OT: Why the real estate market is not in a bubble: Q1 2023 update video added to OP

[Jimpeg]

..

its time for the majority of a residential real estate particiapnts compensation move to fixed fee......a broker doesnt work any harder for a 400K or 600K listing/sale (all other things equal the price) a mortgage broker really see no reason that doesnt transition to a flat fee, much of the reason why banks are getting out of the origination business because of the varying costs (call center originations bankers are paid minimal amount) and moving to correspondent and non GSE loans for wealth management clients...next item to question is title insurance....


The court decision — and others to follow — could have long-term implications for the future of America’s real estate industry. If plaintiffs continue to win lawsuits, the current system of split commission fees could change entirely, experts speculate.

If a buyer decides to hire an agent, it could be at a negotiated fee that is constrained in part because their compensation may no longer be baked into the listing price, Kelman said.

Some buyers might even skip working with an agent entirely and try searching for properties on their own to save money, Gross said.

Another issue is that many new agents start off their careers by working for buyers, Gavin Myers, managing partner at venture capital firm Prudence, which invests in tech companies involved in the real-estate sector, told CNBC.


Lower demand for buyer agents, or the possibility of lower commission fees, could deter folks from entering the industry entirely.

Those who are quick to adapt and pivot their business model may gain an edge in the future.

 

[KK1827]

..

its time for the majority of a residential real estate particiapnts compensation move to fixed fee......a broker doesnt work any harder for a 400K or 600K listing/sale (all other things equal the price) a mortgage broker really see no reason that doesnt transition to a flat fee, much of the reason why banks are getting out of the origination business because of the varying costs (call center originations bankers are paid minimal amount) and moving to correspondent and non GSE loans for wealth management clients...next item to question is title insurance....


The court decision — and others to follow — could have long-term implications for the future of America’s real estate industry. If plaintiffs continue to win lawsuits, the current system of split commission fees could change entirely, experts speculate.

If a buyer decides to hire an agent, it could be at a negotiated fee that is constrained in part because their compensation may no longer be baked into the listing price, Kelman said.

Some buyers might even skip working with an agent entirely and try searching for properties on their own to save money, Gross said.

Another issue is that many new agents start off their careers by working for buyers, Gavin Myers, managing partner at venture capital firm Prudence, which invests in tech companies involved in the real-estate sector, told CNBC.


Lower demand for buyer agents, or the possibility of lower commission fees, could deter folks from entering the industry entirely.

Those who are quick to adapt and pivot their business model may gain an edge in the future.

Fund managers should work for flat fees too then. Theres no real difference between managing $100,000 then there is managing $100,000,000, right?

Attorneys should all charge a flat fee too, right?

Anyway, sitzer burnett isnt gonna have close to the effect on the industry some believe it will. Everyone saying it, has zero experience in real estate and its your typical wall street/vc guys who in june 2022 when this thread was started thought i was an idiot but now i can shove the real time receipt in their face.

I am a broker, I have sold hundreds of houses. I have sold 4 of my own homes and every single time I have paid a buyers agents commission. You cant allow me not to. And the data shows the more you offer on the buy side commission the more you net for your sale.

Also, the fee was never baked into the list price. List price is the list price. Commission just happens to come out of the sales price. You dont tell someone, “your house is worth $500K but we’ll list at $525K because my commission will Be around $25,000”

 

[jtung230]

Fund managers should work for flat fees too then. Theres no real difference between managing $100,000 then there is managing $100,000,000, right?

Attorneys should all charge a flat fee too, right?

Anyway, sitzer burnett isnt gonna have close to the effect on the industry some believe it will. Everyone saying it, has zero experience in real estate and its your typical wall street/vc guys who in june 2022 when this thread was started thought i was an idiot but now i can shove the real time receipt in their face.

I am a broker, I have sold hundreds of houses. I have sold 4 of my own homes and every single time I have paid a buyers agents commission. You cant allow me not to. And the data shows the more you offer on the buy side commission the more you net for your sale.

Also, the fee was never baked into the list price. List price is the list price. Commission just happens to come out of the sales price. You dont tell someone, “your house is worth $500K but we’ll list at $525K because my commission will Be around $25,000”

Attorneys charge by the hour. Maybe Realtors should do the same. Houses that sell itself in good markets don’t require a lot of time but houses that sit require more attention.

 

[KK1827]

Attorneys charge by the hour. Maybe Realtors should do the same. Houses that sell itself in good markets don’t require a lot of time but houses that sit require more attention.

