Realtors' Party Poopers

November 17, 2023

THE BIG SPLASH

Realtors' party poopers

What you can’t miss today

At the National Association of Realtors' annual convention, real estate agents grappled with the looming threat of commission erosion, amidst a backdrop of legal challenges and internal turmoil.

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  • The recent $1.8 billion antitrust verdict against NAR and two brokerage firms in Missouri has sparked industry-wide anxiety, with fears of a domino effect leading to more lawsuits and a potential overhaul of commission structures.

  • NAR, facing additional lawsuits and DOJ scrutiny, is in a precarious position, especially after recent leadership shake-ups due to allegations of sexual harassment and a toxic workplace.

  • The median income for NAR members was about $56,000 in 2022, but those with less than two years of experience earned significantly less, highlighting the financial vulnerability of many agents.

  • The convention's sessions, like "How to Get a Buyer Representation Agreement Signed," hinted at a future where buyers might directly pay agents, a shift from the current norm of seller-paid commissions.

  • Agents expressed a mix of resilience and concern, with some seeing the changes as an inevitable evolution of the industry, while others worried about the impact on their livelihoods and the broader implications for home ownership.

A SCOOP OF MARKET DATA

The number you should know

One Third

In today's housing market, where a staggering one in three homes is being snapped up with all cash, it seems like mortgages are going out of style faster than flip phones.

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  • The current real estate scene is witnessing a cash-buying spree, not seen since the days when people actually listened to music on iPods - way back in 2014.

  • With mortgage rates skyrocketing from a comfy 3.2% in early 2021 to a jaw-dropping 7.4% now, financing a home feels like signing up for a monthly luxury yacht membership.

  • The National Association of Realtors has let the cat out of the bag: housing affordability is at its worst since the time when Madonna and shoulder pads ruled - that's 1985 for you.

  • Existing homeowners are holding onto their low mortgage rates tighter than a miser's purse strings, leading to a mere 1% of them selling in the first half of 2023, and thus, the housing market is as thirsty for new listings as a desert for rain.

A SCOOP OF INSIGHTS

Something you’ll learn

New York City's Financial District is transforming its empty office buildings into housing, including the largest such conversion in the U.S., signaling a potential trend for Manhattan's other office-heavy neighborhoods.

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  • The Financial District, once a ghost town post-banker hours, is now buzzing with 66,000 residents, up from a mere 13,700 in 1990, making it more family-friendly than a Disney movie marathon.

  • Luxury apartments are popping up in historic buildings, like the 1907 office tower at 84 William Street and the former Bank of New York headquarters at 1 Wall Street, because who wouldn't want to live in a building with more history than your average high school textbook?

  • The area's narrow, sun-starved streets, reminiscent of a vampire's dream, are now lined with new residents, strollers in tow, replacing the suited 9-to-5 crowd.

  • Real estate analysts are eyeing this transformation as a hopeful template for other Manhattan areas drowning in a sea of empty offices post-pandemic.

  • Mayor Eric Adams and Governor Kathy Hochul are all for turning these office relics into residential spaces, but let's face it, converting dark, cavernous office spaces into cozy homes isn't as easy as a Sims game.

  • The Financial District's makeover isn't just about slapping some paint on old buildings; it's a strategic shift sparked by the exodus of banks and the scars of 9/11, proving that the area can bounce back faster than a cat on a hot tin roof.

  • With the highest office vacancy rate in Manhattan, nearly 27%, the Financial District is ripe for more conversions, making it a goldmine for developers looking to play real-life Tetris with office spaces.

A SCOOP OF CONTROVERSY

Everyone will talk about it

In downtown San Francisco, a proposed 71-story residential tower at 530 Howard St. is stirring up controversy as it promises to dramatically alter the city's skyline and reshape urban living in the heart of the city.

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  • Spearheaded by developer Paul Paradis, known for the Salesforce Tower, this ambitious project aims to convert a current parking lot and a small office building into a towering residential structure.

  • The design, characterized by its slender, uninterrupted form, plans to house 672 apartments, with about 67 offered at below-market rates, and includes a unique bridge to Salesforce Park.

  • Paradis touts the project, poised to be the city's third tallest building, as a new benchmark for San Francisco's rental properties.

  • Notably, the development bypasses usual planning commission approvals, leveraging Assembly Bill 2011 for a faster approval process, sparking debate among city planners and residents.

  • Mayor London Breed supports the project as a crucial step in revitalizing downtown, converting underused spaces into housing, amidst a backdrop of high vacancy rates and economic uncertainty.

  • The tower's development, adjacent to other high-profile but stalled projects, underscores the complex dynamics of San Francisco's real estate market.

  • Despite the market's current volatility and his own past challenges with the 33 Tehama project, Paradis remains confident in the city's resurgence and the tower's future success.

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