Dim sentiment, brighter outlook

The Current RMI fell into the basement to a value of 9.2, the lowest level since RCLCO began recording the index at the end of the Great Recession, according to a Wednesday report from RCLCO Real Estate.

The previous low was recorded in Quarter 4 of 2018 at 37.5 in the wake of the U.S. Federal shutdown that occurred in December 2018.  Prior to the coronavirus pandemic, in Quarter 4 of 2019 the index was just under 65.0, reports RCLCO.

RMI values in the 60 to 70+ range are typically indicative of very good market conditions. Values below 30 are typically coincident with periods of economic and real estate market stress/recession. The nearly 56-point drop in so short a period mirrors the speed and depth of the damage that the pandemic has wrought upon the U.S. economy and real estate markets.    

If there is a silver lining, RCLCO writes, it is that respondents expect that conditions will improve significantly over the next 12 months.

The RCLCO Future RMI dropped somewhat from the Quarter 4 of 2019 reading of 52.3 to 36.8, down more than 15 points, and so there is some optimism that the worst of the downturn may be behind us, and market participants are anticipating much better market conditions a year from now. 

 Recent survey responses show nearly 90% of respondents indicating that national real estate market conditions have gotten moderately or significantly worse compared with one year ago. This is a dramatic shift from the last survey at the end of 2019 when only 13% of respondents indicated that the market was only moderately worse than the previous 12-month period.