Tag Archives: National Association of Realtor

Making Selling A Home Cheaper

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On Friday, Yahoo Finance posted an article about a change in the commission rate that many realtors will make when selling a home.

The article reports:

The 6% commission, a standard in home purchase transactions, is no more.

In a sweeping move expected to dramatically reduce the cost of buying and selling a home, the National Association of Realtors announced Friday a settlement with groups of homesellers, agreeing to end landmark antitrust lawsuits by paying $418 million in damages and eliminating rules on commissions.

The NAR, which represents more than 1 million Realtors, also agreed to put in place a set of new rules. One prohibits agents’ compensation from being included on listings placed on local centralized listing portals known as multiple listing services, which critics say led brokers to push more expensive properties on customers. Another ends requirements that brokers subscribe to multiple listing services — many of which are owned by NAR subsidiaries — where homes are given a wide viewing in a local market. Another new rule will require buyers’ brokers to enter into written agreements with their buyers.

…By some estimates, real estate commissions are expected to fall 25% to 50%, according to TD Cowen Insights. This will open up opportunities for alternative models of selling real estate that already exist but don’t have much market share, including flat-fee and discount brokerages.

I have very mixed emotions on this. I support the change because I think it was needed in view of the inflation of house prices in recent years. A 6 percent commission on selling a house for $100,000 would be $6,000. Obviously some of that commission would be paid to the Real Estate Agency–the agent would not be able to keep the entire amount. According to Statista, the average price of a house sold in 2023 was &511,100. The real estate agent’s commission on the sale of that house would be approximately $30,000. I realize that the agent has expenses-a photographer to photograph the house, the cost of multiple listing, etc., but that seems high. I hope with this lawsuit, we will get back to more of a free market in real estate sales where the rate is competitive. I don’t want to see either a private or government monopoly determining real estate commissions.

Bidenomics At Work

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Aside from what you are paying for groceries and gasoline, have you looked at mortgage rates and home sales right now?

On Monday, One America News reported the following:

Sales of new U.S. single-family homes fell more than expected in October, likely as higher mortgage rates reduced affordability, but the housing segment remains supported by a persistent shortage of previously owned properties on the market.

New home sales dropped 5.6% to a seasonally adjusted annual rate of 679,000 units last month, the Commerce Department said on Monday. September’s sales pace was revised lower to 719,000 units from the previously reported 759,000 units.

Economists polled by Reuters had forecast new home sales, which account for a small share of U.S. home sales, would fall to a rate of 723,000 units.

New home sales are counted at the signing of a contract, making them a leading indicator of the housing market. They, however, can be volatile on a month-to-month basis. Sales increased 17.7% on a year-on-year basis in October.

The stock of previously owned houses on the market is nearly 50% below it’s pre-pandemic level, according to the National Association of Realtors, which last week reported that home resales plunged to more than a 13-year low in October. Most homeowners have mortgage rates under 3%, making many reluctant to sell, boosting demand for new construction.

According to The Mortgage Reports, the mortgage interest rate in 2021 was 2.96 percent. In 2022, it was 5.34 percent. The current mortgage rate, according to Nerd Wallet is about 7.5 percent. That is a significant increase. Interest rates were artificially kept low for a number of years. That was not sustainable. However, the rate of increase (the Federal Reserve’s attempt to curb inflation) has hurt real estate sales. At one point many years ago because of a job change, we were forced to take out a mortgage at 8.5 percent (giving up a mortgage of 4 percent). If you are sitting on a 3 or 4 percent mortgage right now, the last thing you want to do is move and take out a 7.5 percent mortgage. Bidenomics has hurt Americans across the board. We need a new President with a new approach to the economy.

The Recovery Doesn’t Seem To Be Recovering Very Well

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Yesterday Ed Morrissey posted an article at Hot Air about the latest report to come out on the housing market. The National Association of Realtors reported that the market for both new homes and existing homes went down in March. March was the third month out of the past four months when sales of existing homes have gone down.

The article reports:

Residential real estate remains the economy’s soft spot, challenged by stricter lending standards, lower home values and the threat of more foreclosures. An improved labor market and mortgage rates near historic lows have yet to stoke bigger gains in demand.

The article further states:

The description of an “improved labor market” applied more in February than it did in March.  Last month, the US only added 120,000 jobs, barely enough to keep up with population growth.  Even before that, the previous three months added around 650,000 jobs in the aggregate, which means actual growth above population increase of about 300,000 jobs — which wouldn’t greatly increase demand in the housing market, but shouldn’t result in a decrease in demand.  First-time buyers still only account for a third of these purchases, when the normal level is around 40%, according to Bloomberg News.  That’s an indication of a lack of confidence among younger adults.

I am not an economist, but it seems to me that until people feel they have secure jobs, they won’t buy houses. I also wonder if the fact that it used to cost $30 to fill up a gas tank and now costs $60 might have people saving their pennies in case things get worse.

 

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