We often examine and delve into real estate analytics on LuxuryLAHomes.com. Occasionally we will also check in with overall economic markers like employment numbers, wage growth and even gross domestic product.
Those broad economic indicators have an obvious relationship with the real estate and mortgage markets. But other factors other than hard numbers can have a surprising effect on home buyers.
One of those deciding factors is consumer confidence. How potential buyers and sellers feel about the economy is often as, if not more, important than the actual numbers. So how has consumer confidence been faring as of late?
For a solid answer, we look no further than the Nielsen company, yes the same standard-bearer company that tracks television ratings. Their Conference Board Consumer Confidence Index has been tracking this important indicator since 1985 and that’s the year they compare to others on a hundred point scale. So, 1985 equals 100.
The CCI is released monthly and had increased in September, but the newest numbers show a decline for October. The Index came in at 98.6, down from 103.5 in September. The Present Situation Index decreased from 127.9 to 120.6, while the Expectations Index declined from 87.2 last month to 83.9.
“Consumer confidence retreated in October, after back-to-back monthly gains,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current business and employment conditions softened, while optimism regarding the short-term outlook retreated somewhat. However, consumers’ expectations regarding their income prospects in the coming months were relatively unchanged. Overall, sentiment is that the economy will continue to expand in the near-term, but at a moderate pace.”
The monthly Consumer Confidence Survey, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was October 13.
Consumers’ appraisal of current conditions softened in October. Those saying business conditions are “good” decreased moderately from 27.7 percent to 26.2 percent, while those saying business conditions are “bad” increased from 15.8 percent to 17.7 percent. Consumers’ assessment of the labor market was also less positive than last month. Those stating jobs are “plentiful” decreased from 27.6 percent to 24.3 percent, while those claiming jobs are “hard to get” declined marginally from 22.3 percent to 22.1 percent.
Consumers’ optimism regarding the short-term outlook was somewhat less favorable in October. The percentage of consumers expecting business conditions to improve over the next six months decreased from 17.0 percent to 16.0 percent, while those expecting business conditions to worsen increased from 10.8 percent to 12.2 percent.
Consumers’ outlook for the labor market was also less optimistic than in September. The proportion expecting more jobs in the months ahead decreased from 15.7 percent to 13.1 percent. However, those anticipating fewer jobs declined from 18.1 percent to 17.0 percent. The percentage of consumers expecting their incomes to increase was unchanged at 17.5 percent, while the proportion expecting a decline decreased from 10.4 percent to 9.8 percent.
Though this is purely speculation on our part, the election may have something to do with these changes. It’s not uncommon for consumer confidence to waiver in times of uncertainty.
If you’re interested in buying or selling a Luxury Home in Los Angeles, please contact us now at 323-829-8811 or email Susan Andrews at susan@luxurylahomes.com.
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