- John Banks | REBNY President
- William C. Rudin | REBNY Chairperson
- Code of Ethics
- REBNY Residential Listing Service
- Become a Member
- Benefits & Rewards
- REBNY Action Network
- REBNY Services
- Our History
- Contact Us
- Looking for a NYC real estate broker?
- Contests & Awards
- Sponsorship Opportunities
- REAL ESTATE EDUCATION
- MEMBER SPOTLIGHT
- GIVING BACK
REBNY Index: NYC Broker Confidence Tempers Amid Continued Interest Rate & Inventory Concerns
November 5, 2015
-- Brokers stay positive on the overall residential and commercial real estate market, but proceed with caution in 3Q 2015 --
Confidence in the New York City real estate market continued to decline slightly among residential and commercial brokers in the third quarter of 2015, according to the Real Estate Board of New York’s (REBNY) latest Broker Confidence Index. Worries about rising interest rates and the lack of inventory continue to temper the confidence of residential brokers, while commercial brokers are concerned about the national and international economy. Despite this, the overall level of confidence among the two groups remains positive.
The Overall Broker Confidence Index for the third quarter of 2015 was 8.34, a half-point drop from last quarter’s 8.84. Confidence in the market six months from now was also positive at 7.87, though dipping more than a half point from 8.52 last quarter.
“The continued, slight waning in broker confidence is largely due to the anticipation of an interest rate increase in the future for both the commercial and residential sectors. Its potential impact on the job market and local, national, and global economies have given brokers pause, though they remain positive on the real estate market overall,” said John H. Banks, III, REBNY President.
The Commercial Broker Confidence Index was 8.85, a slight decrease from last quarter’s 9.47, while confidence in the market six months from now was 8.17, down almost a point from last quarter’s 9.10. The anticipated interest rate increase impacted brokers’ confidence in the market six months from now and their main concerns were focused on the financing market for commercial real estate sales.
While one commercial broker expressed apprehension over New York City’s increasing tax burden and its impact on tenants’ plans to grow here, another offered that rising interest rates should not materially impact office leasing.
“No confidence in Congressional leaders and even less confidence with Wall Street equals a negative outlook for 2016, despite it being an election year,” countered a commercial broker.
“Leasing, economic, and job growth will affect tenants’ near- and long-term space decisions,” concluded another.
The Residential Broker Confidence Index decreased slightly to 7.83 from 8.21 last quarter. The issue of concern most cited was the lack of inventory, specifically in Upper Manhattan rentals and two-to-three bedroom inventory for sale. This has been an ongoing concern for residential brokers within the past year and a half. On the contrary, Brooklyn is experiencing an inventory boom, while Long Island City has experienced strong price growth.
Residential broker confidence continues to remain positive, and even though the uncertainty of interest rates have left many brokers unsure of the market six months from now, some believe that an increase may trigger sales while others believe it will reduce sales. Confidence in the market six months from now dipped to 7.58 from 7.93 last quarter. This has been the lowest index for the market six months from now since REBNY’s reporting began in 2013.
“Increased interest rates may get buyers off the sidelines and commit,” suggested one residential broker, while another expressed concern that any increase will make lending conditions for mortgages even more difficult than they are currently.
“Buyers will remain price sensitive,” added another residential broker, noting that Wall Street bonuses should be significant and have an effect on demand. Another pointed out that there has been a lot of aspirational pricing on the part of brokers, leading to price reductions and more open houses.
REBNY’s Broker Confidence Index is a collection of responses from an online survey given to REBNY’s residential and commercial brokerage division members.