CREFC Board Sentiment Index Turns Sharply Negative

April 26, 2022

On April 19, CREFC released the results of its 1Q 2022 Board of Governors’ (BOG) Sentiment Index. This most recent survey indicated concerns across various fronts with the overall index dropping sharply from 105.2 in 4Q 2021 to 80.5 in 1Q 2022. This was the second-largest drop in the index after a 31% drop in early 2020, the first survey conducted after the beginning of the pandemic.

The results of this quarter’s survey were not altogether surprising, given uncertainty surrounding inflation, rising interest rates, the lingering effects of the pandemic, as well as geopolitical risk. The questions with the most significant movements revolved around the forward-looking sentiment for the U.S. economy, demand for CRE and multifamily debt, and the overall outlook for CRE finance businesses.

Sentiment for the U.S. economy saw a meaningful shift for the second consecutive quarter. Whereas the previous quarter saw a movement toward neutrality, the current quarter’s activity was decidedly negative. The Board also tempered its outlook for borrower demand with only 13% believing there will be greater demand and 35% believing there would be less demand. Finally, while sentiment for all CRE finance businesses moderated from the preceding quarter, the Board did not foresee any liquidity concerns and indicated there is ample capital available for borrowers seeking to finance their projects.

This most recent survey perfectly captures the industry’s mood at this time. There are several once-in-a-lifetime macro risks whose outcome remains uncertain. However, real estate assets continue to perform, and while lenders and investors have become more selective, transactions continue to occur, and year-to-date lending volumes are still well ahead of 2021. While volumes may come under pressure, we expect robust liquidity for real estate assets to partially offset downward pressure on values and fundamentals.

- CREFC Board of Governors Chairman Eric Thompson, Kroll Bond Rating Agency

CREFC’s quarterly Sentiment Index is derived from the Board’s responses to 10 core questions on the state of the CRE finance market. The Sentiment Index was initiated in the fourth quarter of 2017 and thus tracks markets pre-COVID, during COVID, and today as we continue to recover from the worst of the pandemic’s impact. Detailed results for each question in the 1Q 2022 survey can be found here.



Raj Aidasani
Senior Director, Research
CREFC’s quarterly Sentiment Index is derived from the Board’s responses to 10 core questions on the state of the CRE finance market.
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2022 CRE Finance Council. All rights reserved.

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