Published: November 11, 2013 – 1:50 pm
It goes without saying that real estate brokers in the city are still confident about the state of the current market, but in a bit of a surprise that faith in a better tomorrow has ebbed a bit from the readings of earlier this year and what’s more brokers have lost faith that things will get better. Those shifts and more came out in an third quarter survey of both commercial and residential brokers conducted by the Real Estate Board of New York.
In all, REBNY polled about 350 brokers working in the city, and asked them 10 questions about their assessment of the markets, with each answer ranging from zero to 10 for the most optimistic response. Overall, the confidence index was 8.75 this quarter, down from a high of 8.9 earlier this year.
“I think both commercial and residential sides were generally optimistic but the report was done at the end of the third quarter, just about the time the government shutdown took place, and before the mayoral election had happened,” said Michael Slatterly, REBNY’s senior vice president for research.
But on the residential side, a lack of new affordable housing units drove confidence down to 8.33. While such a reading is still on the high side, it nonetheless stands as the lowest reading since the second quarter of 2012. Respondents told REBNY that the glut of luxury housing on the market, while relatively little is available for income groups other than the ultra-rich, was a driving factor behind the decline in confidence from 8.71 from last quarter, despite the fact that sales rose to record levels in the third quarter according to REBNY data.
One of the lowest metrics concerned financing. Residential brokers were less confident about the future of financing markets.
They averaged a response of 6.16, the lowest number since the second quarter of last year. When residential brokers were asked generally about their confidence in the current market, the average answer was 7.45, the lowest number all year, but about a point higher than last year.
The combination of major creditors like Freddie Mae and Fannie Mac have been tightening their criteria, and budget uncertainty in Washington, may have driven the numbers down, Mr. Slatterly noted.
On the other hand, echoing the concerns voiced by brokers, financing for ultra-luxury residential buildings continued to be plentiful. Hines’ tower adjacent to the Museum of Modern Art and Time Equities’ long-stalled tower at 50 West St. recently scored huge financing deals to allow them to move forward.
In contrast, commercial brokers had a much rosier outlook on leasing activity as the economy continues to pick up. Their confidence ticked up to 9.18 for the current overall market, the highest number since the second quarter of 2012, when the number was 7.48. And in contrast to concerns voiced by their residential peers about financing, commercial brokers rated the current borrowing environment a perfect 10.