Reviewed by: Sharron Swain
Local real estate experts share Q3 expectations + how to participate in the next survey
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The experts at the Alabama Center for Real Estate (ACRE) have created a forecasting tool based on responses from a quarterly survey of industry professionals. These reports measure statewide commercial and residential real estate expectations for the upcoming quarter. Read on for some of the standout stats from their most recent report, as well as how to contribute to the next one.
These reports are receiving positive feedback
We talked with Stuart Norton, Associate Director of ACRE, to learn more about these index reports and how they work. Here’s a rundown:
- The index reports were created because the industry, both residential and commercial, values forward-looking resources.
- These results come from a survey of local commercial and residential real estate professionals.
- They provide a quick and easy way to compare one’s own expectations of market conditions to the consensus view.
- The AL CREI is a commercial index, while the AL RREI is residential.
- The index is based on a scale of 0-100, over 50 being positive, and under 50 being negative.
ACRE will continue to produce these reports each quarter, with the next survey beginning September 1, 2023 for Q4 2023.
“The reports have been very effective and helpful thus far. We have received much positive feedback on these new resources, again, because of their forward-looking nature. We hope to continually boost participation in the quarterly survey and hope to have over 1,000 respondents for the residential index by mid 2024.”
Stuart Norton, Associate Director, ACRE
Want to participate in the next survey? Register for the commercial index or the residential index now.
The 2023 Q3 Report—here’s what they found
With inflation and interest rates on the rise, Alabama real estate professionals in both the commercial and residential fields shared their outlook on the market for the upcoming quarter.
The Alabama Commercial Real Estate Index and the Alabama Residential Real Estate Index both had index scores under the neutral mark of 50, registering a weak outlook for the third quarter with a 42.2 and a 48.9, crediting an increase in interest rates, construction costs and cap rates as the cause for decreased growth.
Staying positive: Stuart Norton suggests that the index scores can rise above 50 for both fields, but will need “the Fed to eventually loosen monetary policy” so interest rates can decrease.
Here are a few interesting stats we found in both reports:
Commercial Real Estate
- Birmingham-Hoover leads in metro confidence with a score of 44.9. (Go Bham!)
- Alabama Market Outlook: Commercial real estate market conditions in the state are expected to lower this quarter with a slightly negative outlook of 47.2.
- US Market Outlook: Commercial real estate market conditions nationwide are expected to lower this quarter with an outlook of 38.3.
- Interest Rates: Interest rates are expected to rise this quarter with an outlook of 36.3.
- Construction Costs: Survey respondents expect construction costs to rise as the index score of 47.2 is slightly below 50.
“Overall new CRE financial transactions will remain suppressed for 2023 until existing projects meet stabilization and move to permanent financing or sell. Challenges will continue for CRE Projects until interest rates show signs of settling. Developer/ Borrower equity requirements will remain heightened.”
Commercial lender, Mobile metro area
Residential Real Estate
- Auburn-Opelika was one of three metro markets with a positive outlook and had the highest score of any Alabama metro with an index of 53.6.
- Alabama Market Outlook: Statewide market conditions are likely to improve with mild confidence, registering at 52.9.
- US Market Outlook: Industry professionals anticipate the United States residential market will weaken this quarter with an index score of 44.9
- Interest Rates: With an index score of 41.6, participants anticipate interest rates will increase during the third quarter.
“Based on the current economic outlook, I am anticipating a steady year of sales. I am optimistic that by Spring 2024 we will start to pick up the pace again and see growth.”
Residential broker, Auburn-Opelika metro area
Additional participants are needed for the fourth quarter reports. New participants can register and take the survey on September 1.
To become a participant for the fourth quarter, register for the commercial index or the residential index on the ACRE website.
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