An index that gauges the outlook of Realtors, builders, and lenders for the performance of the Texas real estate market dropped for the fourth quarter compared with the same quarter last year and the third quarter of this year, said a researcher at Texas A&M University’s Real Estate Center.

The Texas Real Estate Confidence Index for the fourth quarter 2004 was 0.55 on a scale in which 0.5 is neutral and numbers greater than 0.5 indicate more positive than negative expectations.

James H.

An index that gauges the outlook of Realtors, builders, and lenders for the performance of the Texas real estate market dropped for the fourth quarter compared with the same quarter last year and the third quarter of this year, said a researcher at Texas A&M University’s Real Estate Center.

The Texas Real Estate Confidence Index for the fourth quarter 2004 was 0.55 on a scale in which 0.5 is neutral and numbers greater than 0.5 indicate more positive than negative expectations.

James H. Leigh, associate research scientist for the Real Estate Center at Texas A&M University, said the fourth quarter is usually a soft season for home sales. “The index is in the ballpark of the fourth quarter TRECI readings we observed in previous years,” he said.

Commercial lenders, commercial Realtors, builders and residential Realtors have a positive outlook for the fourth quarter, according to the survey results, while the index for residential mortgage lenders is 0.35 for the fourth quarter, which reflects negative expectations and a drop of 0.16 since fourth quarter 2003. It was the fourth consecutive quarter in which residential lenders had a negative score.

“A huge number of homeowners refinanced their mortgages when interest rates dropped several years ago. Now that the market for refinancing is all but dried up, the major source of financing business must come from the sale of new and existing homes. With so many mortgage lenders and brokers chasing a much smaller market, some of the smaller, less aggressive, and less well-known firms most likely will be weeded out,” Leigh said, adding that he does not expect the mortgage lending market to return to the optimistic days of years past anytime soon.

Residential Realtors and builders have lower expectations for the fourth quarter than they did for the third quarter, according to the index, and residential Realtors and residential lenders have lower expectations for the fourth quarter 2004 than they did for the fourth quarter 2003.

Commercial lenders had the highest index score for fourth quarter 2004 at 0.72, which is up 0.09 from last quarter and up 0.14 from fourth quarter 2003.

“Optimism about the commercial real estate market does not exist in all metros. But overall, the commercial market has benefited from economic growth and modest interest rates,” Leigh said.

Every metropolitan area surveyed had positive scores. Fort Worth-Arlington led the metros again this quarter, with an index rating of 0.67.

Next was Houston at 0.59, followed by “other” areas outside the major metros at 0.57, Austin at 0.54, San Antonio at 0.53, Dallas at 0.51, and El Paso at 0.5.

“The Fort Worth-Arlington metro continues to prosper, Houston seems to be in the midst of a turnaround, and most of the other metro areas are at the very least holding their own” said Leigh, who is also an associate professor of marketing in Mays Business School at Texas A&M University.

Panelists for the Real Estate Center’s quarterly survey are recruited from professional organizations.

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Send tips or a Letter to the Editor to glenn@inman.com or call (510) 658-9252, ext. 137.

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