REBNY Index: Real Estate Broker confidence rises for the first time in two years
The cloud of uncertainty surrounding real estate broker confidence in the New York City real estate market is starting to clear up. The Real Estate Board of New York’s (REBNY) Real Estate Broker Confidence Index in the fourth quarter of 2016 recorded the first increase in broker confidence since the fourth quarter of 2014 when the index was 9.22.
Quarter-over-quarter, the Real Estate Broker Confidence Index rose by 0.21 to 6.0 in the fourth quarter of 2016 from 5.79 in the third quarter of 2016, which marks a positive shift in overall broker outlook in both the present situation and future real estate market.
The Future Real Estate Broker Confidence Index, which measures broker confidence in the market six months from now, swung upward quarter-over-quarter to 5.97 in the fourth quarter of 2016 from 5.29 last quarter. The Commercial Broker Future Confidence Index rose to 5.39 from 4.32, while the Residential Broker Future Confidence Index rose to 6.54 from 6.26.
“Confidence among our brokers is on the rise after being strained with uncertainty throughout the last election cycle,” said John Banks, REBNY President. “Stronger prospects for the future were expressed by both residential and commercial brokers despite their continued unease over financing, interest rates, and other shifting market conditions.”
The Residential Broker Confidence Index for the fourth quarter of 2016 was 6.14, down 0.23 from 6.37 in the third quarter of 2016. In a similar vein to last quarter, the oversupply of apartments and softening of the luxury condominium and rental markets have diminished residential brokers’ confidence in the near term. “There are vacant apartments on the market that are not getting rented and landlords are offering incentives,” one residential broker commented.
Another stated, “Inventory is rising, mortgage rates are rising, and buyers feel more entitled to negotiate or wait before purchasing.”
Residential brokers with international clients expressed unease about the market climate under a new president, while others bemoaned unrealistic seller expectations. One residential broker commented, “The market is shifting and prices are not skyrocketing. Sellers are convincing brokers to overprice properties just to ‘try.’ This is not a market to ‘try’ a price.”
Commercial brokers are more confident in the market now and in the future than they were last quarter. The Commercial Broker Confidence Index posted a 0.64 increase, rising to 5.85 in the fourth quarter of 2016 from 5.21 in the third quarter of 2016.
Concerns about our country’s political future and central bank movements have continued to influence the outlook of commercial brokers. Some voiced unease about the availability of financing and rising interest rates.
Commercial brokers who work in retail leasing and sales expressed a positive outlook on the future for retail in New York City. “Retail leasing is on hold for now, but should improve after retailers assess the actual direction of the new administration,” one commercial broker predicted.