A federal judge has suspended Oregon’s ban on homebuyers providing letters to sellers that accompany their offers. The state had banned the letters as it posited that they could help contribute, unknowingly or not, to Fair Housing violations as they could tip off sellers to characteristics of buyers that could support biases. Other jurisdictions throughout the country have considered similar bans. Indeed NAR, itself, has stated these homebuyer notes could lead to Fair Housing violations. While a preliminary injunction has been issued, this issue is far from settled.
Utah-based Homie, which operates an alternative finance (AltFin) real estate model in which it looks to streamline real estate transactions with innovative finance options for consumers, laid off a third of its staff in February. Estimates put the number of staff let go at approximately 100. The AltFin landscape, as T3 Sixty investigated thoroughly in the 2022 Swanepoel Trend Report chapter, “The Real Estate Financing Revolution,” is a fast-moving one. Companies are testing and innovating new ways for consumers to finance homes using a variety of new tactics. Many have yet to prove out, and companies such as Homie – and, most notably Zillow Group with its iBuying shutdown last year – are having to pivot as they find their way forward.
Article available on S&P CoreLogic Case-Shiller National Home Price Index
National home prices rose to $278,630 in 2021, an 18.9 percent jump over 2020 prices, according to the S&P CoreLogic Case-Shiller National Home Price Index. That’s the largest year-over-year increase in the index’s 34-year history. Inflation, years of huge demand and scarce inventory are swirling to create a dynamic housing market in 2022.
In January, 70 percent of the offers Redfin agents wrote experienced bidding wars. That’s the highest percentage since the national brokerage began tracking the stat in April 2020. In addition, Redfin data shows that in the four weeks through February 13, 57 percent of homes that went under contract did so within two weeks of listing. The housing market remains blazing hot as the spring selling season just begins to kick off. Mortgage rates will likely balance the market more than in the past two years, but time will tell exactly how much.
A pair of Black California homeowners sued an appraisal company alleging violations of the Fair Housing statutes when another appraisal company valued their home for approximately $500,000 when all indications of race were removed from the home. The DOJ rejected the appraisal firm’s motion to dismiss. Housing discrimination has played a big role in how communities have been shaped. Lawsuits like this one and an increased awareness of the discrimination still present in the industry will hopefully create a more equitable housing landscape.
Interest rates on 30-year fixed-rate mortgages rose past the 4 percent threshold in late February, the first time they rose above that amount in over two years. With inflation running rampant in the U.S. economy and the economy at large giving off healthy signals, mortgage rates are rising again after reaching all-time lows in 2021. This could signal a begin to a more balanced supply-demand market after years of severe low inventory.
The lockbox service provider SentriLock, owned by NAR, has sued rival Supra, alleging theft of technology. Lockboxes and the technology that supports them are a key, compelling part of the MLS and local Realtor association industry. These companies often obtain exclusive agreements with MLSs and/or the local Realtor associations that operate them, which can create downstream challenges for users. This suit may shed some light on this important industry tech.
NAR membership swelled to 1.6 million members in 2021, the highest for any year in the association’s over-100-year history. The ranks swelled by over 156,000 in just 2021 alone. With a blazing housing market, great price appreciation and the pandemic shifting the job market, many professionals turned their eyes to a real estate career and saw the appeal. While the industry is riding high right now, the ranks will shrink again when the market cools. Indeed, they make shrink further than in years past as a maturing industry demands more from agents than ever before.
A case against Houlihan Lawrence has been granted class-action status by a New York state court. The lawsuit alleges that the brokerage incentivized agents who facilitated deals in which the brokerage served on both the listing and sales side. The brokerage says it plans to appeal the ruling. Dual agency has faced a test in the courts in several cases throughout the years. As this one appears to get traction, it may renew the conversation, and debate, about the merits of dual agency in the industry.
