Real estate brokers are feeling more confident for the first time since the end of 2017, according to the Real Estate Board of New York.
REBNY’s Real Estate Broker Confidence Index score increased to 5.86 out of 10 during the fourth quarter of 2018, an increase of 1.11 points compared to the third quarter of the year. Broker confidence had gone down in three consecutive quarters prior to this.
Confidence ticked up among both residential and commercial brokers at the end of the year. For commercial brokers, the confidence index hit 6.46 during the fourth quarter of the year for an increase of 0.93 points from the third quarter.
And for residential brokers, it hit 5.25 for an increase of 1.28 points.
REBNY attributed the confidence increase among commercial brokers to a better understanding of the current price corrections in the city’s real estate market, the reversal of the L train shutdown, and Amazon’s decision to place part of its second headquarters in Long Island City (although that deal may now be in jeopardy).
Other brokers expressed concerns about interest rates, tariffs, and volatility on the stock market and in politics. One pointed to taxes as a major problem.
“The biggest thing holding back the market is taxation. In particular, real estate taxes have gone up and up, while at the same time effective rents have declined,” one commercial broker said. “This is particularly true with retail properties.”
REBNY attributed the confidence improvement among residential brokers to their positive assessments of current conditions for residential real estate financing and leasing.
“The real estate market is in a slight correction and mortgage rates are still historically low, so investing in residential real estate has historically been a good investment and will continue to be,” said one residential broker.
However, several residential brokers still had concerns about the market. They predicted it would remain soft going forward and pointed to political uncertainty, stock market turbulence and buyer hesitations as complicating factors moving forward.
“REBNY brokers continued to weigh the effects of federal tax reform and trade negotiations, potential rent regulation reform, and changing interest rates in measuring their confidence for this survey,” REBNY president John Banks said in a statement. “Their rising confidence in the real estate market now and six months from now marks a brighter outlook for improved market conditions in 2019.”