Redfin Is Leaving the National Association of Realtors
redfin.comProps to Redfin. If there’s one area I’d love to see Silicon Valley actually disrupt, it’s real estate. There’s too many middlemen in this process— personally I don’t even think houses should be investments. I’ve never bought the argument by hedge funds that “we add valuable liquidity to the market (*for only a few billion dollars in fees!)”, but perhaps that argument might hold water for real estate.
Silicon valley has if anything made real estate more of an investment, look at fractional ownership schemes. The costs of transacting business through an agent is a holdover from another time when those costs weren't that significant given how infrequently a home would transact (and lower real prices). I agree realtors generally don't provide value for the money anymore. However, all else being equal, removing realtors will itself make it more profitable to invest in real estate.
>I agree realtors generally don't provide value for the money anymore. However, all else being equal, removing realtors will itself make it more profitable to invest in real estate.
I'm a Realtor, but I'm not here to turn this into a pissing match - if you believe that representation doesn't benefit you, then don't use a Realtor. In the same way, if you believe you can represent yourself successfully in court don't use a lawyer or if you can adequately assess your financial future, don't use a financial advisor. Expertise exists for a reason - because I can tell you a lot about water rights, land use, zoning, negotiations, market and pricing, and I can connect you with other professionals to meet your needs. Many people find those professional services to be worth their time and money.
All that said - yes, I think we will see changes to the cost (commissions et al) of real estate services. But when I hear people talk about "normal" real estate transactions or comments like "you don't need an agent for residential" I know this person is either very new to real estate or very experienced. The newbie doesn't know what they don't know, and the experienced person likely has sufficient knowledge that they will only bring in an agent to supplement that knowledge. The majority of people do not transact enough real estate such that they may think they know more than they do.
Many of my friends are real estate agents, and my observation is that most of them are not particularly educated in land use/zoning issues. Which is not to say that they don't add a lot of value in other ways, but there's no substitute for reading the zoning rules personally if you are thinking about construction.
As an outside observer my impression is that the sell-side realtor provides a lot of value (especially if he/she has a small construction crew on standby) but the buy-side realtor contributes less. Also, the incentives are misaligned for the buy-side realtor - they get paid more the higher price you pay.
Every market is going to be different in terms of skill and standard of practice... in urban markets, people only selling residential, they may not need to know much about land use, but you are paying them for their market analytics and negotiating skills. In my market, to actually serve clients well, I need to know an absurd number of things as my people are dealing in land use, water rights, fencing, development, etc...
Regarding being on sell vs buy side - the buy-side should be helping you make sure you don't use a foot gun. They should be helping identify any material issues with the property and/or sourcing experts who can help with risk mitigation. And, they should have savvy to help negotiate the strongest possible offer to your favor. Because of several national lawsuits, it is very likely that consumers will be negotiating a price for a buyer's agent's services and paying for it directly in the near future. That's a whole other topic and probably requires frosty beverages.
Sorry, the IQ/brain capacity/"insert a term that you are comfortable" with here required to be a lawyer is much higher than to be a real estate agent. It is much more accessible to the avg person to do at least 80% of the work an agent does, especially on the buy side. And count on AI doing 100% of it, on both buy and sell sides, much better and cheaper than real estate agents, in a matter of a couple of years, if not months.
The main reason RE agents play a significant role is the artificial stronghold around the MLS. It's not their Nobel prize winning brains providing irreplaceable services.
Good sir, I've met some fucking dumb lawyers in my day, so I'm not sure why you are holding them up as a pillar of intelligence. Nobody said anything about intelligence here anyway - what I said was, real estate agents, like lawyers, financial planners, librarians, and pretty much every career on the planet exist because they have specialized knowledge and skills. You think you can replace what I do with AI? Why don't you come on over and do a ride along with me on a typical day - I bet you'll change your mind. Zillow, Redfin, and plenty of others have been trying for more than a decade to replace us and they aren't making much progress.
The MLSs? Do you have any idea what it was like prior to their existence and how much the public has benefited from the improvement in information asychronicity? Zillow et al stand on their shoulders. You don't like it, you try replicating what the MLSs do.
I don't think fractional ownership is a silicon valley creation? What makes you say that?
Similarly, how are real estate agents a guard on investing?
I'm not convinced they are bad, mind you. Curious on your angle, though.
Other commenters mostly made the points I had in mind about companies in the fractional ownership space. Regarding agents dampening investment in housing, I had on mind the fact that the transaction costs of 6% or so when selling makes housing an unattractive short term investment. If that wasn't there I think there'd be more incentive to speculate in housing markets.
I doubt that, personally. Especially back when people could dream of larger returns as illustrated on many TV shows, I seriously doubt 6% even registered on most people. Seems the main thing holding back more folks was lack of capital. Not fear of 6%.
Would be interesting to see data on this. Didn't Redfin have a reduced commission path? Any evidence that led to more speculation?
If you look at it as an investment and profits, it's not 6% anymore, but a much larger percentage of your profits.
I buy a house for 100,000, incur about 5k in government, administrative fees. Sell it for 125k, netting 20k - less if you consider insurance and property taxes. So let's say 18k. But I've paid the realtor 6% on 125k. That's 7.5k. That's a whopping 41.67% of profits
Most people seem to just ignore the costs of transacting a house. They'll say they bought a a 100,000 house and sold it for 125,000 and say they made 25,000 in profits.
Neglecting the fees, commissions, insurance, loan points, repairs, time, taxes, the cost of the house sitting there vacant, etc.
Houses are historically lousy investments.
What you are missing is that a home purchase is typically leveraged. You buy the house for 100K and put 20K down. The house increases to 125K and you more than doubled your money. Now take out those fees and etc. Problem is you still need a place to live and those houses have gone up in value too, so you need all of that profit for the new down payment.
Not saying this makes houses good investments, but it is something to consider. I think that this is the cheapest leverage a typically person in the US could obtain.
There's nothing special about borrowing money to invest in things. The ROI is based on the amount invested, including borrowed money.
At least the US government heavily subsidizes leverage for real estate investment specifically, with institutions such as Fannie Mae for example. Absent that, no bank would offer a middle class individual a 30 year fixed rate loan for 80 - 95% of the value of a home. A loan to buy stocks on the other hand will typically be floating rate and the brokerage will retain the ability to liquidate your position AND require additional margin if your investments don't perform.
Fannie Mae has a short history page here for those interested: https://www.fanniemae.com/about-us/who-we-are/history
I think the only special thing, here, is that home purchases are the most common thing bought on leverage that can almost be seen as an investment? Only other leveraged loan that most people will do is a vehicle, and those laughably lose half their value as soon as you close the loan.
Yes, but most people aren't speculating on real estate, they're just occasionally buying a new place to live.
Yes, but land is an historically safe investment. However very often in well-developed areas, it is difficult to acquire one without the other.> Houses are historically lousy investments.
First, I want to be clear that I'm not saying you are wrong. I don't know. I personally doubt the fees enter most people's speculations, though.
Specifically, my intuition is that most people don't speculate in housing because they don't have the capital to do so. More, most of the people I have known that had the capital to do so, did, in fact, speculate in real estate. Similarly, most people I know that have purchased homes could only do so on highly leveraged loans. Again, they didn't have the capital to do speculation. They still stretched for as large of a loan as they could, at large. Which is its own form of speculation.
I'd be curious to know how much the fee for day trading can be. I know it isn't directly comparable, due to volume differences, but I'm assuming you weren't thinking real estate would get to day trader levels of speculation?
I am not disagreeing with you either on most people not speculating.
Every transaction has overheads. But I'm just talking about house flipping, or even when upgrading from one house to another, 41% of any money I, as an individual could use towards the new house, kids education or whatever, going as a transaction overhead is simply crazy, and almost extortionist given how monopolistic this is in the US
Re: Day trading - That would be REIT and related instruments.
> I'm just talking about house flipping
Realtor here - if you are house flipping, you are in a unique category and not really a member of the general public. You should either get your real estate license (if you believe you are able and willing to market property yourself) or you should find a dedicated agent partner with whom you have a negotiated rate. But also consider that as an agent, my out of pocket costs to market your example property could easily be $1000, plus my brokerage (assuming I'm affiliated and it isn't my own brokerage) also is taking their 40%+ cut of my commission, so I'm not making nearly as much as you think -- which is why especially on a house priced at the lower end of the spectrum I need to keep my commission % higher.
Commissions are fine, they are transaction overheads. This doesn't still justify taking a 40% cut on any upside I have when I upgrade my house. This is not necessarily targeting an individual broker, but the system as it is set up right now, with no real innovations happening.
As my sibling post says, if you are house flipping, you almost certainly work out a way to not have a full realtor fee. Either by being said realtor, or otherwise working out a deal. I've known several people that would do this. And I'm still fairly confident in my claim that you would really only do this if you had the capital otherwise.
Upgrading a house is another odd one. Most of the upgrades you would do that go with "get a new house" are all size and location related. You might give some pause to the fees involved, but probably not much.
My point on day trading is that transaction fees don't seem to stop people with excess cash to go off and speculate in the market. They won't be as high as realtor fees, of course, but the overall stakes are also not nearly as high.
That said HELOC and similar tools also really highlight just how bad most people's financial considerations are with home values. Refinancing to get a lower rate is a laughable idea when you consider the fees that went into that effort. And that doesn't stop many people at all from doing it. (Not to mention the ones that reset their timelines...)
All of that is to say, I still have my doubts that any of the myriad of fees involved in the process are what stops speculation.
That comment didn't claim it was an SV creation, it can be read as SV made it easier and more popular so it made real estate more of an investment in general.
Perhaps fractional ownership was used in limited circumstances before, but some tech co thought they can make it mainstream and didn't stop to think if they should. Cue unforeseen consequences.
I mean... sure, a silicon valley company is offering fractional ownership. I don't see how that supports silicon valley making housing more of an investment. But, sure, dunk on a common boogie man.
Kinda like ClosedAI. Let's do this because we can and it's profitable (shareholders) and cool (software engineers). People lose jobs? That's just life man, I mean we do get to keep ours so...
Not a problem as long as it stays _other_ people.
let them all retrain as baristas while we are figuring that one out... /s
Check out https://lofty.ai. Fractional, income-generating real estate, including the tax benefits (which you can't get with REIT).
My question is more of why this is seen as SV making this more common. That there are starting to be some SV companies that are doing this is evidence, I suppose. They still seem to be in the vast minority of the companies that offer it, though. Feels like saying SV encourages payday loans, because there are some that exist there.
lofty is simultaneously horrifying and attractive. Rent seeking is an abomination it is the only way to build a financial future. Work doesn't pay enough.
I've often felt that trading stocks and real estate investing like this is benefiting from other people's debt. which raises the interesting question. If you were to live according to Dave Ramsey's debt is evil philosophy and everybody got rid of debt, where would you put your money to build for the future?
Fwiw, this is using USDC as a currency. Your deposits are automatically converted.
This company has been extending fractional ownership to a lot of communities in California.
> Pacaso is a property broker that buys single-family homes and sells them to consortiums of buyers.
Why not just buy a REIT?
Why not just buy fractional shares of a property?
> Why not just buy fractional shares of a property?
Transaction costs for diversification. The same reason it makes sense to buy ETFs versus directly balance your own portfolio for anything below your first million.
But owning a REIT is nothing like owning property. Sure, REITs and investment properties both derive cash flows from rent, but the similarities stop there.
In general, asking “why not X instead of Y” without giving reasons why X is preferable over Y is just a waste of everyone’s time.
Owning fractional shares in property is also nothing like owning property. You’re not going anywhere profound with this line of argument.
Really? Most people own fractional shares of real estate, e.g. when the property is part of a marital estate.
Investing in a REIT is just investing in a company that happens to derive cash flows from real estate. You’re not buying fractional ownership of real estate when investing in a REIT. You’re investing in a management team and a capital allocation strategy. It’s much more similar to a mutual fund or PE fund. The only difference between a normal business and a REIT is that you have to pay income tax on your dividends. Owning a fractional share of a property is taking an ownership stake in a real asset. The two aren’t related at all.
Why do you keep saying "fractional share"? All shares are fractions. You sound like a moron.
> When disagreeing, please reply to the argument instead of calling names. "That is idiotic; 1 + 1 is 2, not 3" can be shortened to "1 + 1 is 2, not 3."
Typically, fractional ownership of real estate assets is typically done via a tenancy in common title, not via a share mechanism, so your “share” (literally “portion”, which can be partial or whole) is a fraction of the whole.
REITs don't pay capital gains the way you and I would if we bought a house together.
If you and I bought a house together, no capital gains would be "paid". We would own an asset, which could go up in value and we could sell. Exactly the same with REITs.
