An analysis by Bloomberg News of over 100,000 property records shows that iBuyers Zillow, Opendoor and Offerpad sold approximately a fifth of the homes they sold in 2021 to institutional investors, who either flip the homes themselves or rent them out. This is another consequence of the rise and prevalence of iBuying – a streamlined access to homes standardized to sell for investors. As first-time and lower-income homebuyers already face many hurdles to homeownership, this is emerging as another one.
HomeSmart, the nation’s 10th largest brokerage, has filed paperwork with the U.S. Securities and Exchange Commission to go public on the Nasdaq exchange under the ticker “HS.” The move would bring the number of brokerages part of public company among the nation’s 10 largest brokerages to seven. The financial resources that public markets provide companies is forcing more and more brokerage companies who want to compete for a spot on the leaderboard to consider the opportunity.
T3 Sixty’s annual ranking of the residential real estate brokerage industry’s most powerful leaders, the Swanepoel Power 200 (SP 200), launched its ninth annual edition on January 11. The publication named Keller Williams Co-Founder and leader Gary Keller the most powerful leader in 2022, followed by eXp World Holdings Founder and CEO Glenn Sanford and Realogy President and CEO Ryan Schneider. The rankings spotlight the leaders who have the most influence in shaping the industry’s future in the next year. Visit sp200.com to see the full list.
After a pandemic-induced migration away from New York City, the nation’s largest metro is seeing a sharp turnaround in real estate activity. The New York Times reports that more Manhattan apartments sold in the third quarter 2021 than in any quarter in the last 32 years. Other boroughs saw similar upticks in activity. The pandemic undeniably deeply impacted real estate consumer behavior and activity. This early data suggests that the Covid-induced flight to the suburbs may not be a longer-term trend.
Rocket Companies, the parent of major lender Rocket Mortgage and nascent brokerage Rocket Homes, acquired personal finance app Truebill in December for $1.275 billion. As Rocket Companies continue to build out a full suite of home services businesses, acquisitions like this one indicate the resources and scope the company can bring to bear on the effort. The company can use an app like Truebill across a vast array of its services, thus leveraging scale, introducing new services and spreading cost across several businesses.
Spurred by sustained low inventory, the December median home price rose 14 percent year-over-year to $359,750, just $200 shy of July 2021’s all-time high of $359,950. With inflation and relatively low mortgage rates stoke homebuying activity, the market remains extremely hot. 2022 is starting off with the real estate bang.
REX Real Estate, which provides a residential real estate marketplace outside of the MLS system, sued NAR and Zillow in March 2021, alleging that Zillow’s application of a NAR rule that prevents the commingling of MLS listings and non-MLS listings disproportionately impacts REX listings and thus is anticompetitive. A judge recently dismissed a request from NAR and Zillow to dismiss the case. This lawsuit marks another ongoing suit that could change the way MLSs operate, in this instance, how their participants display IDX listings on their websites.
Lumber prices nearly tripled in the four months into January, adding over $18,600 to the cost to build a new single-family home, according to the National Association of Home Builders. Pandemic-related supply chain issues, high tariffs on Canadian imports and wildfires have contributed to the rise. In a real estate market already ravaged by a dearth of inventory with home construction as an invaluable relief valve, this trend increases one of the primary limiting reagents to a balanced housing market in 2022. Read the chapter 2022 Swanepoel Trend Report chapter, “The Impact of New Construction.” You can access it digitally on T3 Intel.
Citing an interest in preventing racial bias, Redfin, realtor.com and Trulia all stopped displaying crime data on their portals in 2022. The nation’s most popular real estate portal, Zillow, had not displayed that data. By analyzing the sources of crime data, Redfin, one of the most outspoken members of the movement to remove neighborhood crime data from real estate websites, determined that they included too much potential bias to not reinforce inaccurate and biased real estate search results and information. This is an example of the industry stepping up to improve equity in the housing market, something T3 Sixty fully supports and applauds.
