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REBNY 3rd Quarter 2018 Broker Confidence Index Report
December 1, 2018
The Real Estate Board of New York’s (REBNY) Real Estate Broker Confidence Index for third quarter of 2018 was 4.75 out of 10, a decrease of 0.78 since brokers were surveyed about the second quarter of 2018. Residential and Commercial Broker confidence both experienced declines in the third quarter of 2018 when compared to the second 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 third quarter of 2018 was 5.53, a decrease of 0.90 since brokers were surveyed about the second quarter of 2018. The Commercial Broker Confidence Index has declined by 0.74 year-over-year, down from 6.27 in the third quarter of 2017.
In the first two quarters of 2018, commercial brokers expressed concerns about the impact of tax reform, interest rates, tariffs, and political instability. These concerns continued in the third quarter of the year. Given such conditions, commercial brokers remain uneasy about the market six months from now with an index of 5.22 recorded for the third quarter of 2018, a 0.67 decline from the second quarter of 2018. Confidence declines for future expectations were fueled by concerns regarding the commercial financing market (Table 4, Question 4), which was indexed at a low of 3.33, a 2.37 decline since last surveyed in the second quarter of 2018.
The Residential Broker Confidence Index (which focuses only on the Residential Brokerage Division responses) was at an all-time low of 3.97, a decrease of 0.66 since brokers were surveyed about the second quarter of 2018. Residential Broker Confidence Index took a noticeable turn, decreasing by 1.75 year-over-year since the third quarter of 2017, representative of a continual downward trend in market confidence for residential brokers. Residential brokers indicate that soft buyer demand combined with seasonal factors and government instability account for their reduced confidence in the market, while noting that the market may improve when buyers become more active.
Similarly, residential brokers are far less certain about the present situation and the market six months from now as the residential Future Confidence Index was at a record low of 3.91 for the third quarter of 2018, a decrease of 0.55 since the second quarter of 2018. The drop is attributable to future expectations of the leasing market which was indexed at 3.57, (Table 3, Question 6) a decrease of 0.61, since last surveyed in the second quarter of 2018. A significant portion of residential brokers expressed concerns with the sales market undergoing price corrections from all-time highs, as conditions are becoming more favorably oriented towards buyers compared to sellers. Furthermore, increases in inventory levels, especially on the higher end, have outpaced demand leading to a decrease in commission expectations (Table 3, Question 7) that was indexed at 3.39, a 1.12 drop from the second quarter of 2018.