New York City continues to be one of the most prosperous and dynamic real estate markets in the world. However, expectations about future market performance were disrupted by the recent government shutdown and debt ceiling debate.
Last week, REBNY released its Real Estate Broker Confidence Index (“Index”), which polls hundreds of real estate brokers working throughout the City each quarter. The Index survey consists of eight questions that ask participants to assess the current market and their expectations of the market six months from now.
Overall confidence for the Third Quarter of 2013 decreased slightly compared to last quarter, due primarily to concerns about political uncertainty in Washington and the lack of residential inventory. The City’s brokers also lowered expectations for their six-month outlook, even though they reported strong confidence in present financing conditions.
Residential brokers were mainly concerned about the low production of affordable housing and increasing high end developments coming to the market, which is skewing the market in favor of very high income buyers, many reported to be non-New York City residents. Despite these concerns, residential brokers are hopeful that more developments favoring various household incomes will come to the market, improving the local economy and housing market.
The latest increase in brokers’ confidence in the current market was chiefly due to the increase in confidence in the financing market for commercial real estate sales, for which an index of 10 was recorded. By contrast, the residential financing average response was a 6.16, the lowest we’ve seen. It is likely that confidence is being deflated by federal budget uncertainty coupled with more stringent Freddie Mac and Fannie Mae lending criteria.
Both residential and commercial brokers showed concern about the market six months from now due to the recent government standstill and the effect that any decisions will have on interest rates and the economy as a whole. We hope that a long-term resolution of the budget and borrowing issues in Washington will ignite a burst of confidence in the market and a pick-up in new residential construction activity to serve all New Yorkers..
A full copy of the REBNY Broker Confidence Index can be found at www.REBNY.com.