NAR in the News

The quarterly meetings of the Federal Reserve’s Federal Open Market Committee are followed closely by the financial media. Dozens are stories quote experts anticipating what they will do go interest rates before they meet, and hundreds are written afterwards, reporting and interpreting what the committee did. Experts after experts pore over the Fed’s tea leaves to read meaning into every move—and non-move—when the FOMC meets.

Yet somehow the FOMC’s decision last week to leave the federal funds rate unchanged (which NAR thinks was the right move) didn’t create the kind of stir on the news pages and the talk shows that one might have expected, especially when you consider that it was the first time the Fed had not raised rates in more than two years. Seventeen straight times the FOMC decided to raise rates.

Continue reading "Economic Tea Leaves" »

Posted on August 11 at 05:57 PM | Permanent Link | Add a Comment (0)

The best-selling book Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt and Stephen J. Dubner argues that REALTOR®-owned homes sell at a higher price than others because they stay on the market longer, and the authors suggest that somehow REALTORS® do a better job of selling their own properties than they do for their customers.

The fact is that a large percentage of the REALTOR®-owned properties the Freakonomics authors studied were investment properties, not primary residences. With investor properties, the seller can wait out a bad market and wait for the prices, not worrying about the timing of a job transfer or the start of school year. In the Freakonomics study, the data sample consisted of 3,300 REALTOR®-owned sales out of 98,000 total sales. That is, REALTORS® engaged in 3.4% of all home sales. Yet REALTORS® represent only 0.8% of the general population. That percentage is much larger than would be expected out of the general working population. Clearly, the high percentage of REALTOR®-owned homes can only be attributed to investment properties.

Freakonomics assumes that the longer a property is on the market, the higher the price at which it will sell. In fact, the opposite usually occurs; price concessions become deeper the longer a home stays on the market. For sellers needing to move, they have to concede lower price with each passing week. Investors, on the other hand, have less incentive to concede. So the fact that REALTORS® are selling a client's home with fewer days on the market is a value-added contribution.

Posted on May 8 at 10:32 AM | Permanent Link | Add a Comment (5)

The best-selling book Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt and Stephen J. Dubner takes an unorthodox look at several areas of the economy, including the real estate market.

The authors argue that real estate agents could get higher prices for home sellers by urging them to keep their houses on the market longer. But they don’t because agents would not make enough in additional commissions to justify the extra time on the market.

Levitt and Dubner assume real estate businesses are built around one-time transactions. In fact, successful professionals build relationships with customers for life. Homeowners move once every seven years on average and are likely to use an agent they have used before. Consumers also rely on referrals from friends and relatives to find real estate representation. Wise real estate professionals build their business on endorsements from their satisfied customers. According to NAR’s 2005 Profile of Home Buyers and Sellers, 63 percent of home sellers would definitely refer a friend or relative to the agent they used and another 19 percent would probably do so. Among buyers, 97 percent report they were satisfied with their agent.

It’s clear that real estate professionals must do the best possible job for the consumer if they intend to build a successful business.

Posted on April 18 at 05:41 PM | Permanent Link | Add a Comment (3)

WASHINGTON (April 5, 2006) – Vacation- and investment-home sales both set records in 2005, with the combined total of second home sales accounting for four out of 10 residential transactions, according to the National Association of Realtors®.

The annual report, based on two surveys, shows that 27.7 percent of all homes purchased in 2005 were for investment and another 12.2 percent were vacation homes. All together, there were 3.34 million second-home sales in 2005, up 16.0 percent from an upwardly revised total of 2.88 million in 2004. The market share of second homes rose from 36.0 percent of transactions in 2004 to 39.9 percent in 2005.

Posted on April 11 at 06:41 PM | Permanent Link