In the past five years, the median rent in New York City has climbed nearly 30 percent, reaching an all-time high of $3,800 a month. For rental agents, that means more lucrative commissions.
Yet in a StreetEasy survey of more than 400 agents, 85 percent said the city’s affordability crisis has hurt their business. Almost a quarter called the impact severe.
The problem is the city’s record-low vacancy rate of 1.4 percent, which in turn pushes rents up. With available apartments rare and expensive, few new leases are being signed.
“People who would have been represented by a broker are perhaps just staying
in place,” said UrbanDigs co-founder John Walkup.
For those looking to move, “you have a limited number of apartments, and only a handful of a handful of brokers who are actually able to secure deals for those apartments,” Walkup said.
“Retention has been great for landlords, but I don’t have any inventory.”
The rental market before Covid was more forgiving. From 2014 to 2019, the median August rent increased just 2 percent. But in the five years since, it has risen 29 percent; according to StreetEasy.
Meanwhile, wages in the city rose 16 percent in the first five-year period but only 12 percent in the second, data from the Bureau of Labor Statistics show. Relative to earnings, rent became much more affordable in the first period and then much less affordable.
At the nearly 800 units across Brooklyn and Manhattan managed by the Agency’s Elina Brewer, residents have been reluctant to move because there’s nothing available within their budget.
“The retention has been great for landlords, but it’s definitely impacting me, because I don’t have any inventory,” Brewer said.
In buildings that do have vacancies, Brewer said it’s been hard to find qualified tenants, and buildings can’t lower their prices because of the loans underwriting the building. She pointed to a new, 72-unit property in Bushwick.
“Usually it takes me six months to rent the entire building,” Brewer said. “This time, it took me a year.”
All of this leaves agents making less money per hour than they once earned. More than half of the respondents in StreetEasy’s survey said they spent at least 10 hours marketing a single unit for a landlord, and roughly two-thirds said the time and cost of marketing a listing with no guarantee of payment are major issues.
At the same time, high interest rates have stifled development, and legislation pending in the City Council threatens to slash agents’ earnings.
A bill to spare tenants from paying fees to brokers hired by landlords is heading toward passage, possibly on Nov. 16.
But in the current market, some brokers have already gone where the law has not, offering concessions to get deals done.
“There’s been a lot of times where I’ve taken half a month’s broker fee or essentially no broker fee,” Compass’ James Finelli said. “I’ve even given clients an Amex gift card if they apply for the apartment.”
He added, “You have to be a little savvier about how you’re going to get these deals to the finish line.”
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