This is, of course, incorrect. If you and I bought a house together, took ownership, enjoyed appreciation, and consummated a sale, and realized income, we would owe capital gains tax on the income.
There are some ways we could avoid some or all of it, but I was not considering a situation where you and I shared a primary residence, because we’d spend too much time arguing about taxation basics.
On the other hand, a REIT with more than the required number of members that distributes the required share of profits will pay no income taxes. Investors in the REIT, on the other hand, pay taxes on the dividends.
One little known fact about REITs is that the capital gains are taxed as income not as capital gains. On the other hand, you can use depreciation and a 1031 exchange to avoid paying any taxes on real estate you own / sell.
Because a REIT gives you a fractional share of hundreds of properties.
Your comment doesn't really answer my question... you just typed the same observation from the other side. You've added nothing. Zero value.
I contributed the same value as you. Owning property and owning a REIT have very little in common other than a correlation in market value.
But they didn't invent time shares?
> removing realtors will itself make it more profitable to invest in real estate
Perhaps this statement should be restricted to just say the costs of investing in real estate would be reduced. Small difference I know, but I think it’s an important distinction.
Lower transaction costs lead to a more liquid market as the cost of entry and exit are both reduced. Every body wins except the middle men.
Agreed, but that doesn’t translate to profit universally.
> Perhaps this statement should be restricted to just say the costs of investing in real estate would be reduced. Small difference I know, but I think it’s an important distinction.
It's especially important in this case because of the implications: One of the parties who "invest" in real estate is construction companies, who hold the real estate while they're building it. Lowering their costs makes them more profitable, so you get more construction -- which lowers housing costs by removing the realtor's vig and by the increase in the housing supply.
They seem like equivalent statements. What was the point of rephrasing?
I suspect it’s because profits only exist in an “up” market while reduced costs provide benefits whether the market is up or down.
Profit is up to other factors. Lower costs means you need less revenue to make a profit, but of course it does not guarantee it
I recently bought a house that has increased in value by around 10% since I bought it. I’d be happy about it, but all I can think about what a struggle it was to find, bid on, and buy a home at the prices the market demanded at the time. Now it’s worse, and I profit from it for doing effectively nothing (assuming I sell when it is still valued higher).
That’s not good. Not like this, at least. Maybe this was more appealing to people in the past because it wasn’t so overtly bad for communities and society.
Just 10%? Eight years ago, I bought a house that has increased in value from $120k to $350k (validated both by Zillow and by recent sales in the neighborhood of nearly-identical houses). And for a mortgage whose interest has been less than the price of inflation!
I'd be happy about it too, but am overwhelmed by guilt when talking to my intern, our newly hired engineer, my younger siblings, and many of my friends who rent at ever-increasing rates.
That $230,000 was taken from the pockets of my non-homeowning friends. I don't understand how so many seem to be cheering the rising prices, oblivious to what it's doing to our society.
> That $230,000 was taken from the pockets of my non-homeowning friends.
Nope! First of all, it's come from no one's pockets until you sell. Until then it's just a hypothetical, theoretical gain on paper.
Second of all, when you do sell it, the money will come from the pockets of your willing buyer :-)
Edit: if you still want to feel bad about something, let it be this: that the rise in your home's value represents wealth that has been created "by the community" in the sense that it's only because of many variables of the surrounding community that the land has become more desirable and therefore more expensive; and your ability to capture all of that increase via your untaxed monopoly on the ground rent creates a deadweight loss for the broader economy.
But that's why we created the universal land value tax and used it to replace all other taxes! (Hello from the year 2078!)
If your phone and your laptop were suddenly worth twice as much would you also be celebrating?
I am struggling to find the right words to express how wrong your view is to me. Housing is a basic human need like food and clothing. How can you in good conscience celebrate making a tremendous profits exploiting the fact that people cannot afford a basic need?
> I am struggling to find the right words to express how wrong your view is to me.
Then surely I have failed to convey it!
In any case, my edited point about "deadweight loss" is perfectly consonant with the parent poster's feeling of guilt, and with what I presume is your feeling of disgust; it is in fact the economic term of art for that at which you intuitively recoil.
(Although you're kind of equating a very, very expensive home, in the overall scheme of things, with the minimum requirements of decency, if you really think that he's exploiting someone's inability to afford housing, but w/e.)
Now let's get into the controversial stuff...
> Housing is a basic human need like food and clothing.
Agreed. But it's also an asset, because someone has to build and maintain it and have exclusive use of (at least parts of) it, and being a basic need doesn't automatically create a right to something (for obvious reasons) so that asset is gonna trade hands voluntarily like any other. Its price will fluctuate, sorry.
Now, NIMBYs using government fiat to drive down housing supply in their market is an annoyingly common failure mode of local democracy, maybe that's all you're upset about.
No. It really is that your view is wrong, and not that you simply failed to convey it.
You glimpse the problem at the end, only to dismiss it. Your glimpse is when you say:
> Now, NIMBYs using government fiat to drive down housing supply in their market is an annoyingly common failure mode of local democracy, maybe that's all you're upset about.
The triangle that you're looking at is that NIMBYs lead to lack of construction, lead to undersupply of housing, which is a direct cost of both high housing costs and high homeless populations. The profit that I have as a homeowner comes from somewhere. Where it comes from is artificial scarcity that causes renters to struggle, and over 170,000 Californians to be unhoused.
Looking at that without guilt, is like New Englanders whose families made a fortune investing in the triangle trade, congratulating themselves on not having been those evil slave owners. Sorry, but it is tied together. You cannot both profit from the crime, and disclaim a portion of responsibility for it at the same time.
Ah, the internet. Where homeownership is unironically being compared to slave trading.
> for obvious reasons
What are those obvious reasons?
> Housing is a basic human need like food and clothing.
Yes, food, but I don't see many arguments for bringing down the price of caviar.
IOW, making an argument against high property prices in highly desirable areas is not the same as making an argument for low cost housing.
It doesn't really matter how dense you make housing in highly desirable areas, there'll always be more people who want to live there than houses available.
The solution is more remote working and much faster public transport.
Tax breaks on businesses for each remote worker will be cheaper than building more slums, it will be quicker (demand is affected almost immediately) and it needs no political campaigning against the local NIMBY residents.
Instead of trying to guilt trip people about the paper value increase in their property, just remove that paper value increase altogether.
(I'm not sure how you would solve the slow public transportation problem. Where I am we have 160km/hour trains, but the door-to-door travel time using these trains to travel 20km is still about twice the time it takes to drive)
> It doesn't really matter how dense you make housing in highly desirable areas, there'll always be more people who want to live there than houses available.
A land area with a 40 mile radius and the population density of Manhattan would contain the entire population of the United States.
> Instead of trying to guilt trip people about the paper value increase in their property, just remove that paper value increase altogether.
The only way to do this is to build more housing. You can't fix it with mass transit because the existing housing is low density and mass transit requires high density.
> A land area with a 40 mile radius and the population density of Manhattan would contain the entire population of the United States.
That's a good point you make - even at the extremes of high-density living, high density still doesn't solve affordability!
People can neither walk nor bike 80 miles, and public transport over 80 miles with multiple stops takes hours, so you can reasonably expect that prices would be considerably higher in the center (40 miles to everywhere) where it is more desirable, and people can neither walk nor bike 40 miles for commuting. Public transport infrastructure for a 40 mile journey also makes commuting infeasible.
The problem of not being able to afford living close to where you need to be is still there, even in the hypothetical pathological case.
If it can't solve the problem in the ideal case, it can't solve the problem in any case.
I’m not the GP poster. But I do not think one 80 mile wide city containing every US resident was intended as an example ideal case. It was intended as a demo of how non-dense the US is, on average.
Most “new urbanism” people advocate for medium sized, densely built, 15 minute cities. Not a single megalopolis.
I plan on retiring in an area with hardly any people in it. Even now, living that tightly packed in sounds like a nightmare.
I can drive 30-45 minutes and be sitting on a lake with no one around, when I retire that drive will be 5-10 minutes.
A lot of us don't want to live like that even if we could.
Which is fine -- nobody is asking for a law requiring all housing to be high density. The ask is to remove the laws prohibiting new housing from being high density.
Which should make it even easier to find low density housing, because you won't be competing for it against people who just need a place to live and don't care about having a big yard.
Right. Nobody is trying to force anyone to live densely. The point is: dense housing (e.g., Manhattan) is expensive because of supply/demand. Lots of people do want to live like this. And it's illegal to build this way in most places in the U.S., only perpetuating the affordability problems across the board.
> That's a good point you make - even at the extremes of high-density living, high density still doesn't solve affordability!
Manhattan is <23 square miles, containing ~1.6M people, surrounded by a metropolitan area of ~20M. The surrounding metro area has a much lower population density (less than 3% that of Manhattan itself), implying that it's practical for it to be higher, which would reduce housing costs by supply and demand.
It's not about how much housing you have in absolute, it's about how much you have relative to demand. The demand in NYC is about the highest in the country, so they need more supply than they have even now.
> People can neither walk nor bike 80 miles, and public transport over 80 miles with multiple stops takes hours, so you can reasonably expect that prices would be considerably higher in the center (40 miles to everywhere) where it is more desirable, and people can neither walk nor bike 40 miles for commuting. Public transport infrastructure for a 40 mile journey also makes commuting infeasible.
The average commute is 41 miles as it is. And with that level of density you could justify express trains that travel at highway speeds or more, making that distance a much shorter commute than it is even now.
The area in the center might cost more than the outer ring, but what of it? The point is not to make all housing have the same price, it's to build more housing to lower the price of all housing. It doesn't matter if the center costs more than the outskirts if they each cost <25% of what they do now.
It also goes without saying that you would not actually build this. You neither need nor want the entire US population to live in an area the size of Connecticut which represents less than 1% of its land mass; there are multiple metropolitan areas spread all over. The point is merely that enough housing for the entire population would fit in that area, which serves as an upper limit on how much housing demand you could even have. And even Manhattan has a lower population density than we could build at -- it certainly doesn't consist entirely of 100 story buildings despite them being possible to build. The claim that it isn't possible is clearly false.
> The problem of not being able to afford living close to where you need to be is still there, even in the hypothetical pathological case.
That is the pathological worse case scenario because you would have to provide enough housing for a single city with 340M people in it, and you still end up with a lower average commute than people have today.
If you took an existing metropolitan area and raised the population density to that of Manhattan (i.e. lowered the area with the same population) then the San Francisco metro area with 7.8M people would have a radius of less than 6 miles.
And it would be silly to do even that, because all you need to do is convert existing single story housing into multi-story housing and thereby provide enough housing to satisfy demand. You can increase the density by a factor of >50, it's not a question of whether existing construction technology would allow it to be built, but even increasing it by a factor of only 2 or 3 would significantly lower housing costs.
Because we don't all levitate over open water.
If someone discovers their vintage car is worth more than they paid for it as teenager should they feel guilty over this?
Do you feel guilty when you eat food because someone somewhere isn't?
Shelter is a basic human need, not housing.
Anybody who’s seen a slum would agree that it’s housing that is a basic human need, not shelter.
That's a fine line you're cutting there.
No, the line is clear. Now here's your government issued box and tarp.
> How can you in good conscience celebrate making a tremendous profits exploiting the fact that people cannot afford a basic need?
I'm completely missing your point.
If I buy property in a developing area because I think it's cool, and I live there for years and am part of the community and watch it grow around me, and years later decide to sell - I took an early risk, don't I deserve to recognize the rewards from that risk?
If it was a bad risk and the area went to hell, and I lost money - is that ok?
But making money isn't?
Should home builders not be allowed to make money because housing is a basic human need?
Should we not be allowed to build luxury homes that cost more because we could have built multiple cheaper ones with the same money?
What should the rules be, in your opinion?
> I took an early risk, don't I deserve to recognize the rewards from that risk?
In your mind, how much of the increase in value of housing is due to “early risk” paying off in a valuable community vs an increase in overall demand without an increase in supply?
When the nation sees the housing supply increase slower than the population, that’s not a risky investment. It’s musical chairs where you pay to win.
Are you actually involved with real estate investing?
I'm asking because it really doesn't seem like you have much experience with it based on your comments.
Housing prices go through bubble-burst cycles regularly.
National trends are interesting, vaguely, but local markets are everything, and fluctuate wildly based on many factors.
We get into serious trouble when we have external forces skew the market, like in 2008.
Covid years + essentially free loans (nearly zero interest) are another example.
It caused a bubble that's going to cause a lot of pain as the market corrects.
I'll be part of the solution - I'll buy properties (most likely next year) that are in distress, rehab them, and then sell them later.
According to you, though, that's somehow wrong. I should just let foreclosures happen, let houses rot empty - because profit is wrong?
