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CREFC Sentiment Index Reflects Growing Caution Over Economic Outlook
The CRE Finance Council (CREFC) said its Second-Quarter 2024 (2Q 2024) Board of Governors (BOG) Sentiment Index survey decreased to 102.4, a 3% decline from the previous quarter’s 105.4. The change reflects growing caution in the economic outlook and the ongoing impacts of higher interest rates, according to CREFC.
Drilling down into the survey’s core questions reveals significant changes in expectations and insights. They include the following:
- Overall Sentiment: Industry sentiment has moderated with 61% neutral and only 22% positive, down from 35% in Q1.
- Economic Outlook: Confidence in the U.S. economy has waned, with only 11% of respondents expecting better performance over the next 12 months, down from 24% in the previous quarter.
- Federal Policy Impact: Neutral sentiment toward federal legislative and regulatory actions increased to 67%. Negative sentiment decreased to 26%.
- Mortgage and Cap Rates: Forty-one percent of respondents viewed the impact of rates positively, up from 31% in 1Q.
- CRE Fundamentals: Stability is expected, with 24% anticipating improvement, consistent with the previous quarter.
- Transaction Activity: Demand is expected to remain strong, with 54% expecting increased investor demand, consistent with the prior quarter (55%).
- Financing Demand: Expectations for borrower demand slightly decreased to 65% from 69%.
- Liquidity: Expectations for improved liquidity fell to 46%, compared to 1Q’s 57%.
- CMBS Market: Positive sentiment toward CMBS and CRE CLO demand decreased to 43% from 51%.
“The 2Q 2024 survey results reflect an industry forging its way through significant uncertainty,” said Lisa Pendergast, executive director of CREFC. “As the industry navigates these challenging waters, its resilience and ability to innovate will be key to capitalizing on emerging opportunities while mitigating potential risks.”
- ◦Economy
