Photo: MTA of NYC/Flickr
Overall real estate broker sentiment was down in the first quarter of 2017, with brokers also feeling uncertain about the New York housing market’s future. However, residential brokers recorded a boost in overall confidence in the market for the first time in a year in anticipation of new product hitting the market, according to a new report released earlier this week by the Real Estate Board of New York (REBNY).
The Real Estate Broker Confidence Index, which measures overall residential and commercial broker outlook on housing market conditions in the present and six months in the future, declined 0.13 points from the previous quarter to 5.87 in the first quarter of 2017. The index had recorded its first rise in two years in the fourth quarter of 2016, but the most recent decline was attributed to brokers’ cautious optimism about the future market, says REBNY.
Meanwhile, the Real Estate Broker Future Confidence Index, which measures residential and commercial broker confidence on the market six months into the future, declined 0.27 points from the previous quarter to 5.7 in the first quarter of 2017.
“Brokers stepped into the first quarter of 2017 with greater confidence, but are proceeding with cautious optimism,” says REBNY President John Banks.
However, residential brokers were reportedly more optimistic about the market in part due to high confidence in future commissions and lending conditions. The Residential Broker Confidence Index increased 0.32 points from last quarter to 6.46 in the first quarter of 2017. This was the first recorded increased in the Residential Broker Confidence Index since the first quarter of last year, says REBNY.
“Consumer confidence is high and should remain so for the next 6 to 12 months. The economy continues to grow along with NYC jobs. All should drive the sales market,” one residential broker told REBNY. Another residential broker commented that inventory is selling at a brisk pace.
Residential brokers were less optimistic about the next six months in the rental market. The Residential Broker Future Confidence Index dropped 0.08 points from last quarter to 6.46 in the first quarter of 2017.
Brokers have commented that NYC rents may have risen too high in recent months due to low inventory and high demand, while others were concerned about how rising interest rates will affect financing.
“Housing supply has been a continual concern that brokers have expressed, but I think the issue is also one of demand,” REBNY Senior Vice President for Research Michael Slattery tells BuzzBuzzNews.
However, the real challenge is creating product for New York City’s middle income buyers, according to Slattery. Brokers, he says, realize that we are not building enough housing to meet our needs.
Commercial brokers were also less optimistic about the housing market. The Commercial Broker Confidence Index declined 0.57 points from last quarter to 5.28 in the first quarter of this year, while the Commercial Broker Future Confidence Index dropped 0.46 points quarter-over-quarter to 4.93.
Commercial brokers pointed to uncertain interest rates as well as the instability of brick and mortar retail as causes for their lack of confidence in the market.
“New York City’s appeal as a place to live and work has never been higher, and uur brokers continue to close transactions and meet their customers’ needs,” Slattery points out.
Click here to read the entire report.