Broker Confidence Continues to Slip

REBNY president John Banks III

NEW YORK CITY—The slow but steady decline in broker confidence here that began in late 2014 continued in the second quarter of this year, the Real Estate Board of New York reports. In its Broker Confidence Index for the second quarter, REBNY says domestic politics and global economic instability continue to weigh on the psyche of New York City commercial and residential brokers. The Real Estate Broker Confidence Index in the second quarter of this year fell 0.19 points to 7.04 from 7.23 in the first quarter of 2016 , continuing the index’s gradual decline that started in the fourth quarter of 2014 when the index was 9.22. The Real Estate Broker Confidence Index for the market six months from now decreased 0.26 points quarter-over-quarter to 6.47 from 6.73. Again the downward movement in the forward-looking index has continued since the fourth quarter of 2014 when the index was 9.23, the highest it had been since REBNY began surveying its brokers in 2013. REBNY president John H. Banks III says that while broker confidence is down, the group’s view of the New York City real estate market remains positive. “Uncertainty is rising among the residential and commercial brokers who participated in our latest survey,” says Banks. “While their softened confidence is reflected in the index, both groups maintain cautious optimism for the current and future New York City real estate market.” The decline in overall broker confidence in the current market and the market six months from now was driven in large part by commercial brokers. The Commercial Broker Confidence Index at the end of the second quarter was 6.57 and the index gauging expectations of the market six months from now was 5.71. Though these two indices showed modest improvement compared to the last quarter, the gains were not sufficient to halt the slow decline in the overall broker confidence in the real estate market. The Residential Broker Confidence Index in the second quarter of 2016 was slightly lower at 7.52, down 0.58 from the first quarter.  Rising interest rates and the lack of sales inventory were ongoing concerns among residential brokers in the current market and the market six months from now, REBNY reports. Residential brokers suggested that domestic buyers are delaying on purchases because they anticipate prices will fall. Foreign buyers also have grown more cautious due to Brexit and other global economic concerns, the research reveals. Residential broker confidence in the market six months from now dropped to 7.23 from 7.92 last quarter. Some brokers remained positive because the current lack of sales inventory is creating more competition, but concerns over interest rates and the Presidential election have left many residential brokers unsure of market conditions  six months from now, REBNY adds. Comments from survey respondents were mixed, however, with some stating that some market turmoil will have a positive impact on the market. For example, one commercial broker says, “Instability in Europe and China will positively impact investment in US real estate.” Commercial retail brokers are sensing a slowdown on the horizon. One such broker again put a positive spin on a market negative: “Many retailers are struggling and downsizing. The shift of retail real estate from traditional shopping centers to more urban and mixed use will keep  brokers busy.”