Hmm don’t think I said profit is wrong. I said owning an asset in limited supply with growing demand and then selling later is not particularly risky. I made no moral claim.
I’ve seen HGTV. I’m familiar with house flipping, I know that the markets are local. I don’t really need an economics lesson to understand that low interest rates spurred buying. Don’t kid yourself into thinking it takes a genius investor to buy something in low supply relative to demand and resell it for more.
> I’ve seen HGTV
Guess I should be learning from you then.
Singapore has a good model that allows most of its citizenry to own homes. Basically, it competes with home builders directly. If they don't want to build, the government will do so.
The Singapore government won’t build in advance so demand is far higher than supply so there is a lottery. Oh and you have to married. Singles wait until 35 and can only buy a 1 bed.
If you don’t win the lottery you can always buy resale which is close to $1M for a 2 bedroom place.
Oh and it’s a 99 year lease. After 99 years you give it back to the government and get $0.
Oh, folks want to build, that’s for sure. They’ve been prevented, and sometimes still are.
In Singapore, the state has vast eminent domain powers and is exempt from all zoning laws, which is covered in the video. I'm not sure that would ever fly in the US.
Yes, would have to fall on the state, as in US State, not the domain of the Feds.
Being a nationwide problem, they probably wouldn't be able to solve the problem. Because solving the problem means everyone moves to your state.
That "wealth created by the community" is often really "there is high housing demand, but the community of housing owners refuse to allow reasonable increases in density, which has the effect of increasing their home values".
When the people who "generate wealth" are doing so by dictating prices, that seems a bit sketchy to me.
The ironic thing is that housing scarcity often ends up making a place much less desirable -- even for the entrenched homeowners who cause the scarcity problem.
This is a house, presumably close to a job. Not an optional night out. It’s by no means a “willing” buyer. Mostly a “I need this to survive” buyer.
Homeowners with this much gain based on artificial supply constraints should definitely feel bad.
Again, if they sell ... my house has doubled in value ... its still the same house I bought. I would only realize some gain if I put it on the market. What it is now is just another house not for sale and I happen to live in it. This is the same uneducated statement people make about prop 13 in California ... 'oh your house is worth a million so youre a millionaire' ... oh?
Baloney. You have a house with relatively stable monthly payments. You will be able to purchase another hour if and when you need to move. You have a nest egg.
It doesn’t matter when you sell because now you’re floating on the water. As the tide rises, so do you.
The problem is that in California, the owner is still paying taxes on an assessed value only a little bit higher than what they paid for it initially.
If they sell that house, and then buy something new at a similar market rate, their property taxes will balloon overnight, because the assessments "reset" to the purchase price when the property changes hands.
The only way this works out great is if, after selling this house, they move to a new area (possibly new state) with lower cost-of-living, and possibly a more sane property tax regime.
(Not sure the person way upthread is in California, but someone lower down mentioned Prop 13, so I thought I'd bring this up.)
1% property taxes are ~15% of my mortgage payment in CA.
I would pay 50% more if I upgraded with the same debt amount due to interest.
> You will be able to purchase another hour if and when you need to move.
Say you bougt a house for 200K many years ago. Your neighbor bought the slightly larger house next door for 275K back then. Your house is worth 1M now. Can you move?
Sure, you can sell your house at a nice profit (and pay taxes on that!!). The neighbors house is worth maybe 1.2M now. So you can't really afford to move.
Housing gains on paper are not income and you can't cash in on it unless you move out to a much cheaper area. Otherwise whatever gains you had on paper also apply to the nearby houses, so you can't afford them.
> Otherwise whatever gains you had on paper also apply to the nearby houses, so you can't afford them.
Why are you so certain you couldn't you afford them? You were able to purchase a 200K house many years ago. Now you just need another 200K to buy that bigger house — and it's a bigger house! You did it once long ago, you can probably do it again even easier (in addition to everything else, you have a huge downpayment now). And no, you typically don't pay capital gains taxes against your primary residence.
In any case, the point is that you're in a way better place than if you hadn't made that 200K purchase. That's what I mean by "floating on the water" — you have a stake in the market so now as it moves, so does your asset.
> And no, you typically don't pay capital gains taxes against your primary residence.
A married couple can exclude 500K from taxes, but the rest (given example above) is taxable.
> In any case, the point is that you're in a way better place than if you hadn't made that 200K purchase.
For sure. Owning is better than renting.
Not where i live I wont ... there is a bunch of real estate know nothings in here downvoting me cuz they angry. If I sell my house I gotta leave town. I cant afford any of the others. It isnt an investments it is where i live, even if i owe on. A mortgage isnt speculation ... it is debt.
California has a 1% tax rate.
If you can't afford less than $1k per month you could just sell your $1 million house.
Those numbers aren't being dramatic. You need a $1.2 million house to pay $1k a month in property taxes.
> California has a 1% tax rate.
That is technically true, but not really true. The basic tax rate is indeed 1%, but counties and cities are free to add any kind of fees they want (AFAIK there is no limit) to your property tax so in practice you're paying way more than 1% in CA.
Prop 13 says they can't do that. Only the county can charge 1%.
Irvine CA wanted property tax and so they get builders to force you to an extra fee but it isn't technically a property tax.
Not to say there isn't sometimes a fee or two added but it isn't the Wild West at all.
> but it isn't technically a property tax
That is the loophole they use. They add all kinds of fees into the property tax but don't classify them as taxes. Best I know, there is no limit to how many and how much. Twenty years ago my property tax was just a single line item, the property tax. Now it's up to 6-7 (don't have the bill in front of me to check exact count) line items.
So yes, your CA propery tax^H^H^Hfee bill can be way over 1%
> First of all, it's come from no one's pockets until you sell. Until then it's just a hypothetical, theoretical gain on paper.
It comes from their pockets when they pay rent. Meanwhile you, as a property owner, receive thousands of dollars a month in imputed rent by owning a place to live.
You also have the ability to spend the money without selling the property by borrowing against the equity, as many people do.
> Second of all, when you do sell it, the money will come from the pockets of your willing buyer
People "willingly" subscribe to Comcast. Not because they prefer doing business with Comcast or believe themselves to be getting a fair deal.
> if you still want to feel bad about something, let it be this:
The people celebrating the increase in housing costs because they own housing should feel bad about it. Especially the ones who caused it by lobbying for zoning restrictions.
> But that's why we created the universal land value tax and used it to replace all other taxes! (Hello from the year 2078!)
This doesn't actually fix housing shortages created by restrictive zoning -- which you could conceivably still have with a land value tax and a government that keeps the restrictive zoning to maximize land values and therefore tax revenue. (Land is worth a lot more if you need it proportionally to build housing instead of just buying one piece of land to build an arbitrarily large amount of housing by building an arbitrarily tall building.)
> it's come from no one's pockets until you sell
Assuming that property tax has been tracking the current market value of the house then yes.
But in California prop 13 means that isn't the case
The more important point is that you will take that extra money and more and give it to the next willing seller who you are buying from. Rising property prices don’t do much for you at all until you are ready to trade down or leave the market.
Opportunity costs are real.
So is gravity and rainbows. You just gotta get what you can
and taxes ... while prop 13 keeps property taxes reasonably down for legacy home owners there is nothing blocking capital gains
Prop 13 is only in California, and previous poster was talking about sub $350k houses, which makes it very, very unlikely they are in California.
I thought you were joking about sub-350k and looked it up for CA. That is nuts:
In August 2023, home prices in California were up 4.8% compared to last year, selling for a median price of $792,900. On average, the number of homes sold was down 14.0% year over year and there were 25,115 homes sold in August this year, down 29,214 homes sold in August last year.
Yes, checkout the figures for the US west:
https://cdn.nar.realtor//sites/default/files/documents/ehs-0...
A couple hundred thousand is the price of land, not a home. If it is a home, it’s a teardown.
Fair enough but same idea. Any appreciation on a home you live in is moot. Its a house, its a home ... its not an investment. Anyone that leverages their home is an idiot. ... and capital gains applies anywhere but i guess if they are selling a house not in cali there might not be enough gains to worry about the IRS.
Leveraging homes is almost universal when acquiring property: that's exactly what a mortgage is. Why do you call everyone who has a mortgage an idiot?
Capital gains don't necessarily apply everywhere. In eg Australia your owner occupied house is exempt. And in eg Singapore we don't have capital gains on any asset at all.
A house is both a home and an investment for most people. That's just a description of what's happening. However you could say that a house _should_ not be an investment.
Australia?!? Who gives an f about australia or singapore? What youre saying is your arguments have no merit against mine... Cuz mine operate for the place I live in. I understand your gross under generalization ... but if you are living in a house its only worth is a roof over your head.
You didn't specify which place you live in, nor that you were only interested in your part of your small town or perhaps yourself.
> Anyone that leverages their home is an idiot. ... and capital gains applies anywhere [...]
Anyone, anywhere..
No cap gains on the house you treat as your primary residence for three out of the last five years up to $250,000 ($500,000 if married filing separately).
Less than a quarter of Americans own their own homes. [0]
[0] - https://www.forbes.com/sites/johnwake/2023/03/31/us-has-3rd-...
Take out a HELOC at the now-current interest rates and give the money to your affected friends to pay them back. You'll probably have to sign a letter saying it's a gift, not a loan, if they want to use the money toward a down payment, but if you sincerely feel like you have taken money from their pockets, this is a way you can give it back.
I think he's just doing this ritual cleanse of: I feel bad then I can feel good. It's all happening in his head, meanwhile out there, nothing changed.
I do too. The subtext of this is definitely, "Oh really? Let's see you put your money where your mouth is."
The point is that this is a societal issue. One person paying doing some charity on their own doesn't solve the societal issue.
As analogy: "It sucks that my peers earn less than me because they are part of <X disenfranchised group>"; You: "Why don't you just take your extra income and give it to them?"
Not GP here, but speaking for myself: I bought a house at low interest rates, using tech wages that aren't commensurate at all to the standard wages in my hometown where I bought the house.
What I'm doing now is renting out that house at less than my mortgage whilst living in a different country with higher taxes and which generally takes better care of its people (the blight that is the Tories notwithstanding).
That said, you can't expect people not to play the game if they're forced to play the game. Those of us in the western world pretty much all live in capitalist countries; the best we can do is ensure that we're doing well in our own lives whilst trying to fix the game for those who aren't doing so well. Taking out a HELOC and giving the money to friends is a substantial financial risk that jeopardises our own comfort without having a clear positive impact on those friends and without really fixing the underlying problem. It's like giving cash to a homeless person instead of giving them housing and support -- the cash will be gone soon, and the system that resulted in their homelessness won't be fixed, nor will you have prevented any future homelessness.
tl;dr, you can own a house and live comfortably whilst still lamenting the fact that your friends can't, and this isn't an inherently hypocritical stance. You're just lamenting the fact that the game you're playing necessarily has winners and losers, and wishing that would change.
Oh I actually agree with you. It's the hyperbolic, "That $230,000 was taken from the pockets of my non-homeowning friends," grandstanding that gets under my skin. It's (usually) empty virtue-signalling.
IF someone actually means it, though, (which is a very big IF), taking out a HELOC and giving the money to friends for their own down payments is nothing like giving cash to a stranger with a demonstrated history of ending up without money.
If someone really does think their position is a fortuitous accident, and that their friends are equally deserving, just less lucky, they can settle the score. They can take the fruits of their luck, give it to their friends to afford them the same advantage of home ownership, and place themselves in a financial situation similar to their friends. Similar interest rate. Similar equity in the home. Even things out again.
There might be people who really do believe they should right a wrong, and they have the opportunity.
Realistically, I think it's like the richest people who bemoan the injustice that they don't even pay taxes as high as their hired servants, but wouldn't dream of using the IRS's easily available option to pay more taxes voluntarily.
I don't like it when people get points for pretending they care.
> I'd be happy about it too, but am overwhelmed by guilt when talking to my intern, our newly hired engineer, my younger siblings, and many of my friends who rent at ever-increasing rates.
You bought a house and you live in it. Feeling guilt over something that isn't your fault makes no sense. If it makes you feel _better_ to try to help solve the problem, that's great; but that's totally different than guilt.
Just like it's not right to feel bad that you can't keep up with the Joneses, its not right to feel guilty that the Smiths can't keep up with you.
I agree, and I’m profoundly disappointed that people are celebrating the infliction of such misery on a younger generation.
If the food in your fridge or the clothes in your closet were suddenly drastically more expensive and you could make a profit selling them, would that be a good sign for your society and community? Would you view it as a sign of prosperity that your well stocked pantry was now a source of funds you can tap by selling to starving people?
Housing is a basic human need and it’s all but unaffordable. Even if you personally profit surely you can see that this is corrosive to society as a whole.
