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REBNY Index: State Policy Decisions Weigh on Rising Real Estate Broker Confidence
Survey shows optimism for 2019 market conditions, apprehension for Albany policy proposals
May 29, 2019
The Real Estate Board of New York’s (REBNY) Real Estate Broker Confidence Index for first quarter of 2019 was 6.92 out of 10, an increase of 1.06 since brokers were last surveyed about the fourth quarter of 2018.
Residential and commercial broker confidence both experienced substantial increases in the first quarter of 2019 when compared to the previous quarter.
“Overall confidence among both residential and commercial brokers showed marked improvement from a year ago and reflects a positive outlook on the real estate market heading into the summer,” said John H. Banks, REBNY President. “However, New York City brokers also expressed concern over the impact of recent policy changes and Albany’s proposed rent reforms.”
The Commercial Broker Confidence Index, which focuses only on responses from members of REBNY’s Commercial Brokerage Division, was 7.24 in the first quarter of 2019, an increase of 0.78 since brokers were surveyed about the fourth quarter of 2018. Year-over-year, the index increased by 1.22, up from 6.02 in the first quarter of 2018.
More specifically, commercial brokers’ responses regarding their current assessment of the real estate market and leasing conditions demonstrated optimism.
“Our economy is strong: companies are growing and profitable, are seeking talent in NYC, and people want to live and work in NYC,” said one commercial broker.
Despite index improvements, commercial brokers expressed concerns about post-Amazon anti-business sentiments, commercial rent control, rent regulation reforms in Albany, interest rates, and office and retail vacancies.
“The negative attitude toward business, the pile on of taxes and fees, the restrictive environmental and rent regulations, etc., all harm the NYC commercial real estate market,” said one commercial broker.
Another commercial broker addressed the shifting retail landscape in New York City saying: “With the impact of Internet-related sales, the use of retail space needs to be more creative and owners need to get more realistic.”
The Commercial Broker Future Confidence Index, measuring brokers’ expectations of the commercial market six months from now, grew to 6.69, a 0.85 increase compared to the previous quarter. This increase was fueled by heightened expectations for the financing and leasing markets.
The Residential Broker Confidence Index, which focuses only on responses from members of REBNY’s Residential Brokerage Division, was 6.59 in the first quarter of 2019, an increase of 1.34 since brokers were surveyed about the fourth quarter of 2018. Year-over-year, the index increased by 1.05, up from 5.54 in the first quarter of 2018.
Renewed confidence assessments of current residential market conditions, as well as the financing and leasing markets, accounted for the increase.
Meanwhile, residential brokers expressed concerns about several policy issues including increases to mansion and transfer taxes and the loss of the state and local tax deductions, along with concerns regarding inventory surplus, slower activity, and stock market volatility.
“Recent changes in mansion tax and transfer tax have increased transaction fees which eat into buyer purchasing power and seller sale proceeds,” said one residential broker.
Another residential broker commented: “The high inventory will lead to more incentives for new development sales and price reductions for existing listings over 90 days on the market.”
Residential Broker Future Confidence Index increased to 6.56, a 1.34 increase from the fourth quarter of 2018. This increase was attributed to a positive outlook on the future residential market overall as well as the financing and rental markets.
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.