Thats not true. Attorneys charge all different ways, just as realtors do. Its all negotiable.

Ironically the attorney in sitzer Burnett didnt charge by the hour but rather charged around the 40% industry standard of the ultimate winnings. Which is ironic to say the least.

We can do this with anyones job. What do you do for work? Because its easy to make a case everyone should make less.

A good realtor will net you more money and sell it faster. Just because they sell it fast, doesnt mean they should be paid less. Your argument is if theyre a shitty realtor and it takes them longer to sell and for less money they should make more. Kinda dumb

 

[jtung230]

Thats not true. Attorneys charge all different ways, just as realtors do. Its all negotiable.

Ironically the attorney in sitzer Burnett didnt charge by the hour but rather charged around the 40% industry standard of the ultimate winnings. Which is ironic to say the least.

We can do this with anyones job. What do you do for work? Because its easy to make a case everyone should make less.

A good realtor will net you more money and sell it faster. Just because they sell it fast, doesnt mean they should be paid less. Your argument is if theyre a shitty realtor and it takes them longer to sell and for less money they should make more. Kinda dumb

That’s more trial attorneys. Transactional attorneys billed hourly. Seems more relevant to realtors. I get paid by employer based on a salary and a discretionary bonus. Salary is due regardless of production. Bonus is fully discretionary by the employer. Don’t see how that’s comparable to a realtor pay structure. These conversations always come up during a housing boom. When houses sell themselves, difficult to justify 5 or 6%.

 

[KK1827]

That’s more trial attorneys. Transactional attorneys billed hourly. Seems more relevant to realtors. I get paid by employer based on a salary and a discretionary bonus. Salary is due regardless of production. Bonus is fully discretionary by the employer. Don’t see how that’s comparable to a realtor pay structure. These conversations always come up during a housing boom. When houses sell themselves, difficult to justify 5 or 6%.

Anyone can sell for sale by owner and not just try but actually sell it. However theyd be leaving money on the table the stats and data show. Net of commission, homes listed with realtors on average get substantially more money than fsbo’s.

Im a realtor myself and ive sold 4 of my own homes. Every time ive listed my house with my firm and did it as effectively a 6% fee. I paid out a 3% buyers agent commission and obviously didnt take a fee myself on my own home sale. I have family members outside of my area, who ive referred to top notch realtors.

But anyway, yes, anyone can sell their own home. However, its a really dumb move if youre looking to NET the most money possible. Theres no data line that says otherwise.

Perfect example is the house I just bought. The guy ROBBBBBBBED the old lady who sold fsbo for $365K and then flipped it and sold it for $725K after gut renovating it. The house literally 5 doors down was the same size and listed with a realtor and sold for $26K above ask for $525K, guy also gutted that one.

Receipts

10 Plymouth Pl, Roseland, NJ 07068 - MLS 22042042 - Coldwell Banker

Sold - 10 Plymouth Pl, Roseland, NJ - $365,000. View details, map and photos of this single family property with 3 bedrooms and 2 total baths. MLS# 22042042.

www.coldwellbankerhomes.com

19 Plymouth Pl, Roseland Boro, NJ 07068 For sold - $525,000 | The Agency Global Boutique Real Estate Brokerage

Property for sale at 19 Plymouth Pl, Roseland Boro, NJ 07068 | The Agency Global Boutique Real Estate Brokerage

www.theagencyre.com

 

[jtung230]

Anyone can sell for sale by owner and not just try but actually sell it. However theyd be leaving money on the table the stats and data show. Net of commission, homes listed with realtors on average get substantially more money than fsbo’s.

Im a realtor myself and ive sold 4 of my own homes. Every time ive listed my house with my firm and did it as effectively a 6% fee. I paid out a 3% buyers agent commission and obviously didnt take a fee myself on my own home sale. I have family members outside of my area, who ive referred to top notch realtors.

But anyway, yes, anyone can sell their own home. However, its a really dumb move if youre looking to NET the most money possible. Theres no data line that says otherwise.

Perfect example is the house I just bought. The guy ROBBBBBBBED the old lady who sold fsbo for $365K and then flipped it and sold it for $725K after gut renovating it. The house literally 5 doors down was the same size and listed with a realtor and sold for $26K above ask for $525K, guy also gutted that one.

