A look at the NAR issues most frequently covered in the news media
« June 2006 |
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CNN Money quoted Pat Vredevoogd Combs on competition in the real estate business. When asked about commissions, Vredevoogd Combs stated “no evidence exists to prove that agents have agreed to fix commission rates. If commissions cluster within a narrow range, it's only due to normal economic behavior: Competitors lose market share if they raise rates, and can't cover their costs if their rates are too low.” The Las Vegas Review quoted David Lereah on existing home sales, "Over the last three months home sales have held in a narrow range, easing to a level that is near our annual projection, which tells us the market is stabilizing.” Realty Times also wrote about the current buyer’s market.
USA Today ran an editorial claiming the real estate business is "inefficient, anti-competitive, and anti-consumer." A response by Tom Stevens was also published that illustrated the competitiveness of the industry. He stated, “America’s real estate industry is one of the most competitive business environments in the world, characterized by low barriers to entry, intense personal client service and performance-based compensation.”
Numerous media outlets, including MSNBC.com and CNNMoney.com covered June’s existing-home sales. According to the data, existing-home sales were down modestly in June while home prices were up slightly from a year ago.
David Lereah appeared on NBC Nightly News commenting on home prices in a story on the current buyers market, “The boom took prices too high. Now we see a correction and prices are beginning to retreat.”
USA Today’s July 26 editorial, Real Estate Status Quo Seals Raw Deal for Consumer, asks the question: “Why has the Internet, which has revolutionized other business, had little effect on real estate?”
The question itself is wrong. You see, unlike many other industries that have been dominated for decades by large, slow-to-move companies, real estate is about as competitive and dynamic an industry as you can find. New agents and brokers are entering the business every day – and they are using technology to revolutionize the business.
The Internet, in particular, has completely changed the way many consumers shop for real estate, and technology, in general, has impacted how real estate professionals attract clients and provide service. The number of REALTORS who have a web site has increased 129 percent during the past five years, and nearly 90 percent of REALTOR firms have web sites with searchable property listings. Online listings and virtual tours are becoming commonplace, and many brokers are using online transaction management platforms to bring efficiency to the entire process. Such developments are saving real estate professional and their clients time, money and plenty of headaches.
The real estate industry is a textbook example of how innovation thrives in a competitive, consumer-driven environment. If some companies are struggling to stay ahead, maybe it’s because their “innovation” really isn’t so new after all.
David Lereah appeared on NBC's Today show in a segment on the softening housing market. He stated, “We had a boom marketplace. You’ve got to correct for that because booms cannot sustain forever.” The Potomac Almanac wrote a lengthy feature on Tom Stevens and his career in real estate. Finally, the Washington Post reported that the Senate Appropriations Committee approved legislation this week that would permanently ban U.S. banks from engaging in real estate activities.
Realty Times wrote an article this week on the interesting trends among second home buyers that includes information from NAR’s Profile of Second-Home Owners. The Deseret Morning News ran a story on former NAR President Al Mansell announcing his early retirement from the Utah Senate.
The FTC announced that the Austin Board of Realtors allegedly violated antitrust laws by blocking sellers who listed with discount brokers from marketing their homes on Web sites associated with the board. The Washington Post reported on the story and included a statement from the Austin Board of Realtors that “it dropped its rule last year and that the FTC misrepresented its aim.” A Realty Times article fired back at the FTC saying “Once again, the Feds are after real estate associations for rules they have already rescinded.”
I am not an economist, but after reading comments from Celia Chen, director of housing economics at Moody’s Economy.com, in National Mortgage News this week, I am convinced that there must be some “new” economics behind such predictions of a big decline in real estate.
Like the “new” math that was introduced in American grade schools in the 1960’s, this type of “new” economics appears to be lost in the abstract. Ms. Chen says housing will be “a drag on the economy” the next two years. Since when did 7.7 million homes sales – the third highest level on record – become a drag on anything? Even a quick look at NAR’s research shows that the market is stabilizing, and it is expected it to improve in 2007.
With this "new" approach, I am sure we could come up with all kinds of ways to make transaction itself easier. How about anyone with the number seven anywhere in their credit score qualifies for a mortgage? Or, why not just go with income when determining the amount one can afford – forget that pesky debt altogether?
Don’t get me wrong, Ms. Chen certainly is entitled to her way of doing things. I just hope the Fed sticks with tried and true economics and keeps interest rates low enough for us to experience what is most certainly a soft landing for housing.
The Orlando Sentinel quoted Tom Stevens on NAR’s recent testimony encouraging Congress to craft a comprehensive natural disaster insurance policy. Stevens stated "We need to get something done. We're pushing, not just for Florida, but for the whole country…the key is that there needs to be a national policy, so companies can't just walk away." Home sales are expected to stabilize in the months ahead, "We should see home sales rise and fall month to month, but don't look for any big shifts one way or the other,” said David Lereah in a CBS MarketWatch story. Finally, New Orleans City Business ran an article on the exceptional advance registration for the 2006 NAR convention.
The New York Times (free subscription required) ran a letter to the editor by Tom Stevens that stressed the competitiveness of the real estate industry. In the letter he stated “Brokers created, operate and own multiple listing services. They are not markets, or public utilities, as some would like. They are private exchanges and platforms for industry collaboration to facilitate cooperation among real estate practitioners representing buyers and sellers.”
Tom was also quoted by the News & Observer in Raleigh, North Carolina on the value of using a Realtor in an article about homes for sale by owner. The U.S. housing market continues to stabilize with pending home sales rising slightly by 1.3% in May. Reuters quoted David Lereah saying "We are entering the second phase of the transition from the housing boom, in which sellers are becoming more realistic about their expectations - sales are stabilizing and annual home price appreciation is returning to historic norms."
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