Redfin reports that the average buyer agent commission rate dropped to 2.63 percent in November 2021, down from 2.69 percent in 2020 and 2.75 percent in 2017. In a strong sellers’ market, as has existed over the last couple of years, it makes sense for buyers’ agent commissions to drop as homes are easier to sell with many more buyers than available homes. However, as the industry begins making buyer agent commission information more widely available, this could mark a trend that holds even when the market shifts.
REX Real Estate, a real estate platform that aimed to build a marketplace outside the MLS with operations in 19 states, has joined six MLSs. The company sued NAR and Zillow in March 2021, alleging antitrust violations because of NAR requirements that MLS participants segment listings from MLS sources and non-MLS sources. The implications for this move are not clear now, but is a development to watch as REX has garnered attention inside and outside the industry with its take on the MLS and NAR.
Keller Williams Realty has hired eXp Realty president Stacey Onnen as its head of new business operations, while eXp is looking to hire former KW CEO Mark Willis in an executive role. KW has filed a restraining order to prevent Willis from joining a competitor, alleging a potential sharing of trade secrets. KW continues an aggressive development of its business model to become more attractive to teams and agents in the wake of the rise of eXp Realty, fueled by a compelling, low-cost model. The hiring of Onnen away from eXp by KW, marks another step in increasing competition between the long-time leader, where eXp Realty founder Glenn Sanford got his real estate start, and the now formidable up-and-comer.
Zillow expects that home values will increase 16.4 percent between December 2021 and December 2022. The company identified a sustained imbalance between supply and demand as one of the reasons for the increase. This provides another data point to consider when evaluating the long-term trend of the nation’s homeownership rate.
The average monthly rent jumped 14.1 percent to $1,877 in December from a year ago, while median monthly mortgage payments rose 21.6 percent, according to Redfin data. As homebuyers face lower inventory and higher priced, more potential homeowners are forced to rent, which increases demand, and rental prices. The balance between homeownership and rentals will be an important one to monitor as investors play a larger role in the single-family home market. Without a big uplift in homebuilding, homeownership rates could begin to drop.
Outsized investment has reshaped the real estate industry, and 2021 data reveals that investment money, overall, is still flowing. Startups across all industries raised $330 billion in 2021, nearly double what startups raised in 2020, as investors look to take advantage of the pandemic-enhanced shift to digital. Real estate, of course, has seen this impact, especially in regard to the great amount of funding poured into AltFin companies.
In 2021, the median existing home price was $346,900, which represents a 17.0 percent jump from 2020, and an all-time record in price appreciation. Record low inventory, fueled in part by demand inspired by low mortgage rates, has helped push home prices to these highs. Economists expect this trend to dampen slowly in 2022 as mortgage rates rise.
Following the acquisition of Christie’s International Real Estate by At World in December, @properties announced it is adding the Christie’s brand to company-owned offices in Chicago, Indiana, Michigan and Wisconsin to become @properties Christie’s International Real Estate. Following its acquisition by private equity firm Quad-C in 2018, @properties has made big moves to expand and grow its new At World holding company, including the acquisition of brokerage and franchise brand Nest Realty and the announcement of the franchising of the @properties brand.
Compared to White, Hispanic and Asian Americans, Black Americans have the least ability to afford a home, according to an analysis by NAR. The discrepancy in homeownership and the barriers to it by race, particularly for Black Americans, cause the family net wealth differences to persist. The industry talked a lot about supporting diversity in the wake of America’s racial reckoning in 2020 and early 2021, but the activity has died down. These statistics reveal a sustained effort is still required to make change.
Houwzer, which launched as a discount brokerage in 2015, has raised $118 in equity and line of credit to add AltFin services to its list of offerings. The company, which operates in Philadelphia, Maryland, Washington, D.C., and Florida, will now help buyers make all-cash offers, provide a service to streamline the process for buyers who also have a home to sell and iBuying. AltFin services have proven enticing for investors and a compelling offer for consumers. The jury is still out on just what combination of AltFin services, and in what form, will emerge when all this investment and initial innovation and activity mature.
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.