Concerns Exist Among Both Commercial and Residential Brokers
The Real Estate Board of New York’s (REBNY) Real Estate Broker Confidence Index for the third quarter of 2019 was 5.84 out of 10—a 12% decline since brokers were last surveyed about the second quarter of 2019.
Residential and commercial broker confidence both experienced slight declines in the third quarter of 2019 compared to the second quarter of the year. Respondents expressed concerns over unfriendly regulations that are shaping the New York City business climate.
The Commercial Broker Confidence Index, which focuses only on responses from members of REBNY’s Commercial Brokerage Division, was 5.96, a 16% decline since brokers were last surveyed about the second quarter of 2019. The index increased 8% year-over-year, up from 5.53 in the third quarter of 2018.
“Tax incentives will be needed for developers and landlords to invest in housing in the city, otherwise with current policies it will continue to hurt the future economy” one broker said.
Another broker added that “future market performance in NYC specifically continues to be threatened by laws such as capping SALT deductions and the mansion tax.
However, despite this decline, New York City’s strong local economy buoys broker confidence and is responsible for the year-over-year increase.
The Commercial Broker Future Confidence Index, measuring brokers’ expectations of the commercial market six months from now, index dropped from 6.44 to 5.34, a 17% decline. This signifies a strong sense of doubt in the near future of the commercial market, though overall commercial broker confidence remained stable quarter-over-quarter.
The Residential Broker Confidence Index, which focuses only on responses from members of REBNY’s Residential Brokerage Division, was 5.72, an 8% decline since brokers were last surveyed. Confidence increased 44% year-over-year, up from the lowest residential confidence to date in the third quarter of 2018 of 3.97.
The decline can be attributed to additional New York City taxes, which are creating a sense of insecurity in the residential market.
“A rising regulatory environment that is unfriendly to business will negatively impact future market performance”, said one broker.
This helps explain why the Residential Broker Future Confidence Index, which measures the six-month future outlook, declined 2% from the previous quarter. Brokers expressed concerns over taxes, the 2020 presidential election, and the state of the economy as contributing factors to their negative outlook.
REBNY regularly surveys its residential and commercial brokerage division members to measure their confidence in the New York City real estate market. Members are asked to share their perspective on the market as it stands now and make predictions for the market six months into the future. Survey results are published quarterly with a maximum index of 10.