It's true that the last 15 years have been a fantastic time to buy a house. And yes, you are better off compared to those who didn't do that because they were too young or didn't have the money. But don't ever feel bad about this because you're basically treading water with inflation:
1. Through the years you own your home, you will pay roughly 1% of the notional value of the property in state and local property taxes EACH YEAR. You already know this.
2. When you sell your house, agents will eat 5% and the state you are in will take another ~3%. Other closing costs, the expense and the hassle to spruce up the house for sale. Round it off to a 10% haircut of the selling price.
3. If you're single the first $250K of capital gains on your primary residence is exempt from federal income tax. Beyond that the IRS will take its cut. Include the Net Investment Income Tax (NIIT) and you're looking at 24% tax on any capital gains, assuming you will be in a high tax bracket when you sell. And depending upon the state you live in, there will be capital gains taxes paid to the state.
Now look around you at the prices of groceries and meals. I have seen these costs roughly double in the last 8 years.
So it's not just that your house has appreciated in value -- it's more that the value of the dollar has gone down. And the plumbers and electricians and construction workers needed to build a new house have also gotten more expensive. By buying real estate you have managed to preserve your buying power somewhat so it's not eaten up by inflation.
You're not as rich as you think, but at least you're better off than the intern and your younger siblings. (edit: formatting)
Perhaps it’s just rapid inflation, goods and services have yet to catch up? Only time will tell. $100 today is most definitely not $100 from 8 years ago.
That 10% appreciate without me setting foot in it over around 18 months. I bought an imaginary home and it was just completed as of the 28th of September. I’m sure that rate of increase won’t continue, but yeah, the builds in the same area are now selling for a bit over 10% more.
Guilt? Then when you’re ready to sell don’t charge market rate, sell for what you bought it for plus some modest gain.
Would that alleviate your guilt?
Don't be too sure about that 10% increase in value. Online estimates are generally not great and may simply be guessing from past momentum.
Even if it really did increase 10%, you'd be giving up a lot of that difference in all of the various costs involved with selling a house and moving, even if you could cut agent costs to $0.
I have some friends who became real estate agents and thought they'd use their position to flip houses while being their own agents to save on costs. They're learning the hard way that even when you're not paying agent fees, buying, selling, and holding homes is expensive.
Most people don't understand opportunity cost or time-value of money.
How good an investment is it after you remove the realtor fees, closing fees, HOA, taxes, repair and compare it to a steady 7% on average on the SP500?
At a minimum your house MUST go up 10% over a couple years to get even.
The key point here is leveraging, given that an average US mortgage is 6.5x to 20x.
And that leverage is broadly available to most people, supported (and funded) by government policies.
And it is a non-callable loan, unlike borrowing $300k from your brokerage to invest in VOO. And many states require it to be a non recourse loan. And due to the backing of the federal government, it offers a 30 year fixed rate. The public subsidies are insane.
The interest is also deducted from the borrower's AGI. USA being nearly the only country that subsidizes loan interest.
https://www.stlouisfed.org/open-vault/2018/may/why-economist...
https://www.economist.com/finance-and-economics/2017/02/02/w...
https://www.economist.com/free-exchange/2010/09/13/dont-defe...
https://www.economist.com/briefing/2015/05/16/a-senseless-su...
https://fivethirtyeight.com/features/the-tax-deductions-econ...
I don't know about you, but I would have to significantly upsize before the mortgage payments exceeded the standard deduction my wife and I receive as a couple. In my market, the mortgage deduction is effectively dead.
It is dead for 90% of American tax filers since 2017 TCJA. But those juicy standard deductions end at the end of 2025 too, so could be only a few more years before the mortgage interest tax deduction is in play again for many.
Interesting. On the one hand I think it would be political suicide for pols to fail to extend the standard deduction, but on the other hand I think we're going to require substantially higher taxes in the near future to avoid financial repression, currency devaluation(no, not Weimar Republic levels...) and inflation. Should be interesting...
The petrodollar and the dollar's globalization seem like the tipping points.
If either of those substantially changes, the US budget to inflation link becomes very different, because there won't be external sinks to soak up extra dollars.
Globalization will change on glacial timescales. And the alternatives don't look great: Euro (economic concerns), yen (economic concerns), yuan (economic and political concerns), ruble (economic and political and sanctions concerns), rupee (maybe if SE Asia gets its economic integration in order), naira (would need scale from other major African economies)
Oil being sunset is going to be fascinating macroeconomically, as a huge part of the US' world economic power flows through Saudi Arabia.
Non-callable, can be refinanced at buyer's discretion, broadly standardized so there's a competitive mortgage originator/refinancing market, and can be borrowed against by using that same market (HELOC or home equity loan)
There's a lot of mortgage features that make it attractive to "I'm not an Accredited Investor" types.
You bring a good point, but leveraging is absolutely required to make housing an even close to acceptable investment.
All the recurring and one time fees take away from the leverage.
Playing with the buy or rent calculator from the NYT shows you how leverage is an absolute necessity:
https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...
Real estate, at least the land aspect of real estate, should never be an investment. It leads to misallocatiom of resources and rentierism.
The only aspect of "investment" should come from proper maintenance of structures, and replacing structures with greater density as soon as the land values justify it.
Home ownership as investment has been a generational disaster
> leverage is an absolute necessity
Yes, in more ways than one. To juice returns, sure. But the main reason people lever into real estate is because they don't have the cash to buy. So most homebuyers enter into a favorable high-leverage asset whose gains are given preferred tax treatment.
Discussing residential RE as if leverage is optional is not useful.
Sure, but discussing it as a "juicy" investment that returns 5x the upside because you are leveraged 5x is also a false narrative that doesn't include all the fees and costs.
Not to mention risks!
On the other hand, if you need housing (and who doesn't!), it's not a bad deal to pay for a house and "only" end up realizing (at a later sale) a couple percent of gains. Frankly I consider that a great deal! I wish I could buy a car and sell it 10 years later for higher than the purchase price. Or furniture. Or computers. Anything non-consumable, really.
Also probably important to consider that most people who buy homes cannot do so without a mortgage. So you're not even really comparing it to whatever else you might do with that money (well, aside from the down payment); it's just a pure expense. Sure, unless you have an interest-only loan, you're also putting principal into it every month (which you could put in the S&P instead), but that's sometimes better than giving a similar amount to a landlord, depending on housing economics in your area.
I don't know of any other consumable where I have to effectively repurchase it every few decades or I lose it.
For instance, looking at buying a typical home in my market, one would have to pay around $2k in taxes and insurance per month. That's 2/3 of my current rent, and doesn't include maintenance. That's after the mortgage is paid off. That's on a $1.5M house. That $1.5M would earn you $82,500/year in risk free interest right now, or $6,875/mo. That's nearly enough to rent an equivalent house even after you've paid the income taxes.
We shouldn't even have to think in terms of "breaking even" because housing should't be an investing tool. It's a shelter and a home.
Unfortunately, making "good investments" is necessary to stay above water in this precarious society, and our society is so fucking heartless that houses are one of the best investments a person can make. It's both bleak and absurd.
Typically there's much less tax involved when investing in real estate. Here (Australia) there's both no tax on the imputed rent or price appreciation if it's your own home.
>Don't be too sure about that 10% increase in value.
Not disagreeing, but zillow and redfin both track their estimate accuracy: https://www.redfin.com/redfin-estimate https://www.zillow.com/z/zestimate/
If Zillow was good enough at estimating home prices, they would not have shuttered their home buying/selling business after experiencing hundreds of millions in losses.
https://www.nytimes.com/2021/11/02/business/zillow-q3-earnin...
>Zillow, facing big losses, quits flipping houses and will lay off a quarter of its staff.
>The real estate website had been relying on its algorithm that estimates home values to buy and resell homes. That part of its business lost about $420 million in three months.
That wasn’t the problem. If Zillow undervalued or correctly valued your house you would never sell to them, and if Zillow overvalued your house you would always sell to them. The valuations could be extremely accurate overall and it would still be a terrible business plan because of adverse selection.
Bad take.
Zillow is great at estimating home values and related figures.
They're NOT great at estimating those values in the future.
That is a good point, but I have seen it play out over the years. When prices were going up, you can see the house price estimates lag as the most recently sold homes would sell for a higher price and all the other ones in the neighborhood take a while to update. This was late 2010s to 2022.
Then once the prices started coming down, the opposite. I am looking at multiple homes right now, with multiple markdowns, and yet all the other homes around them have the same estimated Zillow price as many months ago, which the currently listed for homes obviously did not sell at. This is mid 2022 to now.
They tracked their estimate accuracy all the way to the bank.
I've always found these accuracy claims fascinating. They both claim <5% error in my metro area, yet when I'm house hunting it's rare for me to find listings where both sites agree within 5%.
I always check both sites when I'm looking at houses (basically every day) and the pattern holds: They can't really agree within 5%.
Technically they could both be correct if the sale price lands neatly between the two estimates, but some of these historical estimate graphs are also swinging more than 5% per month, too. I think there might be some fuzzy math going on somewhere.
I’m basing the price off of the sale values of neighbouring builds. I bought mine for 949, the most recent builds sell for around 1.05M, though the most recent was 1.1M. Nothing has changed and they were all built at the same time.
Mine is the only one of 36 with a view of trees rather than road or other homes, so I perceive that as higher value too. That wouldn’t be evident until I sell it of course, but I find recent prices for these homes kind of insane. This change occurred before anyone even set foot in them; I’m just packing to move this week.
> for doing effectively nothing
you're not doing labour. You're injecting capital into the system. The person who sold the house to you, presumably, is using the proceeds of their sale (and profit) to do something else productive.
I don't get why so many people consider taking asset risk as "doing nothing".
You forgot about land. Land is different from capital.
A competition where we all try to outbid each other on land does nothing for the economy.
it does, just more round-a-bout. The land does not have infinite value. If you overpaid for the land, you will have lost that value to the seller.
Therefore, these bidding is really just a price discovery mechanism. Unfortunately, because the transaction costs are high, and land being quite illiquid, the price doesn't rapidly converge to the "correct" one (aka, the true price might've moved faster than the bidding can catches up).
> does nothing for the economy.
Unless if the seller only ever reinvest into more land (and that seller also only reinvest into more land, ad-infinitum), the capital freed up from a sale will lubricate another sector of the economy.
I’m a capitalist but housing, like a place of shelter for you and your family, should be in a separate asset class.
Just lock up housing so that a single individual can’t own more than 3 homes.
Get married you get six houses you can own.
If that’s not enough maybe you need to reassess whether it makes sense to dump money into a house or put it to some actual better use.
Like creating jobs or new products.
That 10% probably barely covers sell/buy commissions, let alone maintenance, inflation, and interest. If you sold now, it would actually be at an effective loss. You don’t need to feel guilty about a 10% increase, you aren’t really profiting at that point.
The thing is, I haven’t even lived in it yet. It’s increasing in value at a rate that doesn’t make sense for the community where it was built. I don’t think I’m getting rich or something, it’s just bizarre to me that a home can increase in value before it’s even built and continue to as it’s built. On paper I bought it for more than 10% less than identical neighbouring builds, but nothing has changed about the homes.
It isn't built yet?
The price of a house is simply a matter of supply and demand. If you buy when supply is more abundant and demand less so, you'll get a better price. Right now, there is a supply crunch in housing (because interest rates are high, the second hand market is really low volume), that means available inventory has a higher price. If you want a year later, the dynamic will be different.
It is unsustainable. Currently housing is priced as if it was going to increase 10% a year forever (and if that is not the case, you are almost always better off renting right now).
There are multiple factors that pushed the prices artificially up since 2020. They will look retrospectively obvious (as the 2008 subprime crisis seem obvious now). I'm usually not in favor of timing the market but I believe we are currently in the single worst time to buy a house in history.
It took several years for the 2007 financial crisis to really have its full effect on housing—prices fell until about 2012. I bet the same thing is happening now but is happening slower due to all the foreclosure and eviction protections and delays in court since the pandemic. Maybe prices will fall for longer or just flatline for a while since there are so few sellers it drives up prices—but interest rates are going to have an impact. If you couldn’t buy at a 3% mortgage, why will you be able to afford a 7.7% mortgage with prices the same? It’s now more expensive to buy a home in third tier cities than to just get a rent controlled apartment in cities with actual job prospects. Prices will adjust because this is surely not sustainable. I think the car market will soften and turn first and be a leading indicator.
I'm currently holding off despite having a baby on the way, a tech job, and 3/4 of the money saved up.
Rates are, barring a crash(which will also hammer home prices) likely staying elevated for another year, possibly more. Those rates also allow me to make thousands per month, risk-free, in interest off my savings. I'm able to rent for $3-4k/month, while mortgage+taxes+insurance+maintenance would set me back around $5k/month. Housing inventory is poor, so if I did buy I'd have to opt for a suboptimal location and/or construction.
