NEW YORK CITY—Real estate brokers' confidence in the fourth quarter of 2014 reached the highest level since the inception of the Real Estate Board of New York's Broker Confidence Index in spring 2012.
The Broker Confidence Index rose to 9.22 this past quarter from 8.80 in the third quarter of 2014 and 9.00 in the fourth quarter of 2013. Both residential and commercial brokers reported increased levels of confidence in the market now and six months from now, due to healthy activity and the steady rise in prices.
“This high level of broker confidence across the board signals a strong and thriving market as we dive further into 2015,” says Steven Spinola, REBNY president. “We anticipate that this optimism will carry through the year as more affordable housing comes online through the administration's bold initiatives to address our decades-long housing shortage, and as commercial activity maintains positive momentum.”
The Residential Broker Confidence Index increased to 8.85 in the fourth quarter of 2014, from 8.23 in the third quarter of 2014 and 8.52 in the fourth quarter of 2013. Brokers attributed this increase to the steady rise in pricing for sales and rentals, as well as the robust level of sustainable activity. While residential brokers' confidence in the rental market tempered more than their confidence in the sales market, lack of inventory has continued to be a major concern for all residential brokers as prices are expected to continue rising with the current inventory shortage.
They also urged the need for more affordable housing as most of the new developments coming to the market now are luxury condos.
One residential broker said that the influx of new luxury development in 2015 is a big factor for the New York City market, while another explained that this surge of condos could have an adverse effect on prices.
The Commercial Broker Confidence Index increased to 9.60 in the fourth quarter of 2014, from 9.38 last quarter and 9.49 last year. Commercial brokers commented on strong financing and market activity, particularly within the TAMI (Technology, Advertising, Media and Information) sector and in Lower Manhattan.
One commercial broker said, “I see shrinking supply and rising demand, which creates a stable market with rising prices.”
Another commercial broker said, “There does not seem to be any sign that the current market growth will not continue at least for the next 12 months.”
However, some respondents expressed concern for the pace of price increases, which could slow activity down if interest rates creep up.
One broker noted that pricing is “scary high” at this point, while another said that rents in Manhattan are getting very high and tenants are putting up resistance.
REBNY's Broker Confidence Index is a collection of responses from an online survey given to REBNY's residential and commercial brokerage division members.
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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.
