Key Stats:
- A four-week rolling count of homes newly listed for sale hit the lowest it has been in nearly 4 years (with just a couple of exceptions in 2020 and 2023). Current homeowners are having a hard time accepting that purchasing a new home will come with a much higher interest rate than their current home.
- 2 years ago, 50% of homes across the US in May sold above list price. At present, only 30% are selling above the list price – the price expectations of many sellers are not being met. Please note that these statistics reflect national figures and do vary by city, where sales prices have increased significantly since last year, like San Jose (+13.2%), Detroit (15.7%), and Anaheim (+21%).
Interest Rates: The Fed held interest rates at their May 1st meeting, so the promised rate reductions have not come yet. The decision to hold interest rates steady also came alongside a positive report of job and industry growth, so the rate reductions should be near on the horizon.
A note on housing affordability:
If you are feeling the crunch to buy a home – a responsible person financially who has worked hard to achieve your goals but finds it difficult to imagine paying that much for a home, you’re not alone. I like this infographic from Pallavi Rao, Omri Wallach, and Sabrina Lam over at Visual Capitalist for some fresh perspective.
The truth is, the story is even worse if you scoot back to the late 1970s and fast-forward to this month—in some places, the median home sales price is 7x the median household income (and, keep in mind, households are more likely to have two incomes today than they did in the 1970s!).
So there’s no question it is tough out there. But, if history is any indication, buying while the competition is down can be the best method to getting the best deal. That’s certainly what I’ve seen with the deals that have come through in the past few weeks – buyers are paying less than my expectations across the board. Let’s just hope the Fed’s promised 3 interest rate drops in 2024 come true soon enough for these deal-finders to be able to refinance in 6-months or so.
Who will pay the Buyer’s Agent’s Commissions?
US Court approves first wave of settlements over real estate commissions, Reuters
Rhonda Burnett et al v. The National Association of Realtors, U.S. District Court, Western District of Missouri, No. No. 4:19-CV-00332-SRB seems to have settled at $210M (down from the $1.8B initial claim) for several big real estate brokerages to pay for inflating commissions.
What does this mean to you? TBD, to be honest, but I have regular contact with leadership at the National Association of Realtors. While it is clear there is much room for improvement when it comes to housing affordability – and I hope the National Association of Realtors takes proactive steps to ensure the “American Dream” of home ownership can be achieved by all who desire it – this lawsuit doesn’t seem to be the ideal solution and the outcomes are far from clear. A wholesale elimination of buyer’s agent’s commissions could threaten the livelihood of up to 80% of NAR’s 1.6M members, so you can be certain that NAR will have more of a seat at the table when it comes to commission reform.
Some reforms are scheduled for July, others for August, but the approval hearing to determine what actually happens is currently scheduled for November. These lawsuits are ongoing, and policy continues to be hotly debated. In the immediate, you can expect commissions to function as they have for years.