The one circumstance I could see that would possibly make me regret holding off is financial repression by the fed where rates are held below inflation and houses keep appreciating, but I don't see a big risk to that over the next year.
I do expect rates to hold, and maybe even rise, since we're running huge deficits(requiring massive treasury issuance) and going into an election year (where no politician will choose austerity). I think it will eventually drop housing prices. Even in the best case for housing, values will likely stay flat in nominal terms.
>Those rates also allow me to make thousands per month, risk-free, in interest off my savings.
If you are in a state with income tax, I would take a minute, even immeasurable, increase in risk by putting it in US Treasuries (like TTTXX at Merrill), resulting in no state income taxes for 95%+ of your return. In case you already are not doing that.
I'm in a mix of paper(6 month US T-Bills), and various UST ETFs with durations anywhere from 0-3 months out to 2Y. US T-Bills(aka shorter duration Treasury bonds) are the place to be right now. We're currently seeing a "bear steepener" where the long end(10Y+) sells off(aka rates go up) so investing further out the curve exposes you to significant duration risk. It's anyone's guess if rates go up or down from here, but with the USG running huge deficits(in a booming economy no less) requiring large treasury issuance in parallel with quantitative tightening and rate hikes by the fed, it's not likely that rates will come down anytime soon.
You just buy TTTXX and it gives the same state tax advantage as buying the treasuries directly?
Yes, same with VUSXX (vanguard), FSIXX (fidelity), and UTIXX. There might be a negligible amount subject to state income tax, but I am not exactly sure why.
Buying gives you stability, you don’t have to worry about double digit rent increases; it also gives you agency to make the home more suited to your needs.
I wouldn’t trust what the government is doing to have any bearing on rates. Lower interest rates actually make it cheaper for the government to borrow as it does for everyone else. Those treasury bonds get expensive when their yields pop above inflation.
I don't have to worry about double digit rent increases. Between rent control and a softening rental market most folks shouldn't be too worried about that right now. If you think burning thousands per month makes you more stable then by all means do it. I think you should check your math and go with the path that increases your net worth but that's just me.
> Lower interest rates actually make it cheaper for the government to borrow as it does for everyone else.
Right, and that's the government's incentive to pursue financial repression as I mentioned. But that also weakens the dollar and allows inflation to rip again so the government is somewhat boxed-in and has some hard choices to make. My guess is that no repression occurs, rates stay positive as they are now, the government continues to run huge deficits until after the election, and then they pay for it with huge tax increases in 2 years. Right now it feels like the boomers are squeezing the wealth out of the country for their final years and will leave us with quite the bill that only AI-driven productivity gains can resolve.
I’m not happy about timing either. I agree with you. I bought because my kids need something stable and home-like; I suspect in the longer term this will hurt me financially compared to other options. But renting here for an entire family is borderline impossible, and the places I might have had a chance at renting were dumps. I could choose between $5k per month to be sure we won’t face renoviction or ending leases (in a brand new home, too), or around $3750/month to live in a poorly maintained, inefficient, unstable rental situation.
I know it’s a huge difference. As a parent I’d almost be willing to pay even more, though. I can’t rely on someone not selling my home from underneath me and then needing to find something else when vacancies are well below 1%.
I’ll probably feel some pain from this purchase eventually, but I’m prepared. I can also keep in mind that the alternative downsides of renting were serious and constantly present, with no real upside. Rates are extremely high here.
Why is it unsustainable? Housing starts are at the lowest since 2019, and people couldn’t afford them if they did build them. People who bought a home before 18mo ago will have very little incentive to sell until interest rates decline, which doesn’t seem to be on the horizon as long as inflation stays higher than 2%.
Multifamily is being built like crazy.
Just got back from Sacramento and they were building units for as far as I could see. Same thing in many markets.
Go back and read articles from 2006. They said housing prices were fine because we were lacking supply and had underbuilt for years. Then suddenly we had too many houses. Affordability matters appreciation expectations matter. Credit matters. Employment matters.
People will always sell. They can only hold off so long.
Multi-family is overbuilt in many markets, including here in Dallas. It’s just not the same market as homes.
I was around in 2006. We didn’t have too many houses then, we had people granted credit on dubious applications, ARMs bundled up as AAA credit. That’s not going to repeat. And if it does, it’ll be nationwide all at once, rather than market-by-market like last time.
Certainly if there is a major jobs crash, then people cannot afford their mortgage. But the government doesn’t like this and they’ll step in again like they always do.
> I was around in 2006. We didn’t have too many houses then
Yes, I was also around in 2006. That seems irrelevant as there is adequate data available regardless of when you were born.
> It’s just not the same market as homes.
No, it is, at least when people have to make hard choices. There is no law that says each family gets a SFH to themselves. Sure, they may want that, but when SFH becomes unobtainable people make those hard choices.
If you have more homes than you have willing and able buyers, you have too many homes. Family formation can be delayed(i.e. live with relatives longer) or families can choose multifamily. I don't recall a mass epidemic of homelessness after 2008 left homes empty, so it seems to me that we have enough places to live, even if those places are not the dwelling of their dreams. I understand there are statistics that say otherwise, and similar statistics were around in 2006 and proved to be wrong, so I have to question the recent statistics.
> That’s not going to repeat.
I didn't say that. We may see a 2008 style financial crash driven by commercial real estate, but I doubt even that will happen. What will likely happen is that the folks who think prices only go up will be surprised as the pool of buyers opts out of the SFH market while attrition slowly lowers prices. This process may even snowball in some markets as people "race for the exits" when they realize home prices are losing support.
Because we got to a point where most people simply cannot afford a house (I have read that the average house on the market cannot be bought by 80% of the households).
People are indeed holding on their low rate mortgage and that is the only reason why the prices are currently so high (artificially low supply). This will eventually end. People need to move for job (return to the office anyone?), retirement or other reasons. Some people will lose their job and simply be unable to afford their mortgage. It is only a matter of time before it starts crumbling and the floodgates open.
The other side of the coin is that in a perfect market, the obvious arbitrage is to simply rent and invest your money in better performing assets. (we could discuss how in America most people buy blindly without any considerations for the underlying numbers).
Finally in every cycle, housing always took multiple months/years to adjust to the conditions. This is due to a slow moving and illiquid market. Owners think they can still get that "pandemic" 1m$ for a fixer upper while the rates went up a couple %. This price anchoring and discovery takes time. You can see this currently happening all over the US. Prices are slowly declining.
Case-Shiller just set an all time high. Prices are not declining.
For 1, demographic shift; we're halfway (8 years) through baby boomer retirements and just at the beginning of baby boomers reaching their average life expectancy.
The next 10 years are going to be extremely interesting. Especially if we don't increase immigration, at least for the transition
My house has more than doubled in value, and I'm not at all happy about it, because apart from the moral issues of access to housing, on a purely selfish note, I, as most people, are more interested in trading up than down, and as my house has doubled, so have the more expensive houses I might want to move to.
Effectively, rising house prices harm me too, not just first time buyers
House prices increasing are only a benefit to people treating it as an investment, and if it's your primary home, then that means planning for trading down.
The only way to profit is to sell, if you do that where would you live?
Many people here have sold and moved to one of the many beautiful towns on our island that are closer to nature, cheaper, and easy to “buy up” in terms of lifestyle. In turn, that has dramatically boosted prices in those towns.
Hypothetically (I expect the inverse to happen), if my value increases at this rate until my kids are moved out, I can sell this place for $1.5M. That would get me a LOT of house in one of those towns. But why? Who does that benefit? And does it push locals out of those towns, over time?
I don’t want to maintain some kind of housing homeostasis where values remain the same and no one moves. But the time scale here is ridiculous and it’s dramatically changing my region in bad ways, and I don’t see any net positives outside of very few people’s bank accounts.
Yet like I said, I do expect it to go the other way. I expected to lose 10% by now, not gain it. There should be a correction at some point, or things are going to be radically different where I live very soon. People are really at their limits.
Housing is a necessity. It shouldn’t outpace changes in the price of milk or gasoline. That it does should scare the hell out of us. The fact is we have painted ourselves into a corner by propping up insane housing valuations. I’m not sure what to even do about it at this point. Houses cost an order of magnitude more than they should but any correction will destroy the middle class.
Somewhere where housing is less expensive, perhaps?
Ours has increased by 30% but the thought of selling and then, having to enter this market, is nuts. I won't say it's not tempting to extract some of that value, but not now
Mine has increased in the neighborhood, maybe around 40%. I have no desire to sell until my boys move out in about 6-7 years.
> struggle it was to find, bid on, and buy a home
I would REALLY hate to do this electronically.
We might replace people with something like ticketmaster or the "get a flight/hotel/car" mess.
The sad part is, you didn't really "profit" if the broader area you live in is up 10%.
You’re right, and this is why so many people sold in my area and moved to cheaper areas. That has had a dramatic negative impact on those small towns, and their values (and property taxes) have exploded as a result. It’s a concerning situation.
I don’t plan to sell or leave to another place. I’m just disconcerted by buying a home and having the value increase before I ever set foot in it. That’s not normal, and it signals bad things are coming (to me).
eh... don't pop the Champaign on your 10% value increase just yet
It's only worth 10% more when you sell it for 10% more. Right now home closings (the finalized deals) are 50% lower than before the pandemic and lower than in 2007. So selling your house to get that 10% increase is going to be hard.
But even if you did sell it, then it isn't quite worth celebrating yet, because it is likely that your 10% increase estimate is because the entire market is selling 10% higher.
So the problem with this is that if you sell your house and take your handsome 10% profit, you still can't pop the champaign because as it turns out... having a home is one of those sort of necessary things of survival. So if you want to go out and buy another home that is roughly similar to the one you previously had, then it will cost you 10% more than the last time you bought a house, which just so happens to be roughly the same price that you just sold for, so you end up not really making anything.
But wait, there's more. Because you sold you need to pay closing fees, which includes generally 6% (see article) in agent fees, plus various closing costs which generally come out to around 10-15% of the home price. So you gained 10% in the sale price of your home, but you lose 10% or more when you close the deal, which wipes out your "profits".
Oh, but you only bought a house "recently" which means you probably lost 10-20% in closing fees when you bought it. So your investment is actually more like 110% - 120% of the value of the home. So again, gaining 10% value just brings you up to even. But add the seller closing fees (mentioned above) and it pulls you back down, to losing money.
Oh, and now with the cash in hand you buy the next house which is 10% more than before and interest rates are probably several percentages points higher than before as well. So not only is the house 10% more, plus you lost 10% in your last deal, but now your payment will be higher even on the same loan amount thanks to higher interest rates.
People underestimate interest rates all the time too. Let's say you had a $400k loan before at 4.5% interest. Well the 30yr fixed payment on that is around $2,500 /mo. Now lets say you do all the shenanigans above and end up with another $400k loan again in 2023, but it is 6.5% interest. It is only a 2 point increase in interest, not a big deal right? Wrong. The same loan amount but on 6.5% interest is $3,000 /mo. So you are now paying $500 a month more for the same loan and home value as just 18 months ago and you would pay 20% more over the lifetime of the loan.
Just to instill the shock and awe effectively, I will use the same real numbers as above. Let's say you had a $400k loan at 4.5% interest before (the early 2022 rate). You would have paid $851,626.85 over the lifetime of your loan on that.
Now the same loan ($400k) but at the late 2023 rate of 6.5%, because you wanted to sell your house for that 10% profit, remember? Now the same loan amount will cost you $1,036,344.62 over the lifetime of the loan. The house just got $150k more expensive even though the sticker price on Zillow looks like it has been flat since 2022.
So... still excited about your 10% home value?
The thing about my situation is that the increase happened very rapidly. If it continues at this rate, it will be profitable very quickly. At the moment I don’t think I could make “flipping” it worthwhile, but I don’t want to either.
I’m not excited at all, and I expect the home to be a financial burden for a very long time. I’m more so upset that so many of my friends and family are brutally priced out of having stable housing and it’s only getting worse.
Ideally I’d live here for 20 or 30 years, but we’ll see. Above all I want to be close to my kids, and it doesn’t seem like they’ll afford to live here.
Small contradiction there on the role of realtors and investors. Add drag to trade really hits the investors. Look at the Netherlands, recently the buying tax has increased from 6 to 10%+ when buy to let or flip. Consumers buying a home pay only 2% tax. After this (+current interest rates, +some other factors), the professional home investment market in NL completely dried up.
For the rest totally agree, disrupt the middle man in real estate is OK++.
I like this solution a lot.
We both sold our last house and purchased our current house with anyone using a realtor at any point. It was so easy. All the forms can be printed out from the Internet. Fill them out, the buyer gives a check for the earnest money, turn it over to a title company and they take care of the rest. Simple and trouble free.
