A rough rental market is weighing down brokers’ confidence.
Residential leasing brokers say renters and landlords have been more resistant than ever over the summer — typically the busiest time of the year for rentals — when it comes to broker fees, according to the Real Estate Board of New York’s latest broker confidence index.
“Almost 15 years in the business and I have never gotten the amount of push back on fees during the summer as I am now,” one broker said. “Landlords that are not paying the broker’s fee will definitely have to start as the slower months come.”
“People are looking for no fees and are not willing to pay a 15 percent fee,” added another broker.
Manhattan’s median net effective rent, which takes concessions into account, was down 1.3 percent in July from last summer, Douglas Elliman’s latest rental report showed last month.
And a separate report from Citi Habitats showed that the vacancy rate ticked up in June, which the brokerage said was “unusual for mid-summer.”
Concern about oversupply, tax reform, rising interest rates and political instability pushed REBNY’s residential broker confidence index to 4.63 in the second quarter. That was down .91 points from the first quarter of the year, and a 1.31-point drop from a year ago.
Overall, the confidence index for both residential and commercial brokers fell .25 points from the first three months of the year to 5.53 in the second quarter.
“As federal policies have taken effect, local real estate markets have been seeing their impact on buyer hesitancy and seller uncertainty,” REBNY President John Banks said. “Despite these conditions, New York City real estate brokers remain positive overall about the present situation and future real estate market.”
The confidence index for commercial brokers stood at 6.43 in the second quarter, an increase of .41 points from the first three months of the year.
At the start of the year commercial brokers were optimistic about tax reform, but now they’re worried about rising interest rates and political instability.
“Combination of end of VC [venture capital] cycle, rising interest rates, and lack of political certainty are all negatively impacting market,” one broker wrote. “Moreover, the WeWork’s of the world have created a false supply/demand balance. Had those companies not existed, the market never would have seemed as strong.”