NEW YORK CITY –Broker confidence in the local commercial real estate market has increased, but its on the downswing on the residential side. The latest real estate broker confidence index, created by REBNY, shows a slight rise for the second quarter of 2013 for the commercial market and a slight decline amid some uncertainty in the residential sector.
The overall present situation index (commercial and residential) rose from 8.87 in the first quarter of 2013 to 9.05 in the second quarter, largely due to the spike of confidence in current financing in the commercial sector. Meanwhile the residential division saw a decline to 8.71 this quarter, down from 9.02.
The commercial real estate market present situation index clocked in at 9.28, up from 8.85 the previous quarter. Brokers report that they're seeing a healthy retail market and brisk activity. Over the next six months, brokers expect prices to rise, as well as interest rates, which could slow the current pace of sales and leasing six months from now.
Compared to the first quarter, confidence in the residential sector has dipped slightly because of low inventory and bidding wars among potential buyers. Higher prices and weary clients possibly pulling out of the market are a concern, according to the brokers.
“There was a brief disruption in the market when current Fed chair Bernanke seemed to suggest that the Fed was going to phase out bond buying this year, and not next year as originally announced,” REBNY SVP Michael Slattery tells GlobeSt.com. “This reaction in the market suggested that the economy was still reliant on this assistance. The issue facing the economy with a new Fed chair is whether he/she will continue with the policies that are in place or whether they will end bond buying sooner than currently anticipated.
Adds Steven Spinola, REBNY president, “We've been hearing a lot about the direction interest rates are headed after an extended period of historic lows and how an increase in rates, coupled with low inventory levels, will impact the residential market. Our brokers are expressing a note of caution regarding the market six months from now.”
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
