The slow decline in New York City real estate brokers’ confidence continued in the second quarter of 2016 with commercial and residential brokers concerned by uncertainty over global economic instability and the political future of the United States, according to the Real Estate Board of New York’s (REBNY) latest Broker Confidence Index.
The Real Estate Broker Confidence Index dipped 0.19 points to 7.04 in the second quarter of 2016 from 7.23 in the first quarter of 2016, perpetuating the index’s gradual decline which first 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 similarly decreased 0.26 points quarter-over-quarter to 6.47 from 6.73.
This downward movement has been consistent 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.
“Uncertainty is rising among the residential and commercial brokers who participated in our latest survey,” said John H. Banks, III, REBNY President.
“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 drop in overall broker confidence in the current market and the market six months from now was driven by the Commercial Broker Confidence Index which was 6.57.
The Commercial Broker Confidence Index for expectations of the market six months from now was 5.71. Though these two indices showed modest improvement compared to the last quarter, it was not enough to halt the slow decline in confidence in the real estate market.
Concerns about our country’s political future and global turbulence have continued to temper the outlook of some commercial brokers, but the economic conditions of other global financial centers have boosted the future outlook of other brokers.
One commercial broker commented: “Instability in Europe and China will positively impact investment in US real estate.”
On the retail front, brokers voiced concerns sensing a slowdown in the market due to online shopping and transitions in the industry.
“Many retailers are struggling and downsizing, the shift of retail real estate from traditional shopping centers to more urban and mixed use will keep the brokers busy,” said one broker.
Brokers identified that there was still a fair amount of tech office leasing activity this quarter. Others claimed government regulations were affecting banks’ abilities to finance transactions.
The Residential Broker Confidence Index in the second quarter of 2016 was slightly lower at 7.52, down 0.58 from last quarter.
Rising interest rates and the lack of sales inventory were ongoing concerns with residential brokers suggested that domestic buyers are delaying on purchases because they anticipate prices will fall. Foreign buyers have also grown more cautious due to Brexit and other global economic turmoil.
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 has left many residential brokers unsure of what market conditions will be like six months from now.