A realtor isn’t needed but I think a lawyer isn’t a bad idea. You don’t want to mess up a 7 figure transaction…
A very standardized, regulated transaction. The title company and the banks do these all day every day. Unless there is something unusual about your situation, all a lawyer is going to do is cost you money.
Yeah, paying a lawyer and their associated paralegals for 2-4 hours of work is easily worth the low four figure rate.
This is a regional thing. In many west coast states, escrow companies are the norm and nobody hires a lawyer. In many east coast states, both sides hire a real estate lawyer (and you'd be crazy not to).
Most people who've only lived in one region don't realize that the other half of the country does real estate transactions completely differently.
In Washington State escrow agents actually are attorneys -- but their practice is limited to one very specific area of law: real estate purchase contracts.
https://www.wsba.org/for-legal-professionals/join-the-legal-...
Because their practice area is so limited they don't have to go to law school, and their "bar" exam is much easier.
The flip side of this is that unlimited practice attorneys (i.e. "real lawyers") are automatically allowed to do everything that real estate agents and escrow agents are allowed to do.
7 figures?! Uh… not many houses around here go for seven figures.
Seven figures means a million dollars or more.
A large fraction of us on Hacker News are in the California Bay Area / Silicon Valley, New York, Seattle, Chicago, Toronto, London, and other major cities where a million dollars gets you a small home, far from the city. In most of those cities, you need to pay well over a million to get an average-sized single family home.
not many houses around here don't
> We both sold our last house and purchased our current house with anyone using a realtor at any point.
I think if you're buying a house for the first time, trying to wing it is probably not the best idea.
How did you market it and do you think listing on mls, having an agent show the house, or paying a buyers broker fee would have gotten you more and higher offers?
We didn’t market it. My found our current house through a friend. The wife of the couple that owned the house and my wife hit it off. They sold the house to use at well below market rate (in fact, afterwards we got a letter from the county tax office basically asking “uh… you bought this house well below the market rate… how did that happen?”). We figured out how much we needed to sell our old house for everything to work out. We told friends that we were looking for a buyer for our house and someone had a coworker that was interested. They came and looked at it and bought it for what we wanted. Everyone was happy at the end of the day.
That’s a great story! Do you know why your friend was willing to sell below market? Was it just 6% below market - what they would have spent on fees anyway?
Well, they built the house (the husband was a contractor). It’s an integrated concrete form (ICF) house. They raised their family in the house and had lived in it long enough that it was all paid off. They didn’t want it to go to just anyone, so they asked us how much we wanted to pay and we came to an agreement on a number. They wanted to build a smaller retirement house and were just looking for enough to build that house (as in, they planned on building it themselves).
I put mine on Zillow after interviewing a realtor and it sold for $1,000 less than the maximum amount he realtor said I could expect. Since I didn't have to pay his commission I came out ahead by a lot.
6% higher?
> I’ve never bought the argument by hedge funds that “we add valuable liquidity to the market (*for only a few billion dollars in fees!)”, but perhaps that argument might hold water for real estate.
I think you might be mixing up hedge funds and market makers (commonly knows as high frequency traders)?
Both defend themselves with liquidity arguments; with hedge funds (some of them, famously they're a compensation scheme not an an asset class) it's about medium- or long-term liquidity (buying assets that are going to pay off but only months, years or decades down the line), with market-makers it's about short term.
You might be right about that. Though liquidity arguments are a bit rarer for hedge funds. I hear more about claims of efficient capital allocation.
In any case, I agree that hedge funds are more of a compensation scheme. My opinion of them is relatively low, but that's from the point of that investing in them is a bad idea. I don't think on net they have any bad effects on the rest of the market.
I think if anything they're a force for good on the rest of the market - someone needs to be there to buy assets that are both illiquid and risky, and both broker-dealers and (more recently) pension funds have been gradually regulated out of being that buyer.
Hmm, seems like Airbnb has caused plenty of 'disruption' but I can't give them too many props for it. I agree that broadly the mass of realtors, title companies, etc. that pile on to extract their cut of the sale of a home seem unnecessary, or at most should be getting a fraction of what they now take.
Don't give too much props to redfin. What's going on here isn't justice. It's competition. One middle man wants more power from other middle man so they fight.
As an outsider we don't want any side to win. If RedFin wins they could become the new NAR.
Silicon Valley did disrupt real estate -- AirBnB. Made every property more valuable and thus, expensive. Moving? No need to sell, your previous house can now be a passive income vehicle. Even if you don't participate as a host, the reduction of supply augments your home's selling price.
"Disrupt" doesn't always mean, for the benefit of consumers.
What is the alternative to making real estate an investment? For most of history land was allocated via violence. Allocation via money seems to be an improvement.
I think there's a difference between having real estate as an investment, and buying a home to live in.
There's a LOT of people buying up multiple properties and then renting them out.
Often these days they're renting them out on the short-term holiday market like AirBNB and Stayz. Ultimately these rentals are often a net-negative on the neighbourhood community they're in. In small amounts that's fine, but in large concentrations it's an unsustainable burden, and the majority of the benefit goes to those not living in that neighbourhood.
Those that don't do short-term rentals are often putting the least amount of effort/investment into the property. Minimal maintenance, often deferring or only doing the minimum required upgrades in terms of energy/water efficiency makes them unpleasant to live in.
That's aside from the often onerous and arbitrary requirements forced on tenants.
Examples include being forced/"strongly encouraged" into payment methods that add costs to your rent. Being required to hand over all sorts of PII to a huge range of platforms. Then there's third party rent management platforms/companies like RealPage that coordinate rent increases to maximise revenue; not because of any underlying cost increase, but because they can force market prices up.
Making housing a commodity - I.e if you buy a house for 300k, you should expect to sell the house for 300k. Many people buy houses with the intent they they appreciate
You can't wish or legislate away the law of supply and demand for basic needs and physical goods.
E.g., even in North Korea there are black markets where prices go to the equilibrium value.
They tried to do this in Stockholm, but in the end it completely messed up the apartment market. People end up queing for years, or you buy on the black market for vastly inflated prices.
Demand creates supply, but not necessarily at the price point you want.
The best housing policies work with the market, and use regulation to keep NIMBYs in check, update zoning as necessary and allow builders to build enough m2 to satisfy demand.
How do you propose to implement this? In the past, living on the better land meant others would be more likely to try to take it by force. If you attempt to suppress this dynamic entirely instead of transforming it into some other dimension (e.g. violence to money), you will fail and it will be replaced by either a money black market or violence or both.
Also would seem to encourage slumlords - if it's worth what it's worth, why bother with things like "maintenance", "repairs", or god forbid "upgrades"?
> What is the alternative to making real estate an investment
Making it a neutral investment by adjusting real estate taxes based on changing value of the land.
The way to drive out middlemen is to allow competition to make the market more efficient, which will cause people to get outraged at the people who profit from making it more efficient (same thing that happens to HFT firms, which have demonstrably reduced spreads).
The real problem is a lack of supply which is mostly political (although some areas have geographical constraints that make it harder to build... but that's largely solvable by building vertically)
Why is the buyer's agent's incentive to rush the buyer into whatever house as fast as possible? The industry is completely misaligned.
How could real estate not be an investment? Land is scarce. You would have to prevent people from buying it. Not to mention updates, improvements, etc. People would have almost zero incentive to improve their property, and then who is left with the massive repair bills when those people vacate? Real estate by nature is an investment (good or bad).
Land Value Taxes
> personally I don’t even think houses should be investments
Sadly, this has been the cornerstone of american culture for the last seventy years. AirBNB & the chase of "passive income" are only exacerbating this.
400 years. A huge part of the allure of expansion was land speculation. The biggest corporate colonial players pushed to expand west in order to be able to take land that would later develop into new settlements, making it far more valuable.
A house should be an investment in the sense that it is a vehicle to build equity. The whole point of paying a mortgage for 30 years is so when you retire, you own your house free and clear and don't have a house payment. Which means you can retire on a comparatively smaller nest egg.
Now if you want to say that you should buy a house betting on significant capital gains over inflation, that's foolish.
>There’s too many middlemen in this process
Realtor here - if you believe that, don't use Redfin or Zillow or their competitors, because they are yet another middleman adding friction. I'm not going to go into a monologue here, but both are leeches on the system that add more cost. Yes, it's wonderful that they have made more info available to the public - for that they are to be commended. But if you understand how they actually make money they are adding more friction and contentiousness and I do not believe they are actually saving your, the consumer, money.
>I don’t even think houses should be investments
It's a sensitive and emotional topic certainly, but I would encourage you that if you feel that way, try to imagine what set of laws or social changes would need to happen in order for that to not be the case - like what would that world look like? Because each time I try to do that thought exercise with people, I continue to come back to a belief that the alternatives are not superior to the system we have. Real estate is an asset. Cars, bennie babies, stocks, bonds, gold - there are lots of types of assets in the world, but real estate with its permanence and immovability is a very, very special type of asset. Thus, it is very difficult to separate the asset from its investment potential.
> If there’s one area I’d love to see Silicon Valley actually disrupt, it’s real estate. There’s too many middlemen in this process
when has silicon valley ever actually disrupted anything, rather than creating a new, well-funded middleman?
> for only a few billion dollars in fees
Market makers don't charge fees. (I mean, maybe they charge their LPs, but that's a different matter)
I sort of agree: primary homes should not be considered an investment, but there's nothing wrong with owning real estate in general as an investment. I'd prefer real estate investors drive for their properties to generate regular income, though, rather than the common practice of buying property with the main goal of selling it later at a decent profit. That latter activity is one of the factors that drive up housing costs.
This seems so backwards to me. One invests in the home they live in, to improve their quality of life and the value of their own property. Buying more properties than you need to live is what drives up housing costs, because other people need those homes to live in and you're using that core basic human need as a method to extract capital from them.
> you're using that core basic human need as a method to extract capital from them.
This isn't really an argument against doing it. People also need to eat (more than they need a house, in fact). Farmers still should be able to get paid for helping to meet that need. People need to drink water. If you sell them water, there's nothing wrong with that. Just because something is a basic human need doesn't somehow mean that it's wrong to profit from filling it.
The main issue is that we can make more food, but we can't make more land. We can make more buildings though. You'll notice that most of the appreciation in house prices lately has to do with land, not the buildings.
The fundamental error in our understanding of economics is treating non-produced goods like land as if they were "capital." There's nothing wrong with investing in producible goods -- in fact that's ideal. But when people gatekeep nonproduced goods, especially nonproduced goods that everybody needs to live (ie, land) - that's where everything breaks down.
There’s a difference between production and rent-seeking.
I actually prefer the exact opposite: the primary homes should be considered as an investment—i mean, obviously, we live in them—but secondary properties should be banned or strictly regulated as this encourages renting (and associated ballooning of the real estate market). Real estate as an investment asset is precisely the problem.
> I'd prefer real estate investors drive for their properties to generate regular income, though, rather than the common practice of buying property with the main goal of selling it later at a decent profit.
I'd prefer no real-estate investors other than home owners, honestly. They don't seem to add value to the world.
SV has already disrupted real estate. SV figured out that you can keep raising rents each year on rentals, and people who can pay will wear the hit and the people you make homeless don't matter because you make more money overall even if there's empty apartments every where. TA DA! SV helps the world again!
YES! It is about time that realtors get disrupted.
They take 6% out of most housing transactions and add very little value. They managed to put themselves in the critical path by lobbying and regulatory capture. You don't get access to the listings and MLS open houses unless you go with a realtor. They also made the process artificially complex.
Most other countries seem to rely on direct customer to customer for most transactions, with a notary making sure the contracts are binding. Why can we not do that in the US?
I feel like its similar to car dealerships. Once you've decided to take on a realtor, there's now a social pressure to buy/sell. You feel like you can't spend too long looking, and taking up the realtor's time.
I feel like these institutions exist to pressure unsure people into making unsure decisions by trying to get them to gloss over details that might not matter.
Screw that. Be up front with where you are in your process but don't cave to pressure from someone whose financial incentives do not fully align with yours. Be polite but firm, and if they don't want to work with you there's plenty of others who will.
My realtor's commission when I bought this house 2 years ago amounted to about $30,000.
I don't feel too guilty about taking up her time for 3-4 hours a week for 2 1/2 months.
Even if we assume she did the same amount again, if not double, lets say 10 hours/week for those 10 weeks, her 'hourly rate' (which I figure similar to a contractor, as there are of course other expenses) still comes to $300/hr, which is approaching associate/partner levels at a "reasonable" law firm (not white shoe or corporate).
Eh, I think a lot of realtors are not worth it, but a good one is.