Receipts

10 Plymouth Pl, Roseland, NJ 07068 - MLS 22042042 - Coldwell Banker

Sold - 10 Plymouth Pl, Roseland, NJ - $365,000. View details, map and photos of this single family property with 3 bedrooms and 2 total baths. MLS# 22042042.

www.coldwellbankerhomes.com

19 Plymouth Pl, Roseland Boro, NJ 07068 For sold - $525,000 | The Agency Global Boutique Real Estate Brokerage

Property for sale at 19 Plymouth Pl, Roseland Boro, NJ 07068 | The Agency Global Boutique Real Estate Brokerage

www.theagencyre.com

Agreed FSBO is not for everyone and highly dependent on market.

 

[KK1827]

Agreed FSBO is not for everyone and highly dependent on market.

See, I believe the worst possible time to ever try to sell for sale by owner, is when there is excess buyer demand. That is when it is most important to use a realtor to maximize your value and have them handle a bidding war because you have no idea how high somebody’s willing to go.

 

[RUskoolie]

The house sells itself line triggers me every time.

The amount of babysitting and backroom BS a good realtor has to deal with is never understood.

A good realtor more than pays for themselves. Idk how the market is going to change with commissions but I can tell you in commercial they already have certain listings where the buyer can pay his own agent a commission. Not sure how that will translate to residential though. Can't imagine an FHA buyer doing that unless they ask for seller concessions.

 

[Jimpeg]

The house sells itself line triggers me every time.

The amount of babysitting and backroom BS a good realtor has to deal with is never understood.

A good realtor more than pays for themselves. Idk how the market is going to change with commissions but I can tell you in commercial they already have certain listings where the buyer can pay his own agent a commission. Not sure how that will translate to residential though. Can't imagine an FHA buyer doing that unless they ask for seller concessions.

it's basic economics that when you FSBO you have less awareness of your home (ie mls,broker open house) so you would inherently have a smaller buyer pool that "on average" would sell for less....you always hear about someone who says 'saved 6 percent selling by myself, and my attorney handled most of the work" but nobody tells them that yeah the appraiser had to explain to the lender why the appraised value was 20% over the sales price as it was a FSBO and a seller is not going to get a copy of the appraisal...

.

 

[Plum Street]

it's basic economics that when you FSBO you have less awareness of your home (ie mls,broker open house) so you would inherently have a smaller buyer pool that "on average" would sell for less....you always hear about someone who says 'saved 6 percent selling by myself, and my attorney handled most of the work" but nobody tells them that yeah the appraiser had to explain to the lender why the appraised value was 20% over the sales price as it was a FSBO and a seller is not going to get a copy of the appraisal...

.

Yes, always good to use a realtor. It’s not 6 percent now. You can do a deal for 4 percent .

 

[jtung230]

I used YHD when I sold my 1st apartment in the city in 2004. Thought it was the perfect option for my situation. It was a great idea for commoditized markets and lower price point. I also used a broker (actually 2) to sell my last place in 2011 because it was a tough market and at a much higher price point. It’s never one size fits all.

 

[RUskoolie]

it's basic economics that when you FSBO you have less awareness of your home (ie mls,broker open house) so you would inherently have a smaller buyer pool that "on average" would sell for less....you always hear about someone who says 'saved 6 percent selling by myself, and my attorney handled most of the work" but nobody tells them that yeah the appraiser had to explain to the lender why the appraised value was 20% over the sales price as it was a FSBO and a seller is not going to get a copy of the appraisal...

.

FSBOs get robbed more often than not.

 

[KK1827]

@RUskoolie I had a little inside info on this one 😉. 100% bonus depreciation is back

 

[tom1944]

@RUskoolie I had a little inside info on this one 😉. 100% bonus depreciation is back

View embedded media

Is that part of the trade for the child care credit?

 

[KK1827]

Is that part of the trade for the child care credit?

Indeed

 

[KK1827]

2023 NJ data is in.

1) prices up 6.3% across the state
2) 84,305 closed sales which was down 22.1% from 2022
3) 20.1% fewer listings in 2023 compared to 2022

Monthly Housing Market Statistics › NJ REALTORS®

www.njrealtor.com

 

[Rutgers Chris]

2023 NJ data is in.

1) prices up 6.3% across the state
2) 84,305 closed sales which was down 22.1% from 2022
3) 20.1% fewer listings in 2023 compared to 2022

Monthly Housing Market Statistics › NJ REALTORS®

www.njrealtor.com

Narrator voice…”they weren’t in fact in a housing bubble.”