In unsealed recent legal filing, Realogy states that NAR’s rule that requires agents listing properties for sale in Realtor-affiliated MLSs provide a compensation offer to agents who bring a buyer be “rescinded.” Realogy separately clarified its position that it wants offers of cooperative compensation to be optional rather than mandatory. Realogy, along with NAR, RE/MAX, Keller Williams Realty and HomeServices of America, are defendants in several large class-action antitrust lawsuits that center on the issue of sellers being required to pay buyers’ agent commissions under the current NAR policy. The U.S. Department of Justice is also investigating this policy. NAR has amended its rules to provide public transparency for buyer agent commissions, but Realogy, the nation’s largest real estate enterprise, now is publicly asking NAR to drop the requirement. This is significant, given Realogy’s industry scope and power, and while Realogy exec M. Ryan Gorman made clear in an op-ed that this stance does not mean the company doesn’t think buyers agents are valuable and Realogy believes in cooperative compensation, this could push the industry into a new way consumers pay for real estate agent services.
Bright MLS, the nation’s second largest MLS with over 94,000 subscribers, announced a new product, Teams by Bright, that helps real estate teams build brand recognition and visibility on listings and better track production. The MLS says a premium version of the product is coming in early 2022 that will help team leaders better manage goals and productivity tracking. Real estate teams are an undeniable force within the industry. Vast opportunities remain for technology and models to support them, and this move by Bright, represents a forward-looking approach by an MLS to meet subscriber needs. As MLSs look to maintain relevancy, this is a great example by Bright of an innovative way to do so.
At its annual conference, NAR’s board of directors voted to require the display of listing broker phone number or email next to listings that appear on broker and agent websites. The policy that passed had been revised from a previously considered on that required the name and contact information be as prominent as that of any other contact on the page. In addition, the NAR board of directors passed a policy that will require MLSs to publicly display buyer broker commissions on their public-facing websites and to make that information available in IDX feeds to brokers and agents. The board also clarified that buyer agents are prohibited from marketing their services as free. These policies help add valuable transparency to residential real estate consumers.
In the first three quarters of 2021, the number of Hawaii homes selling for over $3 million more than doubled from the number sold in the same period 2020. For homes above $10 million, the sales increased sixfold over that period. In many ways, Hawaii represents a larger trend fueled by the pandemic – homebuyers looking to focus on securing and finding a serene home. While the luxury market shifts for many reasons, this data reveals that the pandemic’s impact on home demand and homebuyer preferences spans across price points.
The nation’s largest MLS, CRMLS, announced that it has launched a venture fund it will use to invest in technologies that can benefit its over 100,000 subscriber base. Along with the announcement of the venture fund, CRMLS announced its first venture investment, in Perchwell, a startup that makes MLS front-end technology. CRMLS says it will offer Perchwell as an option for members. This step represents part of a larger movement by MLSs looking to player a larger role in the technology they depend on. In October, four MLSs partnered to acquire MLS tech provider Remind, and, in May, MLS group MLS Aligned acquired messaging tool Agent Inbox.
@properties, fueled by private equity firm Quad-C, continues its recent acquisition spree as it builds its At World holding company with the acquisition of global real estate network Christie’s International Real Estate, which has over 900 affiliate offices around the world. The acquisition includes the network’s corporate team and company-owned brokerage operations, in addition to the long-term global license of the Christie’s International Real Estate brand.
Realogy and Sotheby’s partner to acquire Concierge Auctions Realogy and the luxury auction house Sotheby’s, with which it has a long-term license for use in its Sotheby’s International Realty brand, partnered to purchase and 80 percent stake in luxury real estate auction marketplace Concierge Auctions. Founded in 2008, Concierge Auctions reported it fielded over $3.4 billion in luxury home bids in 2020 with the average home selling on its platform for $3.5 million. Auctions have always remained a fringe way to buy and sell real estate, but with the nation’s largest real estate enterprise jumping into the fray, they may become more common. As the big companies navigate and increasingly competitive market, differentiations like these emerge as a way to gain an edge. We expect to see innovative moves like this from other large brokerages.
