By Konrad Putzier
This year has not been easy for many New York brokers. “I’ve been calling acquaintances and clients, sending postcards to addresses in streets with big apartment buildings, asking them if they know anyone who might want to list with me. But there isn’t much to sell out there,” said one Brooklyn broker.
“It really makes you feel bad when you’re essentially begging for listings. It’s not much fun anymore”
Rising prices and record sales of luxury condos might have a hold on the headlines, but most brokers are experiencing a very different side of the current market. Residential sales inventories in Manhattan fell to their lowest level in 13 years in the third Quarter, according to Douglas Elliman, leaving brokers in a scramble for the few available listings.
According to a survey by the Real Deal in March, anywhere between 60 and 95 percent of brokers at Manhattan’s biggest brokerages didn’t have any exclusive listings. By all accounts, things have only gotten worse since.
While some brokers have managed to make the most of a difficult situation, many more are finding themselves with their back against the wall.
“I am feeling the pressure to produce. Buyers don’t understand that there is a very limited inventory ” said Bridget Schuy, a broker at BOND who hasn’t had one exclusive sales listing this year.
“I think that the market started to really feel the decrease in inventory about a year ago. I started to see less and less listings and an increase in bidding wars. There were times when brokers in my firm were up against 40 to 50 other bidders,” she said.
Although, she claims she is optimistic and is “not panicking” yet, Schuy admitted she is concerned about the market.
“There’s just so little new development on the market, and there hasn’t been much for several years because of the recession. Not to mention that New York is still suffering the damage from Sandy.” said Schuy, who specializes in Lower Manhattan.
“I think (the inventory crunch) will level off somewhat, but it will always be there because of the ever increasing population of the city.”
The decline in inventories is at least in part a holdover of the 2008 financial crisis, when financing dried up and several large development projects were halted. The sector has since recovered, and several projects are under way. For example, 53 West 53rd Street in Manhattan recently received funding after being sidelined during the crisis.
But developers have not been able to keep up with growing demand, and it will be years before large projects like Hudson Yards hit the market. In the meantime, supply is limited.
Joshua Arcus, managing partner at the Siderow Organization, said many of his brokers have been able to make up for the lack of listings in Manhattan by branching out into Queens. But he also admits that the inventory crunch has made him slightly less picky: “I am more willing to take certain exclusives even if they are a little bit overpriced by the owner,” he said.
“If we had more listings and if there was more inventory, I could say to the person: ‘you know what, why don’t you look around and see what other brokerages say’.”
David Schlamm, CEO of City Connections Realty, has noticed that desperation over a lack of inventory changes brokers’ behavior.
“It brings out the worst in people,” he said. “Thousands of rental brokers are competing to get clients by posting open listings, many of which are not true or accurate, for example by saying ‘no fee’ when there really is a fee.”
The inventory crunch has also led to a growing financial divide between those brokers who are doing well and the many that aren’t. “It’s been pretty good for sellers and for a select group of brokers who are successful because they are well connected,” said Schlamm.
One of these select few is Deanna Kory, a residential broker at Corcoran. She says she might be having her second-best year yet, which she attributes to her own foresight. “I have been aware of the trend for a while,” she said. “Three or four years ago, I told my team we were going to work with more buyers.”
Back then, 70 percent of her work consisted of exclusive sales listings and 30 percent was representing buyers. Now, she says, the ratio is nearing 50/50. Kory’s change of strategy is paying off, although she is certainly also benefiting from her specialization in the booming high-end market.
Donald Brennan, founder of Brennan Realty Services, also said that his brokerage business hasn’t suffered, in part because he is also a developer and can create his own inventory.
But stories of struggling brokers are still far more common, and several large brokerages declined to comment for this article – indicating that the inventory crunch is a sore subject.
Real Estate Weekly has even learned of a broker who is considering going on food stamps.
The situation of the Brooklyn broker, who chose to stay anonymous, isn’t nearly as bad. “Luckily I am also a buyers’ broker,” she said. Nevertheless, she would prefer to have her own sales listings.
“I am not very optimistic,” she said. “People aren’t putting their apartments on the market because they are worried they won’t find another place to move to.
“For something to hit the market these days, it really takes divorce, death or debt.”