 

[Joey Bags]

Thats a strong ass market

 

[Jimpeg]

Im not sure how many people actually thought post covid back in 2022 or early 2023 there would be a "housing bubble" ..
fact there has been a a shortage of housing in US for many years, changing demographics and homeowners have historically low mortgage rates... some areas are cooling off because the housing starts are picking up or concerns about employment..

• A housing bubble is a sustained but temporary condition of over-valued prices and rampant speculation in housing markets.
• The U.S. experienced a major housing bubble in the 2000s caused by inflows of money into housing markets, loose lending conditions, and government policy to promote homeownership.
• A housing bubble is a temporary event.
• A bubble can potentially happen whenever market conditions allow it.

I thought the yearly NJ increase in prices would be over 8%...

 

[KK1827]

Im not sure how many people actually thought post covid back in 2022 or early 2023 there would be a "housing bubble" ..
fact there has been a a shortage of housing in US for many years, changing demographics and homeowners have historically low mortgage rates... some areas are cooling off because the housing starts are picking up or concerns about employment..

• A housing bubble is a sustained but temporary condition of over-valued prices and rampant speculation in housing markets.
• The U.S. experienced a major housing bubble in the 2000s caused by inflows of money into housing markets, loose lending conditions, and government policy to promote homeownership.
• A housing bubble is a temporary event.
• A bubble can potentially happen whenever market conditions allow it.

I thought the yearly NJ increase in prices would be over 8%...

Bruh. Read the first few pages of the thread. I was basically called a mentally challenged for saying it wasnt a bubble. 90%+ of people thought it was a bubble.

Thanks for the chatgpt bullet points haha

 

[NotInRHouse]

With the GDP data and the housing data is that it for screeching "recession"?

 

[KK1827]

With the GDP data and the housing data is that it for screeching "recession"?

Make no mistake, the real estate industry has been in recession for about 18 months now. The past 18-19 months is the lowest total number of sales when adjusted for population in US history.

I have 20+ ACTIVE buyers looking to buy right now. 5 years ago this would be 20+ sales and a very good quarter where id make $300K+. Ill be lucky to find 2 of them houses right now because of how little is available to even show them

 

[NotInRHouse]

Make no mistake, the real estate industry has been in recession for about 18 months now. The past 18-19 months is the lowest total number of sales when adjusted for population in US history.

I have 20+ ACTIVE buyers looking to buy right now. 5 years ago this would be 20+ sales and a very good quarter where id make $300K+. Ill be lucky to find 2 of them houses right now because of how little is available to even show them

I am talking the economy overall. I agree more homes should be built. That is something to take up with town councils which in many parts of NJ have a meltdown to build a fence never mind a house.

 

[Knight Shift]

With the GDP data and the housing data is that it for screeching "recession"?

Time will tell. Mass layoffs have started and more to come. We will see how that effects the recession when a lot of people are laid off.

Expect to see predictions of doom vs don't worry be happy. These two conflicting views on the economy both came up on my phone news feed. Predicting the economy is less accurate than predicting the weather. And each expert making these predictions have their own inherent bias and tendencies.

The Fed's big miss on inflation has doomed the US to recession this year, top economist says

"Monetary policy now is as tight as it has ever been on the precipice of a recession."

finance.yahoo.com

Harvard economist Jason Furman says the soft landing is here—and the risk we ‘veer off the runway’ into recession is not ‘unusually high’

From inevitable recession to “sustained growth,” the U.S. economy continues to surprise economists.

finance.yahoo.com

 

[RUskoolie]

I am talking the economy overall. I agree more homes should be built. That is something to take up with town councils which in many parts of NJ have a meltdown to build a fence never mind a house.

Most of the positive GDP data is from government spending. We are insanely over budget and that is contributing to the higher GDP numbers. It's not coming from the private sector (wish it was, that would be much stronger).

 

[tom1944]

Most of the positive GDP data is from government spending. We are insanely over budget and that is contributing to the higher GDP numbers. It's not coming from the private sector (wish it was, that would be much stronger).

Is that much different than the GDP ratio over the last 20 plus years?

 

[KK1827]

Is that much different than the GDP ratio over the last 20 plus years?

I do know the debt to gdp ratio is currently running at the highest of all time. The covid era spending was supposed to be temporary but as the old saying goes by Rutgers alum Milton Friedman, “nothing is so permanent as a temporary government program”

 

[tom1944]

I do know the debt to gdp ratio is currently running at the highest of all time. The covid era spending was supposed to be temporary but as the old saying goes by Rutgers alum Milton Friedman, “nothing is so permanent as a temporary government program”

I will see if I can find any data later. Have to go see mom and dad first.

