New York City’s real estate brokers remain optimistic in spite of concerns over market activity, according to the Real Estate Board of New York.
In its Broker Confidence Index for the second quarter of 2017, the organization found that the city’s real estate industry is being buoyed by financing conditions.
The report, which tracks both commercial and residential brokers, registered a 0.02 quarter-over-quarter increase to 5.89. On the other hand, the Broker Future Confidence Index, which measures outlook six months from now, dropped 0.14 to 5.56.
“Our membership survey continued to reflect caution among our brokers who closely monitor economic indicators that are impacting activity across New York City’s commercial and residential real estate markets,” said REBNY President John Banks.
“While our members report slower decision-making and price sensitivity, they remain positive about the market with optimism for improved financing conditions.”
There was a gap between the market view for both commercial and residential brokers. Commercial brokers were more optimistic. The Commercial Broker Confidence index rose by 0.56 quarter-over-quarter to 5.84. The Commercial Broker Future Confidence Index, meanwhile, rose 0.35 percent to 5.28.
REBNY attributed this optimism to views on the overall market, current and future financing and leasing conditions. Commercial brokers were confident of current commercial financing conditions, with the index jumping 2.09 points to 7.42. This was in contrast to the leasing outlook over the next six months. Brokers responded negatively, pulling down the index by 1.01 to settle at 3.78. “The market is very cautious and there are not as many sales as last year. Buyers feel prices are too high and cap rates are too low,” one survey respondent said.
Residential brokers were more discouraged than their commercial counterparts. The Residential Broker Confidence Index dropped 0.52 to 5.94. Meanwhile, the Residential Future Confidence Index, declined by 0.61 to 5.85. Residential brokers also expect their future commissions to decrease, with the index dropping by almost a point from 6.9 to 5.92.
“The New York City residential sales market is strong, but slow. Many of the new developments are experiencing good absorption, with fewer projects in the pipeline. Resale is slow (no rush), but well-priced (correctly priced as opposed to aspirational pricing) units sell quickly,” a survey respondent said.
However, there remains a glimmer of optimism on the residential side. Brokers responded positively to questions on current and future financing conditions, with the indexes for both segments rising to 8.0 and 8.74 respectively.