As a buyer I got an excellent rate from their recommended lender, I got a solid lawyer rec, and I got experienced guidance throughout the whole process. Was it expensive? Yes, but was it worth it? In my case, very much so.
All good but 6% is outrageous. 1% each is going rate in many other countries and I don’t see what value even a stellar realtor offers that’s worth more given current housing prices.
Lenders aren't gonna give you a preferential rate because of the realtor, I can't imagine paying for a laywer recommendation, and guidance is not worth 3% of my home's value.
What counts as "guidance" anyway? A realtor can't be relied upon for structural issues, you'll need an inspection. They can't tell you anything about the market that you couldn't dig up yourself in 5 minutes searching Redfin. HOAs, contract language, and other legal matters will need a lawyer. You're basically gonna have to find a dedicated professional for anything that matters.
The limited benefits I can think of are:
- you're buying in a tight market, and they can find some off-market listings through their network
- a reputable buyer's agent might make your offer seem more legit
I didn't get a special rate because of the recommendation, of the 3 lenders I was reviewing, the recommended lender had the best rate and I had the bonus that the realtor and the lender had worked together many times so they were a well-oiled machine.
Trust me, I hate the idea of middlemen, and I do hope the system can get more efficient.
Are they worth 6% of $700k for buying a house? That is yearly income
A median 4B house in greater Seattle area is now 1.5M+.
6% of that is 90,000. Buyer and seller agent each take 45,000. That’s about a Tesla for each of them.
Good realtors make a fortune without creating any productive value in economy. The house stays the same, just a big tax on exchange. Add that to lending fees, title fees, escrow fees and you’re easily looking at ~8% of transaction gone poof.
>As a buyer I got an excellent rate from their recommended lender
No you didn’t, they suckered you on a good rate and screwed you with stealth fees on closing costs.
With a few hours of hunting I saved $50k, beating their rate and cash to close. “Preferred lenders” are almost always a scam, but as always DYOR
I'm surprised at how confident you are saying that based on a 5 sentence post from someone you don't know anything about.
True. They should've added a probably in there.
Preferred lenders usually are just as good as any other, or said differently, no better than anyone else except maybe for expedited paperwork. The bit about offering lower rates and sucking up more net in assosciated costs, hidden or plain, is not uncommon though.
Same. I was very glad to have worked with a realtor when I bought my home, and I'll gladly work with him again if and when I choose to sell my home and buy another. He was well worth his fee.
> Most other countries seem to rely on direct customer to customer for most transactions
Realtors are everywhere.
In the Netherlands selling a house is mostly exclusive to realtors, and there are good non-realtor alternatives available at a fixed fee for more than a decade. But the consumer wants a realtor. Note that in NL the realtor agreement is exclusive, meaning you cannot use multiple realtors, contrary to many other countries. The result is a much lower realtor fee or appr. 1.5%.
Even in informal economies there are informal realtors, and they will demand their cut.
Strongly agree.
That said, is this actually going to change how Redfin operates? They used to rebate part of the agent fee in certain markets, but at least in my market, they no longer do. Now they're the same price as everyone else while providing a slightly worse service.
their agents get their commission partially structured based on the customer satisfaction feedback following the transaction, or used to. So the incentive is at least somewhat more in favor of the consumer.
In Texas, on new builds, you don't need a realtor, but they don't discount the commission from the price. I went ahead and let my sister-in-law, who is a realtor, get the commission. (No, it wasn't a kickback kind of a situation)
in my area, MLS very rarely has something unique that's not on Zillow already. And Zillow is way easier to use, usually has more information/history on the property...
There's realtors in Canada...
There’s some subtext that I think most commentators are missing. NAR and some of the major brokerages have been under intense anti-trust legal pressure this year. By all measures it seems that these lawsuits are working. REMAX just settled one of these lawsuits to the tune of ~50 million and has promised to change their business practices, potentially including dropping the requirement that REMAX brokerages must be members of the NAR [1].
Let me be clear. Redfin is only breaking ties now because the NAR is fatally wounded. Redfin now thinks they can scoop up a lot of market share in the chaos that is going to happen in the next year. They’re not doing this for altruistic reasons.
[1] https://www.housingwire.com/articles/re-max-settles-buyer-br...
> In about half the U.S., including in cities like Charlotte, Dallas, Houston, Las Vegas, Long Island, Minneapolis, Nashville, Phoenix and Salt Lake City, we can’t quit NAR individually or en masse, because NAR membership is required for agents to access listing databases, lockboxes, and industry-standard contracts.
This sounds like they're making a case for cartel behavior.
With the general unaffordability of housing, realtors are a good target right now. Not that they have anything to do with interest rates or have more than minimal impact on asking price, most people aren't going to think that far.
That said, if Redfin can open up access better (and still securely!), this could work out in the long term too.
God, NAR is such a cartel I'm so surprised they haven't been slapped down already. My theory is that, in many places, real estate agent is one of the last decent viable jobs left for a huge swath of people (and I say this generally despising real estate agents, but I've had the fortune of working with a few gems), so the legal system is wary of going after them.
In 2005 NAR got their friends in the TX legislature to pass a law limiting what discount brokers could do - regulatory capture at its finest, and most blatant: https://www.npr.org/templates/story/story.php?storyId=496379.... IIRC the feds actually sued to overturn this law on antitrust grounds. I think they were successful but using Google to search for non-current events can be extremely painful so I gave up.
> NAR is such a cartel
As some rando, I can't pay for access to the local MLS (or any MLS anywhere else).
I could take some classes and get a Realtor™-brand (don't forget to pronounce it real-tore or they get huffy) License and get access that way, but what the hell?
I once sold my house without a realtor. I hired an excellent RE attorney to handle only the paperwork for a flat rate -- way less than a realtor who wanted a whole percent to do the same job. Some parts of the system grudgingly took my money without an agent, like title search and home insurance and the buyer's agent who still got their 3 percent. Best case, if you can get it, would be the buyer and seller meet up without the agents and each has an attorney to help with legal.
Same - I bought my neighbor's house with a real estate attorney. It was a simple sale, no loan -- I called a real estate agent I'd worked with in the past to ask how much he'd charge to act as my agent, he said he'd go as "low" as 1.5% -- that'd be over $7,000 for basically filling out a few papers. The seller said I could use an agent if I really wanted to, but it's a waste of money.
We ended up going to a local real estate attorney in town, and paid less than $1000 in fees for the whole transaction - didn't even use an escrow company, I handed the seller a personal check in the attorney's office. (biggest check I've ever written, had to write the numbers small to fit in the small box on my check!)
That's great! Unfortunately, often real estate agents will refuse to show FSOB houses (at least unless the buyer asks explicitly) so that they take longer to sell, thereby showing the "value" of the seller's agents.
Perhaps Redfin should drop a line to Lina Kahn at the FTC.
Why would agents show a FSBO home for free? They're independent contractors on 100% commission, paying for their own health insurance and retirement- why would they work for free? Do you work for your employer for free?
Buyers are free to find & view FSBO homes on their own, they can easily be found on Zillow and any other listing site. MLS even accepts FSBO listings for a flat $300 or so fee, no agent required
FSBO can pay a buyer agency fee also. The reality is that there is a cartel that props up the 3% to each side.
> Why would agents show a FSBO home for free?
I'm talking about BUYERS' agents refusing to show FSOB homes to the buyers they represent because sometimes they are on the sell side so they don't want to encourage FSOB. If they did represent the buyer in buying an FSOB house they'd still get the buy side commission...a short term gain that would piss off all the other agents in town.
In an FSBO there's by definition no seller's commission.
This whole idea is totally fake (and I'm not sure you get the difference between a FSBO where the seller is paying a buyer's agent, versus one where they're not). Real estate is a high-turnover job with a bunch of stressed-out independent contractors on 100% commission. They don't care what 'other agents in town' think of them, and there's no giant collusion or conspiracy going on. They're all just trying to close a deal so that they can pay their bills and buy groceries every month. I assure they are not colluding with each other
I assume they mean that the selling agent refused to show the house to someone without a buying agent.
There's no selling agent in a FSBO (For Sale By Owner). But the buyers' agents often boycott these houses because of course sometimes they are on the sales side.
The buying agent’s 3% cut is paid by the seller; if there’s no selling agent, do the buyer’s agent still get their cut?
I’m not really clear on why it’s structured that way in the first place — why doesn’t the buyer pay his own agent directly?
You mean they aren’t trying to find me the best home for my money?
>for my money
Sure- what are you paying the buyer's agent?
> Best case, if you can get it, would be the buyer and seller meet up without the agents and each has an attorney to help with legal.
I did this years ago, and it all went well. There's a substantial opportunity for Redfin here if they can connect buyers and sellers directly and charge a reasonable fee for all the boilerplate involved. At the time there wasn't an infrastructure to find homes with this selling arrangement so it was literally a "for sale by owner" sign in the yard.
I'm curious about the specific wording here:
> NAR membership is required for agents to access listing databases, lockboxes, and industry-standard contracts
Is it possible even in places with this regulatory capture for them to facilitate direct sales? Is it only NAR "databases" "lockboxes" and "contracts" that are unavailable to them, and if Redfin brings their own for both buyers and sellers they're in the clear?
I think real estate agents do add some value, after all there are things about properties that you won't know just by looking at online listings and having somebody familiar with an area out there doing some legwork for you is indeed a real job, but it's certainly not commensurate with the 3% of the entire transaction they're extracting.
Realtors™
FTFY
“Redfin will go further than resigning from the NAR board, requiring our brokers and agents to leave NAR everywhere we can”
Wow, they’re really pulling out the big guns. I applaud their efforts to decouple MLS access from NAR, that seems to be the biggest hurdle in advancing the industry.
Bought our first house with Redfin a few months ago and they did a few things really well: sharing data (you can download their results to CSV and chart hundreds of homes in an area), and they pay people a fee for service -- so there was always someone happy to show me just one more house.
Technologically it's a market that's ripe for disruption, but socially as well: there just isn't enough boom left in the market to fund 1.5MM people working in it full time.
I actually don’t hate realtors. In my jurisdiction, seller pays, so it kind of only feels like 3% to me. I have no idea if that’s economically valid, but when I’ve sold a house, I felt like I got my money’s worth on market knowledge and advice. Maybe I just had the fortune to be working with good people.
Possibly I’m a cynic but I suspect Redfin’s endgame here is not to reduce transaction costs but to capture those for themselves instead. Perhaps part of my cynicism is looking at transaction expenses in jurisdictions without realtors - usually there’s some middleman who tends to capture a single-digit percentage of transaction value (either a notary or the government or both or others). Funny how that pattern seems to repeat itself.
Regardless of how it is described or presented, the buyer pays for everything related to a real estate transaction: fees, commissions, inspections, etc. Even when the seller pays, that expenses is ultimately built into the sale price of the property.
Not exactly. It depends on the relative elasticities. You're correct that the cash flow isn't everything.
You’re right in that the buyer pays the seller so the seller pays the agents so ultimately the buyer is paying for everything and hoping he will find another buyer down the lane willing to pay more than 6% of the price he paid to at-least not lose what he put in.
Houses have a huge transaction cost, unlike say trading cost. Yeah the value goes up and down due to supply and demand but the transaction fees are zero at many internet exchanges now.
The question isn't really whether you got some useful service in exchange for your 3%. Monopolies and cartels don't always rob you blind. The question is whether you had a choice and meaningful competition on price.
This is fantastic news. Realtors have had their hands in the cookie jar for too long. Now that information is so much more accessible because of the internet, realtors simply are not needed. Anyone can buy or sell a house.
That said, I don't think consolidating the fees in a tech company is necessarily a win for the greater society.
While it would be fun to see this work, NAR knows that the entire value prop for them to exist is the MLS systems. If realtors ever open access to that, their entire profession will collapse overnight.
I briefly had my license and the entire industry is like a giant pyramid scheme with fees on top of fees on top of fees.
I’m half tempted to reopen my license just to get involved with Redfin because I have no real estate relationships to lose.
FWIW, as a Realtor: The NAR and related state / local associations should go pound sand for a lot of reasons. I am forced to pay them a lot of money each year, for almost no benefit to my business or my clients. The code of ethics is probably their single greatest contribution to the public, but without state and local agencies willing to punish bad agent behavior, it's toothless. Many of the recent lawsuits over commissions and agency where the NAR has been a party have not been to the benefit of the general public, and the NAR has been absolutely weak in its defense of both the public AND realtors.
All that said - Redfin can also go pound sand. They exploit information asymmetry where the public doesn't understand real estate services and think Redfin et al are somehow standing up to big bad exploitative realtors. Look man - the new boss is the same as the old boss and Redfin et al are not doing you any good. Find a good agent you trust in your local market, or go your own way if you think you can do better.
