Broker Confidence Dropped In February

Broker confidence fell for the second straight month in February, though brokers are “cautiously optimistic” about the future, according to RISMedia’s February Broker Confidence Index (BCI).

The index, which is scaled 1 to 10, fell to 7.5 from January’s 7.9 and December 2021’s 8.2.

For the 3,000 brokers surveyed, rising interest rates were not a big cause for concern. They felt that rising rates won’t hurt demand considering current market conditions.

Brokers’ biggest worries were inflation and inventory, with a nod to the ongoing crisis in Ukraine.

“The continued lack of supply has really created a bubble,” Quincy Smith, a broker with ERA Matt Fischer in Yuma, Arizona, told RISMedia. 

“With the equity market starting what appears to be a significant downturn and inevitably higher interest rates to come, I believe we are in store for a prolonged period of price correction. Inflation may be the only saving grace from the correction.”

Most respondents to the survey said inventory constraints remained the same in their markets, not getting better or worse, while 36.4% said their market has become worse. Only 4% said inventory was improving.

Brokers also continue to monitor the Russian invasion of Ukraine. One broker noted that “the situation in Russia and Ukraine is concerning, and how it will impact the real estate market is unknown.”

“It’s all bad for the economy and housing. … It’s just a matter of how bad,” Mark Zandi, chief economist at Moody’s Analytics, said. “There’s a number of different ways in which Russia’s actions will hurt housing.”

Uncertainty resulting from the Ukraine situation may cause rising rates to backslide as investors switch from stocks to bonds, which are considered safer bets. Potential buyers may also retreat from making a big purchase until they feel certain about the war’s outcome.

But the report notes that brokers are feeling somewhat optimistic about market stability moving forward.

“Confidence is declining but the best in the business remain optimistic,” said Dawn Daily, director of operations at House of Brokers Realty, Inc. in Columbia, Missouri. 

“Many are very worried with the lack of ability for sellers to sell. The need and desire to sell is there but they have nowhere to go.”