NYC Brokers’ Confidence in Market Shrinks in Third Quarter, REBNY Finds
By Celia Young November 9, 2022 4:33 pm
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As uncertainty pervades New York City’s real estate market, brokers are feeling the blow to their morale.
Commercial brokers’ confidence in the market dropped by 7 percent between the second and third quarters of 2022, from -37.72 out of 100 to -40.58, marking the fourth quarter in a row that confidence declined, according to a report from the Real Estate Board of New York (REBNY). The trade organization measures confidence by surveying agents and tracking how many answer the questions positively or negatively.
Brokers cited high inflation, the Federal Reserve’s decision to raise interest rates a sixth time this year, the perception of increased crime in New York City and a potential recession as reasons for their lack of confidence in the third quarter, according to the report.
Those worries were shared by residential brokers, who feared the city’s red-hot housing market might be starting to cool as sales dropped 3.7 percent in the third quarter compared to the previous three months. REBNY’s residential broker confidence index dipped from -1.74 in the second quarter to -17.43 in the third quarter, according to the report.
But both groups were slightly less gloomy about the markets’ futures. Commercial brokers’ confidence about the next six months rose from -34.87 in the second quarter to -22.8 in the third quarter, while residential real estate agents’ expectations ticked up from -10.07 in the second quarter to -5.46 in the third quarter.
That rise in confidence was partly because of those interest rate hikes, which brokers see as a necessary evil, said Keith DeCoster, REBNY’s director of market data.
“I think that some of the brokers feel like rate hikes, while they are certainly painful, are a little bit necessary to get pricing under control and take an approach to moderate conditions,” DeCoster said. “It’s tough to say they are positive, because it is still pretty negative, but they are hopeful that what the Fed is doing is going to expedite the normalization of conditions.”
On the commercial side, stronger hotel occupancy, increased city tourism and an uptick in office occupancy after Labor Day have brokers more hopeful for a better future, but real estate agents may have more of a tendency to seek out silver linings, DeCoster said.
“Brokers [are] notoriously optimistic,” DeCoster said. “We’re finally starting to see a little bit of momentum and traction in the return to office, and that may be why the future expectations index for commercial [brokers] improved a little bit.”
Celia Young can be reached at cyoung@commercialobserver.com.
