New York Real Estate Broker Confidence Implodes to Historic Lows in Q3
The Real Estate Board of New York is reporting this week that property broker confidence hit a new record low for the third straight quarter in 2020, highlighting deep concerns about recovery efforts at a time when New York has already lost significant tax revenue due to massive declines in real estate market activity.
According to REBNY's Q3 2020 Quarterly Real Estate Broker Confidence Index, the current real estate broker confidence index is 3.08 out of 10, its lowest point on record and a 7% decline since its previous all-time low in the second quarter of 2020.
Additionally, the future broker confidence index is 3.51, an 10% decrease from the second quarter of 2020 - signaling that brokers feel the market will get even worse before the City begins a full recovery.
These findings should raise serious red flags for policymakers, as another recent REBNY analysis showed that the historic decline in New York City's real estate investment and residential sales activity resulted in the loss of $755 million in City and State tax revenue so far this year. This lost tax revenue is desperately needed to fund government services that are crucial to the lives of New Yorkers all across the five boroughs.
"With brokers increasingly uncertain about the future of the market, the bad news is just getting worse for millions of New Yorkers who rely on the everyday government services funded by real estate-generated tax revenue," said REBNY President James Whelan. "Unless Washington delivers the comprehensive federal aid needed to drive a strong economic recovery, New York City and State officials will be forced to choose between cutting those crucial government services or raising taxes to fund them - and neither option bodes well for the future of the market or for New Yorkers struggling."
The Residential Broker Confidence Index, which experienced a small boost in Q2 2020 as Phase Two of New York Forward began, declined 14% between Q2 and Q3 to 4.00. The Commercial Broker Confidence Index, on the other hand, shared a slightly more positive outlook on the market, increasing 11% from Q2 to 2.15.
According to one commercial broker surveyed, "The uncertainty on federal assistance damages income in the short term, which has long-term impacts."
Additional key findings from the Q3 2020 Quarterly Real Estate Broker Confidence Index report include:
The overall broker confidence index this quarter declined 47% year-over-year. Compared to Q3 2019, the commercial broker confidence index decreased 64% and the residential broker confidence index decreased 30%.
The overall present situation broker confidence this quarter declined 61% year-over-year. Compared to Q3 2019, the commercial broker present situation confidence index decreased 79% and the residential broker present situation confidence index decreased 39%.
The future broker confidence index this quarter declined 36% year-over-year. Compared to Q3 2019, the commercial broker future confidence index decreased 49% and the residential broker future confidence index decreased 22%.
U.S. home prices increased 6.7% in September 2020, compared with September 2019, marking the fastest annual acceleration since May 2014. On a month-over-month basis, home prices increased by 1.1% compared to August 2020.
According to Redfin, California and New York had the biggest upticks in people looking to move out of state since last year, followed by Massachusetts, Washington, D.C., and Illinois -- primarily driven by COVID-19 outbreak.