The Real Deal New York

Confidence dips as brokers worry over health of leasing markets: REBNY

Coming of a high at the end of 2017 following tax reform, brokers less optimistic at the start of 2018
By Rich Bockmann | July 02, 2018 01:15PM

(Credit: iStock)

Residential and commercial brokers were less confident at the beginning of the year due to concerns over the health of the leasing and finance markets.

Brokers reported an average confidence score of 5.78 out of 10 points during the first quarter of 2018, according to the Real Estate Board of New York’s Broker Confidence Index. That was down 1.21 points from the final three months of 2017.

“Residential and commercial broker confidence was decidedly more upbeat in the fourth quarter of 2017, but market confidence in the first quarter of 2018 remained positive overall,” REBNY president John Banks said.

Banks added that while the pace of transactions has slowed, REBNY brokers “are seeing movement among well-priced inventory. Prices are continuing to undergo a natural correction with new developments and a more competitive leasing environment.”

Broker confidence at the end of 2017 was as high as it had been in a year and a half, due in large part to positive expectations for the impact federal tax reform would have on the market.

But to start 2018, brokers had a more dour outlook. Commercial brokers expressed concerns over the health of the financing markets looking six months ahead.

“Of course interest rates are the major factor in the commercial mortgage financing market,” one broker wrote.

On the residential side, the biggest source of anxiety had to do with the rental market.

“In the rental market (range $5,000 to $15,000), consumer confidence is low. The general sentiment is that there is too much product and low demand,” wrote one broker, while others said that no-fee rentals were taking over a large part of the market and making it tougher for brokers.