New York City real estate brokers are growing wary of the market’s future, according to the Real Estate Board of New York. REBNY says broker confidence is on the decline largely due to economic concerns and the upcoming presidential election, which are both taking priority over real estate pursuit.
Between the fourth quarter of 2015 and the first quarter of 2016, the Real Estate Broker Confidence Index — a survey sent out to all REBNY brokers, both commercial and residential — dropped over half a point, from 7.87 to 7.23. For six months down the road, brokers confidence dipped 0.84 points to 6.73 from 7.57 last quarter.
Brokers were asked to respond to each question with an answer of positive, negative or neutral, with the the organization compiling the results into a score of 0-10.
“The ongoing transition in our nation’s leadership has contributed to apprehension surrounding decision-making and uncertainty for the future of the real estate market and economy,” REBNY President John H. Banks III said. “While this builds on concerns about future interest rates and inventory, our brokers maintain a positive outlook overall with healthy market demand and the growth of New York City jobs.”
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Broker confidence has felt a steady waning since the last quarter 2014, when the index was 9.22 and the six-month outlook index was 9.23 — the highest marks since the start of REBNY’s Confidence Index began in 2013.
Commercial agents fear rising rents, unclear politics
The cause of the overall decline in the Broker Confidence Index was largely thanks to the commercial sphere, where confidence dropped from 7.88 to 6.38 between quarters. The first quarter of 2016 was the first time broker confidence dipped below seven since REBNY began tracking in 2013.
Commercial brokers’ confidence for six months down the road also dropped, from 7.24 to 5.55, which is the largest fall since the survey started. Commercial brokers and agents had the most concern over the upcoming election and the global economy.
“Uncertainty of [the] presidential election is a factor in long range decision making. Some groups are delaying,” one broker said in a survey response.
New office space and rising asking rents also led to the decline in certainty levels, with one broker declaring the extra supply is “starting to take its toll.”
Residential brokers more optimistic
While the overall Broker Confidence Index dropped, residential broker confidence rose from 7.85 to 8.10 quarter-over-quarter. The Residential Confidence Index for six months from now grew to 7.92 from 7.90 last quarter. Nonetheless, residential brokers expressed some concern over rising interest rates and lack of inventory.
“Another correction in the stock market will slow the Manhattan market somewhat, and speed the change from a seller’s market to a buyer’s market,” one broker said in a survey response.
Rental brokers also spoke of new units in Brooklyn that could limit price growth. However, most agreed the NYC market is in a positive state.
