Since becoming law, the Fairness in Apartment Rental Expenses (FARE) Act has been hoped to deliver on making housing more affordable in New York City. While it caused some controversy among realtors due to the elimination of broker fees — early indications point to more favorable conditions for renters.
Openigloo did a summer analysis (June 1 to August 31) on the impact of only market-rate units (5,200) — not stabilized units in NYC. While rents did increase by six percent, it still provides savings, because tenants typically pay between eight and 15 percent in fees.
Another thing — renters are gaining more power. Summer renewals dropped by 10 percent year-over-year to 69 percent.
"Once broker fees disappeared, more renters felt free to shop around rather than stay put," Openigloo discovered.
Interestingly, when the FARE Act first took effect in June, Openigloo said that advertised open listings immediately plunged by nearly 75 percent. However, the trend hasn't continued. In fact, supply nearly doubled by July compared with pre-FARE level and the median time listings sat on the market dropped by 39 days to 23.
"Far from freezing activity, the policy seems to have accelerated it," Openigloo emphasized.
"Renters had more choice, less upfront costs, and confidence to enter the rental market in what is usually a competitive season."
The biggest concern among some from the real estate sector about FARE was that landlords would instead bake the fees into rents. In fact, a report from real estate analytics firm UrbanDigs found that rents in Manhattan spiked by 15.7 percent from June 11 to June 23. But again, that may have been just temporary.
Openigloo said overall, based on the early findings from FARE, that the act created a "more dynamic" apartment market.
Looking ahead, landlords will want to pay close attention to the NYC Mayoral Election in November. Democratic nominee and the favorite to win it, Zohran Mamdani, has campaigned on imposing a rent freeze on stabilized units. Voters will decide in less than two months on who will lead Gotham.
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