Nearly half of real estate agents in the United States are struggling to pay their office rent amid low sales and a shortage of inventory in the housing market.
In a November Rent Report from the business networking platform Alignable, 45% of real estate firm owners said they struggled to pay their November rent in full and on time. That's an increase of 5% from October and 10% from September.
Some experts, including TTR Sotheby's International Realty senior vice president Corey Burr, pointed to the recent interest rate hikes and high mortgage rates as the reason for the rising rent delinquency rate among small business owners.
"I think that the Federal Reserve has put us in this spot where they essentially froze up the residential real estate market by holding interest rates low for so long and then increasing them so much so quickly," Burr told MoneyWise. "It's created incredible distortions in our marketplace."
In addition to high mortgage rates, home sales have also dropped to an annual rate of 679,000 in October. That was far lower than the 725,000 new homes analysts expected to be sold. October's numbers were also lower than September's 719,000. October's sales figure were the lowest recorded in the 22 years since the National Association of Realtors (NAR) began tracking home sale statistics.
"During October, mortgage rates were at their highest, and contract signings for existing homes were at their lowest in more than 20 years," Lawrence Yun, NAR chief economist, said.
Where Else Rent Delinquency Rate Rose
Outside the real estate industry, 41% of small business owners said they could not afford to pay their rent in full and on time in November, according to the Alignable report. That goes down to 38% for women-owned businesses and 35% for veteran-owned firms. However, the rent delinquency rate surges to 61% for minority-owned small businesses, up 12% from October's rent delinquency rate.
Of all small business owners polled by the platform, car dealers and repair shop owners topped the list for high rent delinquency rates, with 55% saying they could not afford their rent in November. That is up 19% from October, when only 36% of car dealers and repair shop owners said they were struggling to pay for rent.
READ NEXT: 2024 Forecast: Real Estate Experts Say Mortgage Rates, Home Sales To Improve Next Year
