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REBNY 3rd Quarter 2016 Broker Confidence Index Report
November 7, 2016
The Real Estate Board of New York’s (REBNY) Real Estate Broker Confidence Index for the third quarter of 2016 was 5.79, a 1.25 drop from the second quarter of 2016. There has been a slow, steady decline in overall broker confidence in the market since the fourth quarter of 2014 when it was 9.22, the highest it had been since we began surveying our brokers in the first quarter of 2013.
Similarly, the overall broker confidence index for the market six months from now was 5.29, dipping 1.18 points from last quarter. This index has also continued to decline from the fourth quarter of 2014 when it was 9.23, the highest it had been since we began surveying our brokers.
The declines in overall broker confidence in the current market and the market six months from now were driven by both the residential and commercial broker index. Though the residential broker index is higher than the commercial index for this quarter, the general downward trend of the commercial index since the third quarter of 2015 has contributed to the overall decline of overall broker confidence.
The Commercial Broker Confidence Index was 5.21, a 1.36 decrease from last quarter’s 6.57. This was a directional shift in commercial broker confidence following the increase in confidence seen in the previous quarter. Similarly, the Commercial Broker Confidence Index for expectations of the market six months from now was 4.32, down 1.39 from 5.71 last quarter. This is the first time that any aspect of our indices has dipped below 5.00, which signals that more commercial brokers are shifting to a less positive view of the market and remain cautious.
Concerns about our country’s political future and bank regulations have continued to influence the outlook of the commercial brokers. Some voiced their apprehensions sensing a slowdown in the retail market due to the industry’s transition to web-based services. Others also felt that government regulations and lending were affecting banks’ abilities to finance transactions, delaying their closing times. Despite the drop in confidence, some commercial brokers still believe that there will be a bounce in activity after the election.
Our Residential Broker Confidence Index was slightly lower than last quarter with confidence decreasing to 6.37, down 1.15 from 7.52 last quarter. Residential brokers’ concerns in the current market and the market six months from now included the rental market softening and the uncertainty of the presidential election. Some brokers mentioned that domestic buyers, specifically, are lagging on purchases because of the election. Foreign buyers have also grown more cautious due to the election and international economy.
Residential broker confidence in the market six months from now dropped 0.97 down to 6.26 from 7.23 last quarter. Some brokers remain positive because the $2 million and below sales market remains strong. However, they believe there is an oversupply in the luxury market. Uncertainty over interest rates and the presidential election has left many residential brokers unsure of what market conditions will be like six months from now.