Realtor Rebellion

October 09, 2023

THE BIG SPLASH

Realtor Rebellion

What you should know

Several large US real estate brokerages, including Re/Max and Anywhere Real Estate, have opted out of mandatory membership to the National Association of Realtors (N.A.R.) following a legal settlement. This marks a significant shift, with about 340,000 agents no longer obliged to pay membership fees to the influential trade group.

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  • The Chicago-based N.A.R., faced with sexual harassment allegations and antitrust lawsuits, sees its influence wane. The lawsuits were settled with Anywhere paying $83.5 million and Re/Max $55 million, alongside abandoning obligatory N.A.R. membership, raising questions about the organization’s future influence in the real estate industry.

  • N.A.R., under fire for a policy that allegedly inflates home sellers’ costs, is facing increased scrutiny. The revelation that agent commissions could be set to $0 suggests a potential overhaul in long-standing industry practices and further challenges to N.A.R.’s authority.

  • The organization, which was pivotal in the real estate landscape, faces an uncertain future with significant brokerages like Redfin and others distancing themselves amidst legal and ethical challenges. The developments indicate a pivotal moment of transformation and possible restructuring in the US real estate industry.

  • The class-action suits and internal challenges highlight a “perfect storm” for N.A.R., according to insiders. The departure of prominent brokerages may force a reevaluation of its role and influence, marking a potential shift in the traditional real estate transaction structure and the protection it offers to consumers.

A SCOOP OF MARKET DATA

What matters

Bank of America analysts counter fears of a housing crash similar to 2008, citing stricter lending standards and drawing parallels to the 1980s' market, indicating potential challenges but not a collapse.

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  • The current market lacks the over-leveraging and overdevelopment that characterized the pre-2008 landscape, indicating a lower risk of a similar downturn.

  • Stricter lending standards and a mortgage debt to disposable income ratio of 65% in 2Q 23 reflect a more cautious and stable financial environment.

  • The analysts draw parallels to the early 1980s, where high inflation and rising mortgage rates posed challenges but not a market crash.

  • Despite the rising costs and limited housing inventory, the market is expected to remain stable, with potential turbulence but not a crash, contingent on future rate adjustments to improve affordability.

A SCOOP OF DISCOVERY

Something you didn’t know

In major U.S. cities, renting is becoming a more popular option than buying, even among the wealthy, due to overinflated home prices and the flexibility renting offers.

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  • A surge in high-income and millionaire renters is noted, with more families opting for apartments over the past 50 years, indicating a shift in the traditional homeownership dream.

  • The number of renters with incomes over $150,000 increased by 82% from 2015 to 2020, while millionaire renters tripled, highlighting a trend among the affluent to choose renting.

  • The mobility and lack of maintenance responsibilities associated with renting are attractive, especially in seller’s markets with inflated home prices.

  • Cities like San Francisco have seen a significant increase in millionaire renters, underscoring the appeal of renting in areas with high real estate prices.

A SCOOP OF CELEBRITIES

What you should now

Katy Perry's legal battle over a $15 million property takes an unexpected turn as an unidentified woman disrupts the court proceedings.

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  • Perry and Orlando Bloom are embroiled in a case against veteran Carl Westcott over the sale of his Montecito house.

  • The trial was interrupted when a woman charged into the courtroom during a testimony about Westcott's cognitive capacity.

  • Westcott's family claims he was not in the right mental state to sell the property, citing his age and health conditions.

  • The case has inspired the Protecting Elder Realty for Retirement Years Act, addressing the risks of elder financial abuse in real estate transactions.

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