ADUs, or accessory dwelling units, are small housing units built on the lots of single-family homes used as rentals, studios, in-law units among other uses. They have become a popular way for towns and cities to increase their housing density and provide homeowners with valuable space for additional income and hosting options. The percentage of homes with ADUs is growing and some communities are looking to develop policies that give them even more flexibility for local housing, such as allowing them to be sold separately from the primary single-family home on the property. As inventory remains low and home prices creep higher, ADUs provide a compelling opportunity for communities to increase their housing stock without sprawling. Innovative policies around ADUs look likely to continue in areas throughout the country. Brokerages and agents are smart to investigate and know the local regulations around them, where they can be rented on a short-term basis, where they are prohibited and under what conditions they are allowed.
Realtor.com expects that 2021 home sales to measure approximately 6.0 million sales, a 16-year high. The portal’s economist team expects 2022 will see a 6.6 percent increase in sales as well. Increasing sales, along with increasing home prices, are fueling a boom market in the residential real estate brokerage industry. These productive times are helping fuel industry investment and helping give smart brokerages the revenue to innovate and build the systems and models that will sustain them when the market turns.
The 27,244 homes that iBuyers purchased in the third quarter represents 1.9 percent of all homes sold in that period, according to Zillow’s Q3 iBuyer Report. IBuyers sold 10,728 homes in the quarter. Both tallies are record quarterly highs for iBuying services. IBuying had a record third quarter, but with Zillow Group sunsetting its home-purchase activity this market share is likely to dip in future quarters as the company winds down its operations. Regardless, the model has shown traction, and, while iBuyers continue to broaden their alternative financing services, the core practice remains a promising endeavor.
Douglas Elliman, the nation’s sixth largest brokerage, is set to go public on the New York Stock Exchange under the “DOUG” ticker as its public parent company, Vector Group, plans to spin it off as a separate company, likely by the end of the year. Vector Group Chairman Howard Lorber says operating as a standalone public company will give Douglas Elliman easier, more direct access to capital markets and allow it to tell a more focused marketing message without any entanglements with tobacco, the other major business operated by Vector Group.
Los Angeles-based Cover has raised $60 million to help fuel its service that builds one- and two-unit prefab homes for homeowners to place on their properties. These types of properties, also known as accessory dwelling units, will play a critical role in adding affordable housing, and housing period, as communities look to diversify their housing stock, cities look to add infill and housing demand outstrips supply.
Four MLSs – ACTRIS (Austin, Texas), First MLS (Atlanta), Heartland MLS (Kansas City) and Miami Realtors MLS (Miami) – created a joint venture in MLS Technology Holdings LLC to acquire MLS technology provider Remine. Remine had developed some innovative MLS technology products, but had dealt with reports of unprofessional conduct of leadership and had stumbled in recent months. The move by these MLSs reflects the desire of MLSs to take their future into their own hands and begin owning some of the technology infrastructure they rely on to provide services to brokers and agents.
In August, a record 4.3 million Americans left their jobs, a growing trend that some are calling “The Great Resignation.” The pandemic has forced many to confront their lives on a deep level, and experts suggest this has contributed to professionals reevaluating their careers and making decisions to pursue opportunities and jobs they want now, rather than putting those feelings off.
Housing starts stumble into Autumn In September, home starts fell by 1.6 percent from the previous month while the gap between completed homes and those under construction was the largest on record, according to the U.S. Commerce Department. The drop in starts is unexpected as demand for homes remain very high. A Reuters poll had suggested that starts would instead rise in September, but rising prices for lumber and other building components have added some hurdles.
With a strategic investment in a Vermont-based Keller Williams Realty expansion team, the franchisor has launched a national mega team in Livian. Tailored to attract and support productive teams across the nation, KW has introduced a new team brand it hopes will become a significant player in this arena.
