The CRE Sentiment Index Indicates a Shallow and Brief Recession

The RCLCO Current Real Estate Market Sentiment Index (RMI) has been dominated by volatility lately, with distress reaching 2020 COVID-19 levels, but the results of its most recent survey indicate that the real estate market may have reached its low point or will in the near future.

On a scale of 100, the index has plummeted 26.9 points during the past six months and, more significantly, 80.6 points from its most recent peak, reaching a low of 8.5 at the end of 2022.

The majority of respondents (90%) anticipate that the looming recession was “likely to be of shallow depth and of moderate duration” and 46% predict that “inflation will begin to decrease, while only 36% anticipate that it will increase.” Two-thirds said that inflation will increase at mid-year.

Multifamily is starting to enter its cycle’s slump, and for-sale housing is performing the worst of all asset classes.

“Survey respondents expect every major real estate food group to be in some stage of downturn,” according to the release, “even the heretofore favored industrial asset class.”

Participants’ statements that their employers have reduced hiring (28%) or implemented a hiring freeze (16%), with just a tiny percentage hiring at higher levels (5%), supported their pessimism.

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