President Trump’s “Liberation Day” tariff announcements on April 2 resulted in a dramatic shift in market sentiment for the CRE Finance market, as shown by the CRE Finance Council’s (CREFC) First-Quarter 2025 Board of Governors Sentiment Index survey.
The index fell 30.5%, to a score of 87.9 – down from a score of 126.6 in the fourth quarter.
It was the second-largest drop on record for the index – exceeded only by the onset of the pandemic in the first quarter of 2020.
The decline brings the index below the baseline of 100 for the first time since the pandemic era.
The precipitous decline reflects growing concerns over economic uncertainty triggered in large part by recent trade policies that have led to heightened market volatility.
Sentiment turned sharply negative, with 80% expecting worse economic conditions over the next 12 months, up from just 12% last quarter.
Only 7% of survey respondents say they expect improvement – down from 42%.
There was a decisive shift with regard to federal policy: 59% of respondents say they are expecting negative impacts from government actions – up from 2% last quarter – and only 11% expecting positive impacts – down from 74%.
Lisa Pendergast, president and CEO of CREFC, says while the dramatic drop in sentiment “signals concern, there are pockets of cautious optimism, particularly regarding how lower interest rates might finally break the transaction logjam that has persisted through much of 2024.”
“What makes this quarter’s survey particularly revealing is the stark contrast to last quarter’s record high sentiment, demonstrating how quickly market psychology can shift with changing economic policies,” Pendergast says in a release.
During a recent interview with MortgageOrb, Pendergast discusses the impact of tariff uncertainty on the CRE finance market and more.