Used them once. They use a team leader who has agents meet you. The agent that met me was clueless and knew nothing about the house. The team leader gave me horrible advice and almost 0 communication. Just 1 experience maybe other people have luck but I’d never call them again.
Doesn't sound much different than some of the agents I've worked with.
I used them to buy and the "team leader" was amazing. We were ultimately very happy with the experience so it seems results may vary.
Ive had ~6 brokers for apartments sit in cars outside of the apartment I was looking at, while I walked around inside.
Still demanded 10% of the yearly rent though :)
I get these aren’t the same brokers, but brokers delenda est
That's just very typical real estate agent behavior.
Wow. Gloves are off.
If they pull this off they will crack open innovation and some long overdue lower cost options into the real estate markets.
If Redfin can create a competitor to the monopolistic MLS (owned by Realtor.com), more power to them.
I don't think 'MLS' is a single entity - instead different areas have their own MLS, and these are interconnected based on contracts. Thus, there isn't a monopoly to disrupt in the first place.
"Most MLSs are owned by the REALTOR® association that formed them." See: https://www.reso.org/blog/mls-faq/
Read the Redfin post. The rules the REALTOR association imposes to get access to MLS data is monopolistic.
I did read the post.
There is no monopoly because there is no single 'MLS'
It's perfectly possible for there to be many of them and for them to also be monopolies over their respective regional markets. Compare with cable companies carving up territory and agreeing not to intrude on eachother's turf.
There’s another word for that: cartel
Cartel is the correct word. As an individual consumer, I wanted access to MLS data and was willing to pay a monthly access fee. But they wouldn't provide such access and want you to use the cartel member, real estate agent.
Correct, and some of the MLSs won't even sell you data (for all those trying to disrupt real-estate). They have exclusive agreements to only appear on Zillow or Realtor.com or something like that when I looked into it before.
Actually Zillow I think just scrapes sites, I don’t think they even have legal/API access. I hope someone puts a bullet in the Realtor industry.
They pay a fee for MLS access.
I would much rather the feds go after the National Association of Realtors, cable companies, and any number of other organizations before Google. People love Google (vocal part of HN excluded). People do not like Realtor fees and cable companies.
Now, the next logical move for Redfin is to sue for access to MLS. This may be in fact building up ammunition for the case. They probably expect the NAR to susped MLS access. No way NAR will give away access to its crown jewel and Redfin is more-or-less dead in the water without it.
NAR is just the gatekeeper to the MLS. MLS access is the real benefit to being a part of these associations. No one wants to actually pay these fees. And if Redfin could be the one to disrupt and democratize access to these databases, it would be awesome for buyers and sellers.
Of course, this probably comes at a cost to realtors who get their margins squeezed even more.
Some realtors are worth it.
We sold and bought our house in 2021. We bought for $1 million and sold for almost $3 million over 8 years. When it came time to selling the house, my realtor was able to extract an extra $100k from the buyers as well as make it an all-cash offer with no contingencies.
When we bought our new house later that year, the house we were looking at was on the market for about a month. We were going to give an offer at list price, but she could tell the selling agent was a bit desperate, so she was able to get it $100k below list price, something that is unheard of in the SF Bay Area.
Overall she netted us $200k over both transactions, and she was singlehandedly the reason for this. That's what you get when you have a really good agent.
"Extract" is the key word here
Assuming 6% (3% * 2) and assuming you bought again at $3M, the agent made $180,000 off you, saving you only $20k.
Now you may have been able to do this with a discount broker or not, nobody will know. But they didn't net you $200k.
The flip side, if we had listened to our agent's advice we'd not have (1) landed the house we love (2) sold our prior house.
Particularly, on the sale, we kept hearing "wait, you'll get more offers. wait, you'll get more offers. AirBnB investors are going to love this". No other offers turned up.
Sure, there are great realtors and there are a lot of terrible realtors. A great realtor is worth it.
And the qualification for becoming one is largely liking money, not any sort of training and functional education.
Smart, observant, motivated people generally improve outcomes regardless of what they are involved in. There are amazingly good thieves, con artists and pimps, but is that something we want people pursuing professionally?
The realtor we got was fantastic. She took care of everything, and we had through her a great loan company, and everything was just taken care of. Would not dream of buying or selling without an agent. It's just too much hassle, and I don't have the expertise
3% of a $1M house is $60,000. That's bonkers almost any way you slice it: effort, expertise, or value-add. And that's just one side of the usual commission!
The process _could_ be streamlined and made less of a hassle, but since so many take a cut, there are perverse incentives.
I skew progressive/liberal on many policy issues, but on this one, I'm fiercely in favor of the libertarian argumentation. Realtors have an eff-ing insane monopoly / cartel. Sorry, it makes me crazy.
If you go back in time and/or to some markets, 3% of a $100,000 house = $6,000. That makes a bit more sense in terms of hourly compensation.
3% of 1 million is $30,000 not $60,000. Similarly, 3% of 100,000 is $3000 and not $6000.
But I agree with your overall sentiment that the real estate market is a cartel.
It's 30k and 3k respectively if you're talking about one side.
That’s why you get when you have low interest rates
I see a lot of comments here promoting tech to displace or disrupt realtors. "6% is too much", etc.
As a buyer and seller of multiple homes, I've not had success with RedFin and I've had varied success with realtors.
That said, a good realtor is absolutely worth 6%. A bad realtor (of which there are plenty) is actually worse than DIY / RedFin.
I say this because I want everyone with the position that "Realtors are never 6% value" to consider that they may have simply not worked with a good realtor yet.
Wonder if it even matters, as when we bought our house ~12 years ago, we used Redfin as our buying agent, and, even though we had a real realtor working for us through them, the selling agents were super defensive and refused to deal with her. They would only deal with us directly and we'd have to forward info to her, etc.
First home so had no idea how this was supposed to work, but seemed other real estate agents didn't treat Redfin as a "real" realtor in any case.
That’s cartel behavior.
The NAR is in desperate need of a disruption. I hope Redfin accomplishes this. The MLS is a monopoly and tying it to NAR membership is wandering into antitrust territory.
I see Redfin as one or two points on a continuum of service-cost tradeoffs in the real estate market.
On one end is a traditional realtor arrangement, with the 5% commission divided between the two agents. On the other end is for sale by owner, with potentially no commissions. Adjacent to that is a flat fee listing service, which costs about 2.5% in buyer's agent commission. If you sell through Redfin, your total commission is reduced to 4% from the industry standard 5%, with 1.5% going to your agent. If you buy through Redfin within twelve months of selling through them, you get an additional 0.5% off the commission for a grand total of 3.5%.
Not bad. It can save you $10k or more at jumbo mortgage house prices. Redfin has already done well by doing good and offering a differentiated product in the middle of two other offerings.
I have sold two properties, one using a flat fee listing service and one using Redfin. The former was a fair amount of work, while the latter was way less, comparable to a traditional realtor in the level of service offered. I would recommend Redfin to anyone.
I think the 5% happens but is rarer than 5.5%. Maybe we need to negotiate better but amongst all my friend circle 5.5 seems the norm.
You are right, I checked and 5.5% appears to be the national average now. It used to be 6%. 5% happens where prices are higher.
Redfin offers a 1.5% listing fee, and lowers that to 1% if you buy and sell. However you'll still be expected to pay the typical local buyer's agent commission.
Now HERE is the anti-trust trial we need. How is it that some slimy org controls the only access to price information nationally?
I'm sure there are other reasons, or I might be misinterpreting this statistic, but NAR is listed as the #1 lobbying spender in the US in 2022. They and #2 (US Chamber of Commerce) each spent over 3x the third-place organization, and they spent more than 4x the top tech company (Facebook).
https://www.statista.com/statistics/257344/top-lobbying-spen...
There were few things more frustrating to me when we were buying our house, which we were currently living in, from our landlords, for a price we all agreed to over the phone, that we HAD to employ two realtors who, despite doing little more than paperwork which I could have done myself, took 6% of the sale price.
It's a grift.
Nothing says you HAVE to pay 6%.
In at least most places you can submit the paperwork to your county/state recorder & transfer money between each other completely outside of "the system" for a few dollars. And/or hire your own title agent to facilitate and hold the money.
There's also nothing that says you have to pay each agent exactly 3%. Commissions are negotiable on both sides like anything else. Especially in this sort of situation where they're no shopping/showing and you're paying them just to perform the transaction.
2-2.5% each is routine in some markets and price points. I built our last couple houses on empty lots, found the lot on my own, and my agent was happy to shuffle some paper for a couple hours for 1% (several thousand dollars) and give me the other 2% at closing.
…and for the people who end up looking at dozens of houses before deciding, negotiating, losing an offer, rinse repeating, 3%/$hours_spent_on_you could be a pretty low hourly rate for them.
Nothing says you have to, but boy howdy, would the realtors prefer you do.
We had negotiated ours down to 1.5%, which I thought was fair, but that was continent on the sellers realtor also accepting a 1.5% fee. The sellers realtor would not accept 1.5%, nor would the sellers reduce the price by 1.5%.
Since someone was going to get that 1.5%, I insisted the commissions be matched to be fair to our agent, and the sellers agreed to pay from their proceeds – after a somewhat heated back and forth.
It was dumb.
> that we HAD to employ two realtors who [..]
Why did you have to do that? is it your state/city law? because I know that's not a general requirement. You can always sell/buy directly.
We had to because the sellers insisted on using an agent themselves, because their realtor convinced them they had to, and then that agent then insisted that we use a realtor too.
And that's before I bring up how everyone, from the titling company, to the attorney, to the inspector, also insisted we "needed" a realtor, with multiple potential vendors refusing to talk to me without one.
It felt, at the time, like a racket, with everyone in on the grift.
I see. Honestly it feels more like your seller’s choice to go with a realtor. Then it’s the typical realtor preference to deal with another realtor. It’s like how a judge would hate to deal with a self representing defendant. It’s just a lot more hassle for them and they don’t wanna hold anyone’s hand throughout the process.
Unless there are cities or counties with weird laws I’m not familiar with, you can always direct sell/buy. Due to where my place is, I get almost a monthly or bimonthly letter from a couple of well known developers in the area that usually highlight “no banks, no realtors” an they are looking to pay cash and handle all paper work themselves.
It seems that the grift in your case was every body’s else’s convenience but yours, and that convenience costed 6%
I was literally going to just take the courses and become a licensed realtor in Texas myself (it would have been cheaper than the 3%) but the grift goes deeper as you can't get become a licensed realtor in Texas without being sponsored by/working for a Broker.
Grifts all the way down.
Why did you have to?
----
We bought our current house without an agent. Happens that the seller was an agent, but we worked with them directly.
Slight grandstanding aside, this is great. NAR and the buying / selling agent system in the US is egregiously overpriced and monopolistic. Borderline corrupt. It's 2023, technology could have brought these costs drastically down for homebuyers and sellers a decade ago.
Exactly the fact that commissions are still 6% despite nearly every part of the process (searching, walk throughs, negotiation, closing) becoming online and automated in the past 30 years shows that there are other [cartel] forces at play.
I hadn’t heard about the sexual assault allegations until now. That must explain the barrage of over-the-top realtor ads I’ve been hearing on the radio.
The sexual assault allegation is an interesting touch. They’re probably trying to get a viral social media outrage against NAR going but idk if enough X warriors know or care about NAR to make it a thing though. If Redfin can get it to stick then it will certainly cause NAR some pain so we’ll see.
I don't see many comments here about the alleged sexual harassment of NAR leadership. I, for one, am glad Redfin is calling them out for it and resisting investigation into it! Totally unacceptable behavior from NAR.
I like that Redfin is finally being direct and aggressive. This was the promise they entered the market when they did and it took them 10yrs to get here
“…for two reasons: 1) NAR policies requiring a fee for the buyer’s agent on every listing 2) a pattern of alleged sexual harassment.”
That escalated quickly.
Does leaving NAR reduce Redfin's ability to access/use MLS data? And if so, where, and how significantly?
I truly hope this can start the rebuilding of the real estate industry.
It is incredibly user hostile.
Is their plan really to ask NAR to open the listings up? That will never happen...
Like Tesla going against dealerships, this is very much needed.
In general the best markets are have low transaction fees, efficient, trustworthy, maintain minimum quality bar, and many balanced players on both ends.
In this scenario NAR has created an inefficient market.
Same with most states having a very hefty permitting processes that takes more than half a year for new construction.
Not saying we abolish permits, but Americas solution to housing crisis is making the permitting process faster and transparent.
We can’t call ourselves capitalists when the markets are rigged.
Gotta let the builders build, the sellers sell and the buyers buy.
is Redfin big enough for this gamble?
do they have processes in place to not just become another NAR?
I wonder who will blink first.