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First Quarter 2015 Real Estate Broker Confidence Index
April 28, 2015
The Real Estate Board of New York’s Real Estate Broker Confidence Index for the first quarter of 2015 is 9.05, slightly lower than last quarter but still very positive. However, the primary concern among the brokers is the potential impact of rising interest rates which seem likely this year. This has tempered their confidence in the market six months from now.
The Commercial Broker Confidence Index was at a 9.24, down slightly from 9.60 last quarter. Many brokers reported seeing a strong market with high sale prices throughout Manhattan, especially in Chelsea. Financing was the main concern the commercial brokers had this quarter. In response to the questions about financing now, commercial brokers were still extremely positive. However, their confidence, though still strongly positive, showed a noticeable decline when asked about the financing market six months from now. Clearly, the growing expectation that the Federal Reserve Bank will begin raising interest rates before the end of the year is having an impact on their level of confidence. At the same time they expressed concern about the rising sales prices. Moderate rate increases implemented at a reasonable pace could address their concern about rising sales price without destabilizing the market.
The Residential Broker Confidence Index was virtually unchanged this quarter, compared to last quarter at 8.86. They continue to be positive about the robust sales market and the growing popularity of multiple neighborhoods. Likewise, brokers have seen an increase in rentals in Crown Heights, Brooklyn and Riverdale in the Bronx. The principal concern was once again the lack of inventory in the market. This has been the case for the past year and a half, with brokers mentioning especially low inventory of coops and two bedroom apartments. Low inventory drives prices up and is driving some buyers out of the market, according to our brokers. The rising interest rate is also a serious concern this quarter. As with the commercial brokers, the residential brokers express a slight decline in confidence in financing six months from now. The confidence index for the question about financing six months from now is the lowest of all the questions answered. Nevertheless, though financing is a concern, they are still very positive about its availability and show no indications that a rise in interest rates would have any serious adverse impact on the market.