 

[NotInRHouse]

Time will tell. Mass layoffs have started and more to come. We will see how that effects the recession when a lot of people are laid off.

Expect to see predictions of doom vs don't worry be happy. These two conflicting views on the economy both came up on my phone news feed. Predicting the economy is less accurate than predicting the weather. And each expert making these predictions have their own inherent bias and tendencies.

The Fed's big miss on inflation has doomed the US to recession this year, top economist says

"Monetary policy now is as tight as it has ever been on the precipice of a recession."

finance.yahoo.com

Harvard economist Jason Furman says the soft landing is here—and the risk we ‘veer off the runway’ into recession is not ‘unusually high’

From inevitable recession to “sustained growth,” the U.S. economy continues to surprise economists.

finance.yahoo.com

The unemployment figures don't show mass layoffs. In certain industries (tech) perhaps.

 

[NotInRHouse]

Most of the positive GDP data is from government spending. We are insanely over budget and that is contributing to the higher GDP numbers. It's not coming from the private sector (wish it was, that would be much stronger).

I am pretty confident it has been that way since 9/11. There have been many boom times since, perhaps other than about 07-13 and 2020.

 

[brgRC90]

I do know the debt to gdp ratio is currently running at the highest of all time. The covid era spending was supposed to be temporary but as the old saying goes by Rutgers alum Milton Friedman, “nothing is so permanent as a temporary government program”

But that's also largely due to tax cuts that were given out without finding spending cuts to compensate for them. Covid stimulus ended long ago. We've run deficits for most of the last 40+ years.

 

[brgRC90]

Most of the positive GDP data is from government spending. We are insanely over budget and that is contributing to the higher GDP numbers. It's not coming from the private sector (wish it was, that would be much stronger).

No it's not. Consumer spending accounts for 2/3 of the economy and it has been strong--despite the whining from both left and right about how hard pressed consumers are. The numbers--and my own eyes--tell a different story

 

[Knight Shift]

The unemployment figures don't show mass layoffs. In certain industries (tech) perhaps.

Some more are coming, and is there a link to see numbers? Just what we have been seeing and hearing from very reliable sources (not news) about what is going on in Fortune 500 companies. But the juxtaposition of the two articles I linked are funny.

 

[NotInRHouse]

Some more are coming, and is there a link to see numbers? Just what we have been seeing and hearing from very reliable sources (not news) about what is going on in Fortune 500 companies. But the juxtaposition of the two articles I linked are funny.

I am talking about the national figure which is 3.7% unemployment. I don't doubt tech companies who went all in over COVID are now doing poorly but OTOH if you go to get service in a store or restaurant they're still horribly understaffed.

 

[RUskoolie]

But that's also largely due to tax cuts that were given out without finding spending cuts to compensate for them. Covid stimulus ended long ago. We've run deficits for most of the last 40+ years.

That's not true. We are taking in more revenue because of the tax cuts. We are getting off track on this.

GDP numbers strong but anecdotal evidence not adding up to me.

Also, if the economy is so strong why are we penciling in rate cuts? That also is baffling me.

 

[RUskoolie]

No it's not. Consumer spending accounts for 2/3 of the economy and it has been strong--despite the whining from both left and right about how hard pressed consumers are. The numbers--and my own eyes--tell a different story

Agree. Idk how/where people are getting money to spend.

 

[KK1827]

But that's also largely due to tax cuts that were given out without finding spending cuts to compensate for them. Covid stimulus ended long ago. We've run deficits for most of the last 40+ years.

Nah. Theres been studies down on this. Tax cuts dont lead to larger deficits. Tax collections as a % of gdp are basically always the same.

Look up Hauser’s law

 

[RUBOB72]

The push is to convince the public all is great now …stock market is up so the world is ok. GDP… housing sales, renters can’t afford the rents which are more than a mortgage in some instances. 2-3 bedroom rentals …called luxury are for many out of the question. A cheaper area in NJ ( Middlesex County) has rents going anywhere from upper 2k up to over 4000k . Every available space of land is sold to anxious developers.Don’t worry someday soon the price will come way down…or we are going to have a large number of squatters. A large supply will drive the price down. At least that’s what the guy at Subway told me.

 

[brgRC90]

Nah. Theres been studies down on this. Tax cuts dont lead to larger deficits. Tax collections as a % of gdp are basically always the same.

Look up Hauser’s law

No tax collections as % of gdp vary, though not by much. But a small % of trillions is still a lot.