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REBNY 4th Quarter 2018 Broker Confidence Index Report
February 11, 2019
The Real Estate Board of New York’s (REBNY) Real Estate Broker Confidence Index for fourth quarter of 2018 was 5.86 out of 10, an increase of 1.11 since brokers were surveyed about the third quarter of 2018.
Confidence among both residential and commercial brokers increased in the fourth quarter of 2018 when compared to the third quarter. REBNY regularly surveys its residential and commercial brokerage division members to measure their confidence in the New York City real estate market now and six months from now. Survey results are published quarterly with a maximum index of 10.
The Commercial Broker Confidence Index (which focuses only on the Commercial Brokerage Division responses) in the fourth quarter of 2018 was 6.46, an increase of 0.93 since brokers were surveyed about the third quarter of 2018. The Commercial Broker Confidence Index declined by 0.95 year-over-year, down from 7.41 in the fourth quarter of 2017. Commercial broker responses regarding the current assessment of the market (Table 4, Question 1) indexed at 7.5, an improvement of 0.7 since last surveyed in the third quarter of 2018. Similarly, assessments of the current leasing market (Table 4, Question 5) and the current financing market (Table 4, Question 3) showed respective increases of 1.11 and 2.19 from the third quarter of 2018. Index improvements were attributable to an understanding of the present price correction occurring within the New York City real estate market as the effects of federal tax reform continue to set in. In addition, some commercial brokers expressed confidence following the announcement of Amazon’s plans for its second headquarters in Long Island City and the expansion of similar tech firms in New York City, along with the reversal of the L-train shutdown. In contrast, other commercial brokers expressed concerns regarding interest rates, tariffs, stock market volatility, and political instability.
Given these concerns and unease over potential changes in rent regulations, up for debate in Albany, commercial brokers’ expectations of the market six months from now (Table 4, Question 2) indexed at 6.06, a 0.30 decline from the third quarter. In spite of such concerns, the Commercial Broker Future Confidence Index was 5.84 in the fourth quarter of 2018, a 0.62 bump from the third quarter of 2018 largely driven by positive expectations regarding the future commercial financing and leasing markets, and commissions six months from now.
The Residential Broker Confidence Index (which focuses only on the Residential Brokerage Division responses) in the fourth quarter of 2018 was 5.25, an increase of 1.28 since brokers were surveyed about the third quarter of 2018. Residential Broker Confidence Index decreased by 1.32 year-over-year, down from 6.57 in the fourth quarter of 2017. Increased confidence assessments of the current residential real estate market conditions, the financing market, and the leasing market accounted for the increase.
Residential brokers voiced their concerns regarding the significant unrest and uncertainty within the political arena, stock market turbulence, and buyer hesitations all contributing to a slowdown within the market. Several residential broker respondents predicted that the future market would remain soft, as conditions may orientate more towards price sensitive buyers. Despite such views, however, residential brokers expressed somewhat renewed expectations with the Residential Broker Future Confidence Index rising to 5.52 in the fourth quarter of 2018, a 1.61 increase from the third quarter of 2018. Residential brokers exhibited a positive outlook for the overall real estate market (Table 5, Question 2) and rental market (Table 5, Question 6) with respective increases of 1.48 and 1.3 from the third quarter of 2018.