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3rd Quarter 2013 Broker Confidence Index
October 24, 2013
The Real Estate Board of New York’s Overall Broker Confidence Index for the Third Quarter of 2013 decreased slightly when compared to last quarter, a result of the ongoing inventory shortage within the Residential market. Brokers showed greater confidence in the current market during the Third Quarter of 2013 than in the previous quarter, chiefly due to the increase in confidence in the financing market for commercial real estate sales, for which an index of 10 was recorded. However, both residential and commercial brokers showed concern about the market six months from now due to the government standstill and the effect that any decisions will have on interest rates and the economy as a whole.
The Overall Present Situation Index within the Commercial market showed an increase in confidence, recording 9.77 in the Third Quarter of 2013, up from 9.28 last quarter. Brokers remained positive about the current financing market and current commercial real estate leasing market, despite a slowing down of activity in the retail sector. Although brokers were mainly confident in the commercial real estate market today, there was a lingering concern for the uncertainty surrounding leasing activity. One leasing broker stated, “The market is still very ‘choppy’ with certain buildings experiencing strong pockets of activity while the others are quiet.”
The Residential Overall Confidence Index decreased further this quarter to 8.33 from 8.71 the previous quarter. Residential brokers were mainly concerned about the low supply of affordable housing and increasing high end developments coming to the market, which is skewing the market in favor of elite buyers. One broker said, “The most significant aspect of the current market is the lack of supply, coupled with the expectation of only MUCH more expensive properties coming on line in new developments.” Another broker reinforced this perspective by stating, “The new developments are not aimed for the residents of the city and very little affordable units are being constructed.” Despite these concerns, residential brokers are hopeful that more developments favoring various classes of earners will come to the market, elevating the economy.
Both residential and commercial brokers showed greater confidence in the market today than in their expectations of the market six months from now, mainly a concern of the government shutdown and how it will affect future interest rates. A residential broker said, “I think the future of the sales market in NYC will be directly impacted by what goes on with Congress and the debt ceiling and how it affects interest rates and the economy in general.” A commercial broker was furthermore concerned about businesses’ uneasiness to expand due to “a lot of uncertainty surrounding government programs (ObamaCare, regulation, taxes, and debt/deficit) coupled with looming higher interest rates.” We hope that a resolution to the government standstill as well as developments catering to the middle and working classes will transpire soon and increase confidence in the market.