Real estate brokers’ confidence in the New York City real estate market remained high despite a slight dip in the second quarter 2014 Broker Confidence Index.
This marks a pause in a rising trend in confidence dating back to the third quarter of 2013, according to the Real Estate Board of New York’s (REBNY) report released today.
The second quarter 2014 report recorded a decline in the Broker Confidence Index to 8.88 from 9.21 last quarter.
This decrease was due to the commercial broker’s uncertainty in the market six months from now as land prices continue to rise, and concern that New York’s tech industry growth may begin to slow down.
Residential brokers continue to express concern about the impact the lack of inventory is having on market activity.
“At 8.88 out of 10, the Broker Confidence Index level this quarter remained very high,” said Steven Spinola, REBNY president.
“The slight tempering in the Broker Confidence Index compared to last quarter reflects the commercial broker’s concern about the pace of sale price increases and the residential broker’s concern about the persistent lack of inventory.”
The Residential Real Estate Market Confidence Index in the second quarter of 2014 was 8.30, a decrease from last year’s index of 8.80. The residential index has shown itself to fluctuate from quarter to quarter, possibly indicating seasonal changes in the market.
“It’s starting to slow a bit,” said one residential broker. “It is hard to say if this is a seasonal shift with summer or the beginning of a more ‘normal’ market.”
Another reason offered by another broker was that some buyers are experiencing ‘buyer fatigue,’ while others are leaving the market after losing multiple bidding wars and getting distracted.
The Commercial Real Estate Market Overall Confidence Index in the second quarter of 2014 was 9.45, which also marks a small decline from 9.62 last quarter. After rising steadily since the fourth quarter of 2012, this dip in the Commercial Confidence Index was anticipated last quarter when the commercial broker’s index for the future showed a slight dip.
“The accurate assessment of future market conditions in the Broker Confidence Index enhances the reliability of this measure as an objective indicator of future market conditions,” said Steven Spinola, REBNY President.
“For retail on Madison Avenue in the 60s, rent growth over the past 3 years has been phenomenal,” said one commercial broker.
“Hiring at financial firms will strengthen the market in the next 10-12 months,” predicted another broker.
REBNY’s Broker Confidence Index is a collection of responses from an online survey given to REBNY’s residential and commercial brokerage division members.