A critical analysis of the Clear Cooperation Policy Inman conducted a multipart investigative series on Clear Cooperation Policy, which NAR implemented in 2020. The policy, intended to curb property marketing that illegitimately circumvent the MLS, limits the ability for agents to market listings to a max of one business day before it goes active in the MLS. The series includes a discussion of how, in some markets, pocket listings continue at high rates. For example, one study reveals that the percentage of homes sold within a day of going active in the MLS (a sign that the home was actually sold before going live in the MLS) shot up in markets around the country after the Clear Cooperation Policy took effect. Irrespective of consumer benefit, brokerages and agents face big incentives with marketing homes off the MLS, a practice that has been commonplace for decades. As the industry looks to keep the integrity of the MLS intact, workarounds to the Clear Cooperation Policy as covered in this series make it clear that the practice is alive and well and will continue.
CoStar Group continues aggressive posture toward Zillow Group Andy Florance, the founder and CEO of CoStar Group, which has aggressively jumped into the residential real estate portal arena with its recent purchase of Homesnap and Homes.com, has developed an aggressive tone toward Zillow Group. His recent interview with Brad Inman at Inman Connect revealed how he’s hoping to position his firm’s real estate play in relation to the nation’s dominant portal. A backdrop to the conversation was Homesnap’s October launch of a New York City portal, Citysnap, that will compete with Zillow-owned New York City portal StreetEasy. While Zillow Group sells advertising and leads to agents for placement on other agents’ listings, CoStar Group has a focused strategy of only placing the listing agent’s contact info on listings on its sites.
John L. Scott, the nation’s 15th largest brokerage led by J. Lennox Scott, the grandson of the firm’s founder, is celebrating its 90th anniversary in 2021. The company epitomizes the entrepreneur-led, family-owned character that has dominated the industry since World War II. Family-owned and -run companies like John L. Scott are becoming fewer and far between, especially at the largest brokerage tiers.
Bill Riss, owner of Seattle-based Coldwell Banker Bain, whose 2020 sales volume of $6.4 billion made it the nation’s 26th largest brokerage, has sold his firm to a subsidiary of real estate title giant Stewart Information Services Corp. Stewart is a global firm publicly traded on the New York Stock Exchange with, as of early November, a market cap of over $2 billion. This is another example of the industry’s entrepreneurial owners selling and transitioning the industry in general into one that is more corporately-owned and publicly traded.
HomeSmart, the nation’s 10th largest brokerage and 12th largest franchise brand both by 2020 sales volume, has introduced a revenue-sharing option for its agents. Agents can choose to switch from the company’s existing compensation structure in which agents pay flat fees and keep all of their commissions to one in which they split commissions 80/20 with the company but then gain access to the company’s new revenue-sharing program based on them earning a share of revenue the agents they recruit to the company produce. With this program, dubbed HomeSmart Plus, HomeSmart looks to leverage a strategy eXp Realty used to fuel its spectacular growth in recent years. This move provides an example of how the industry is evolving as newer companies introduce popular features.
Many factors are pulling homebuyers to different areas of the country, with prices as one of the largest considerations. For example, the 50 US counties facing highest heat risk saw 5 percent growth between 2016 and 2020. Texas, where temperatures frequently exceed 100 degrees for much of the summer, is one example. Covid-19 and remote work also plays a big role in the way Americans are moving. T3 Sixty covers this as a complete trend in the 2022 Swanepoel Trends Report, which comes out in early December. Available for preorder at t3trends.com
A 30-percentage point gap remains between the homeownership rate of white and Black Americans. Student loan debt plays a significant factor in this spread. At a median student loan debt of $40,000, Black homebuyers had the highest debt compared to white and Hispanic buyers, according to a NAR survey. This delays the homebuying efforts of Black Americans and plays a factor in them purchasing less expensive homes. The homeownership racial divide in America will take years to address. But organizations such as NAR, by producing studies that highlight the discrepancies and add information that can help influence change.
Howard W. Hanna, Jr., who founded the nation’s seventh largest brokerage Howard Hanna Real Estate in 1957, passed away in late September. He represents one of the entrepreneur leaders who shaped the industry into what the industry is today. His legacy continues with his children and grandchildren who continue to run his company today. Thanks, Howard, for all you did for us.
