Broker confidence in New York City commercial and residential real estate has dropped to the lowest point on record, according to the Real Estate Board of New York.
Dropping for the third straight quarter, REBNY’s Real Estate Broker Confidence Index Q3 2020 tells an increasingly grim story. The third-quarter Confidence Index declined to 3.08 out of 10, marking a 7 percent drop from the second quarter and a year-over-year decrease of 47 percent. While the overall figures are discouraging, sector-level results indicate a divergence in sentiment.
The Residential Broker Confidence Index decreased 14 percent quarter-over-quarter to 4.0, but the Commercial Broker Confidence Index increased 11 percent, rising to 2.15 percent. Furthermore, residential brokers’ Present Situation Confidence Index decreased from 4.06 in the second quarter to 3.61 percent in the third quarter, while commercial brokers’ Present Situation Confidence Index increased quarter-over-quarter, rising from 0.89 to 1.4. Commercial brokers’ comparatively positive assessment of the real estate situation in New York mirrors that of the national commercial brokerage community, which is also seeing gradual improvement in the commercial real estate market.
REBNY’s overall Future Broker Confidence Index, based on brokers’ expectations for market conditions six months from now, offered little encouragement, decreasing 10 percent from the second quarter to 3.51 percent. With brokers increasingly uncertain about the future of the market, the bad news is just getting worse for millions of New Yorkers who rely on the everyday government services funded by real estate-generated tax revenue, James Whelan, president of the Real Estate Board of New York, noted in a prepared statement.
As was the case with the Confidence Index, the Future Broker Confidence Index differed at the sector level. Residential brokers—queried about the future financing market for residential sales, upcoming rental market and anticipated commissions—noted that their confidence continued to sour quarter-over-quarter, with the Residential Future Confidence Index dropping from 5.11 to 4.3.
Commercial brokers’ outlook neither worsened nor improved, holding steady at 2.72 on the Commercial Future Confidence Index. Whelan added that unless Washington delivers the comprehensive federal aid needed to drive a strong economic recovery, New York City and state officials will be forced to choose between cutting those crucial government services or raising taxes to fund them—and neither option bodes well for the future of the market or for New Yorkers struggling.
Read the full report by REBNY.