that the buyer is still searching or that the transaction is in the escrow period or a closing is underway.

22%

0%

5%

10%

15%

20%

25%

30%

35%

2 0 1 0 1 2

2 0 1 1 0 2

2 0 1 1 0 4

2 0 1 1 0 6

2 0 1 1 0 8

2 0 1 1 1 0

2 0 1 1 1 2

2 0 1 2 0 2

2 0 1 2 0 4

2 0 1 2 0 6

2 0 1 2 0 8

2 0 1 2 1 0

2 0 1 2 1 2

2 0 1 3 0 2

2 0 1 3 0 4

2 0 1 3 0 6

2 0 1 3 0 8

2 0 1 3 1 0

2 0 1 3 1 2

2 0 1 4 0 2

2 0 1 4 0 4

2 0 1 4 0 6

Percent of Respondents Conducting

An Apartment Rental--as of July 2014 RCI Survey

3%

0.0%0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

2 0 1 2 0 7

2 0 1 2 0 8

2 0 1 2 0 9

2 0 1 2 1 0

2 0 1 2 1 1

2 0 1 2 1 2

2 0 1 3 0 1

2 0 1 3 0 2

2 0 1 3 0 3

2 0 1 3 0 4

2 0 1 3 0 5

2 0 1 3 0 6

2 0 1 3 0 7

2 0 1 3 0 8

2 0 1 3 0 9

2 0 1 3 1 0

2 0 1 3 1 1

2 0 1 3 1 2

2 0 1 4 0 1

2 0 1 4 0 2

2 0 1 4 0 3

2 0 1 4 0 4

2 0 1 4 0 5

2 0 1 4 0 6

2 0 1 4 0 7

Percent of Respondents Conducting

A Commercial Rental--as of July 2014 RCI Survey



Page | 17

IV. Commentaries by NAR Research

Personal Income: Latest Data Shows Continued IncreaseLawrence Yun, Chief Economist

o Personal income in the U.S. continues to increase, which assures consumer spending willcontribute to economic growth in the upcoming months. Income from wages is risingsteadily. Rent income is shooting high. Farmer income is falling in line with lower crop prices.

o The total personal income from all sources rose by 3.9 percent in June from a yearago. Income from wage and salaries gained 5 percent and profits earned by entrepreneursalso rose by 5 percent. But interest income hardly changed with historical low interestrates. Meanwhile, farmers’ income fell by nearly 20 percent (though from very high

levels). Politicians still need to be mindful of farmers’ moods in Iowa. o Rental income continues to rise at a good pace with a 7 percent gain. The rent income is

accruing a large number of investors who bought homes in the past few years. Apartmentrent increases of around 3 to 4 percent are also contributing to the overall rent incomegrowth.

o Income from unemployment checks is falling rapidly. Though there were few loudcomplaints about the unemployed households unable to feed the family when the eligibilityextensions were ended, the rapid decline in unemployment payments combined with ageneral increase in private sector income are very positive indicators about the direction ofthe economy. Tough love may have induced people to find work faster.

o As should be obvious, income helps but is not the sole factor for human happiness. Research

shows that having good reliable friends to talk with is one of the best indicators to generalhappiness. For those financially fortunate, giving money to charities also raises happiness.o For those with absolutely no human feelings other than getting a strong itch in the palm

when money is talked about, there tends to be only a short-term ephemeralhappiness. Benedict Arnold after receiving a huge 20,000 pound payment for betrayingAmerica lived out his final years in poverty and in disgrace in London.



Page | 18

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Foot Traffic Diffusion Index Rises in JulyKen Fears, Director, Regional Economics and Housing Finance Policy

The July reading of foot traffic as measured by NAR’s Research diffusion index jumped 12.3

points following two consecutive months of declines. The diffusion index crested the 50 mark, a

reading that suggests a modest expansion relative to the same time last year. The late-summerstrength reflects a rebound in consumer confidence and acclimation to an environment of higherrates, but also the sharp surge and drop in foot traffic last summer as mortgage rates bottomed torecord lows in early May of 2013 before lurching more than 100 basis points in the wake of theFed Chairman’s announcement that the Fed would reduce its purchase of Treasuries and MBS.

Every month SentriLock, LLC. provides NAR Research with data on the number of propertiesshown by a REALTOR®. Lockboxes made by SentriLock, LLC. are used in roughly a third ofhome showings across the nation. Foot traffic has a strong correlation with future contracts andhome sales, so it can be viewed as a peek ahead at sales trends two to three months into thefuture. For the month of July, the diffusion index for foot traffic surged 12.3 points to 54.8.

The index is above the “50” mark which indicates that more than half of the roughly 200 marketsin this panel had stronger foot traffic in July of 2014 than the same month a year earlier. Thisreading does not suggest how much of a change in traffic there was, just that more than half of

the markets tracked experienced more foot traffic in July of 2014 than 12 months earlier.

Foot traffic surged in July to its highest point in a year with the first reading over theexpansionary “50” mark since October of last year. This reading portends well for an improvedsales market in the second half of the year. However, tight mortgage credit and low inventoriesat the entry-level portion of the market could hamper pull-through from buyer interest to strongsales. Still, the sustained interest should propel steady price gains and boost seller confidence, potentially stimulating nascent re-sale inventory.

realtors® confidence index: july 2014

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