Are you ready to uncover the chilling truth about the current state of the real estate market? Brace yourself as we dissect the latest data from Redfin, revealing a significant slowdown in the housing market, with mortgage purchase applications and Google searches for homes for sale both plummeting. Notably, medium home sales prices are on the rise, largely due to soaring mortgage rates, which recently hit a 23-year high. This chilling data points to a deep freeze in the housing market, with new listings and active listings also following the downward trend.
But hold on, the plot thickens! We're going to expose the imminent storm brewing for real estate brokers courtesy of the Justice Department. The heart of the US housing market, the commission system, is under a powerful microscope of antitrust enforcers and is the target of two class-action lawsuits. The real estate industry's iron grip on the multiple listing service and the commission-sharing system is being questioned. These looming legal battles could potentially cost real estate brokers billions. So, buckle up as we navigate these industry-shaking developments and analyze their potential impact on the real estate sales industry.
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Real estate brokers could run into some trouble with the Justice Department. Find out more in this week's weekly Real Estate Market Update. But before that, here's this week's housing market data, courtesy of Redfin. Mortgage purchase applications are down 6% from a week earlier and down 21% from a year earlier. Google searches for homes for sale is down 23% from a month earlier and down 22% from a year earlier. Medium home sales price was $369,250, up 2.5% from a year earlier. Prices are up partly because elevated mortgage rates were hampering prices during this time last year. By the way, just a little FYI right now, as I record this, on October 19, 2023, the mortgage rates hit a 23 year high of 8% and the 10 year treasury hit a 4.9% today, and which leads to the next data point here, which is the monthly mortgage payment on a median asking price was $2730, just $8 shy of the all time high set two weeks earlier. So it's going to be even higher because next week, when this data comes out and the mortgage rates crossed 8%, that's a new all time high and that's going to again. This is why the housing market right now it's a deep freeze. If you have any properties for sale, you know there's not a lot of activity. There's almost a deep freeze almost zero activity happening right now in this market as we speak. Pending home sales were down 11.6% year over year. New listings of homes for sale fell 3.9% year over year the smallest decline since July of 2022, in part because new listings fell rapidly at this time in 2022. Active listings dropped 8.4% from a year earlier the smallest decline since May of 2022, partly because pending sales fell rapidly at this time in 2022 as well. 29% of homes that went under contract had an accepted offer within the first two weeks on the market. Homes that sold were on the market for a median of 32 days and 30.2% of homes that sold were sold above their final list price and reported by Bloomberg. So there's a big situation happening right now with real estate licensed real estate people. The lucrative broker commission system at the heart of the US residential housing market is facing unprecedented antitrust scrutiny from the justice department and two private class action lawsuits that risk weakening the national association of realtors, the industry's powerful lobbying group. Federal antitrust enforcers are poised to decide whether to pursue their own case after a year's long investigation. According to a person familiar with the issue, the justice department focused on a real estate commission sharing system that typically puts home sellers on the hook for 5-6% cut of the sale split between the two agents the buyer and the seller's agent. It's a structure largely unique to the US and preserved by the association's control of many of the country's multiple listing service, an essential tool that aggregates properties available for sale in a given region. To use the system at AR National Association of Realtors check this out requires sellers to offer compensation to buyers representative, which critics say inflates home prices. This practice will also be on trial in two antitrust class actions. This is a big deal for the real estate industry, for you real estate people that are licensed real estate people, including one beginning Monday in Missouri. That case could result in as much as a $4 billion in damages, while plaintiffs in an Illinois trial earlier next year are seeking as much as $40 billion. Holy smokes, this is a huge deal for the industry. The commission sharing structure equates to collusion. Michael Ketchmark, the lead plaintiff's attorney in the Missouri case, said in an interview the day of accountability is coming, and I quote what do you think about this? Do you think that this is going to create major problems in the real estate sales industry Because it's going to destroy a lot of people. If this happens and this has been your real estate market update I'll see you guys next week. Peace out.