Texas Confidence Wanes

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Texas A&M’s Real Estate Confidence Index, based on a survey of real estate professionals, shows marked decline.

August 23, 2000

Whether it''s a sign of impending doom or the start of a mild downturn depends on who''s interpreting the data. But there''s no mistaking the trend that confidence among Texas real estate professionals is on the decline.

The Texas Real Estate Confidence Index (TRECI) dropped to .59 in this year''s third quarter, down .04 from the second quarter and .09 from the third quarter of 1999. The TRECI, produced by the Real Estate Center at Texas A&M University, measures attitudes among various segments of the real estate industry, including home builders. A TRECI of .50 is neutral. Less than .50 is negative and more than .50 is positive. So the current outlook, while still positive, is trending in the wrong direction.

James H. Leigh, associate professor of marketing at the Lowry Mays College and Graduate School of Business, who developed the TRECI, notes that the TRECI among builders dropped .14 to hit the negative side of the scale at .43. "However, I''d be far more concerned if builders were enthusiastically optimistic about the coming quarter while other industry segments waved cautionary flags," he says.

The tight housing market in Austin is a growing concern. The Austin builder panel dropped .11 to .56. Every other Texas metro area also showed double-digit confidence declines among builders.

The Realtor panel also showed declines across the board, except in Dallas.

Expert panelists for the quarterly surveys are recruited from professional organizations that co-sponsor the effort. The TRECI builder panel is co-sponsored by the metro associations of Texas Asso-ciation of Builders. National Association of Realtors'' Lone Star Chapter of Certi-fied Residential Specialists co-sponsors the residential Realtor panel, and the lender panel is co-sponsored by Texas Mortgage Bankers Association.

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