The significant home price increases in markets across the country have been scuttling transactions due to appraisal issues at higher-than-average rates. In August, 13 percent of the nation’s appraisals fell short of the contract price, according to CoreLogic data. That’s nearly double the standard rate of approximately 7 percent. The rise of alternative finance companies, which include iBuyers and the increasing number of companies who help buyers make the equivalent of all-cash offers with the ability to waive financing and appraisal contingencies, are increasingly removing barriers that have traditionally caused transactions to fall through. These AltFin companies, as T3 Sixty has dubbed them, are ushering in a real estate financing revolution, a trend featured in the 2022 Swanepoel Trends Report, available for order at t3trends.com.
After announcing an agreement to acquire the nation’s most popular showing software ShowingTime in February 2021, Zillow Group closed the acquisition formally on October 1. A review by the U.S. Federal Trade Commission delayed the closing. While the transaction has closed, however, an FTC review remains active. As we discussed in the Opendoor-related summary above, industry participants are beginning to grow and operate in new and different ways, including Zillow Group. With its ShowingTime acquisition, the company now owns the industry’s most used showing app, which many MLSs use exclusively; it also has launched brokerage services to power its Zillow Offers program, provides digital transaction management services through its dotloop subsidiary, and owns the nation’s largest real estate portal in Zillow. The industry is embarking on a new era, with companies operating in new ways.
The U.S. Federal Trade Commission has been investigating Opendoor’s advertising practices since August 2019, and in September 2021 the company reported that a potential settlement or FTC action is still possible. Details about exactly what the FTC is investigating were not disclosed. As AltFin companies and other brokerage industry participants innovating with newer business models, new messaging, consumer relationships and government scrutiny emerge. The fast-developing industry has many elements in flux now.
California passes a law that ended exclusive single-family home zoning in transit-rich and urban infill areas throughout the state. Until this law, it was illegal for property owners and builders to construct duplexes, triplexes, multifamily units or any other housing types on lots in areas zoned as single-family. Experts expect the impact of the new law will take time, but it signals a major step forward in making additional properties available for new-construction units, and a cultural shift toward encouraging increased housing density.
NAR’s MLS policy committee will consider several policies related to the U.S. Department of Justice’s review of NAR at its upcoming annual meeting in early November. These include the banning the word “free” for agents advertising their services to consumers and prohibiting the ability for agents to filter listings based on agent compensation. If the committee votes to send this for a vote and the NAR board of directors passes them, the changes would go into effect on January 1, 2022 with a March 1 implementation deadline. These proposed changes are just a few of many that the industry faces, thanks to lawsuits, DOJ and FTC review and more.
HomeServices of America is ending use of the Real Living real estate brand it took on in 2012, when it acquired a controlling interest in it and the Prudential Real Estate brand. In an email and video to Real Living franchisees obtained by Inman, Real Living CEO Allan Dalton said that the brands inability to realize growth caused the company to make the decision to sunset the brand. For years, HomeServices of America had been actively working to transition Real Living affiliates to the Berkshire Hathaway HomeServices brand, which it introduced in 2013. Founded in 2002, the Real Living brand had over 2,800 agents who did over 28,000 transactions in 2020, making it the nation’s 19th largest brand by transaction sides that year, according to the Real Estate Almanac.
Realogy has added a new feature to its Spark initiative, which it launched in 2019 as a benefits program for agents affiliated with one of its brands. The new feature allows agents who join Spark’s premium level (which requires an annual membership fee), to contribute up to $64,000 to the program’s affiliated 401(k) retirement plan with the ability to borrow tax-free against funds they have in it. Realogy, the nation’s largest real estate company, in establishing and evolving a benefits program for its affiliated agents, who are independent contractors, is another sign of the industry corporatizing. Other large companies in the industry have pursued similar benefits programs for the independent contractor agents in their networks including eXp Realty and HomeSmart.