A Phil Hall Op-Ed: Ever since the National Association of Realtors (NAR) announced its $418 million settlement to settle the charges raised in the Sitzer/Burnett case, there has been a flood of bizarre articles, interviews and opinion pieces in the mainstream media blaming real estate professionals for the problems facing the American housing market. The depth and scope of the ignorance on display is fascinating for all the wrong reasons – it provides a cruel display of information gatekeepers who are failing in their duties to educate the general public.
Readers of this site are already aware of the Wall Street Journal’s scurrilous opinion column that stated the commissions earned by real estate professionals amounted to “a rigged game that pads their pockets at the expense of consumers.” The Journal’s editors also claimed that “empirical evidence also shows that buyer brokers steer clients away from homes whose sellers paid them less than 2.5% to 3%” – of course, the Journal’s editors never bothered to share this evidence.
Other media outlets are just as outrageous. Bloomberg’s Conor Sen put his name to a piece titled “Squeezing Realtors Is Just What the Housing Market Needs.” According to Sen, “Commissions are in a state of flux, but one immediate outcome should be increased transactions that will get the property market moving again.”
Moving again? Last week, NAR reported that existing home sales during February spiked by 9.5% from January to a seasonally adjusted annual rate of 4.38 million, while RE/MAX reported home sales in February recorded a 17% upswing from January and a 2.3% uptick from one year earlier. The market is very much in motion without the need to squeeze realtors.
Things aren’t much better at the New York Times, where opinion columnist Peter Coy published “A Big Step Toward a Fairer Housing Market.” According to Coy, “Realtors’ commission practices have long been anticompetitive.” Coy also declared, “The history of the real estate industry’s efforts to prop up commissions is long and inglorious” – obviously, Coy believes that people with commission-fueled jobs should be ashamed of themselves for wanting to make a good living.
“The combined commission paid to agents for buyers and sellers is typically 5 percent to 6 percent, compared with below 2 percent in Britain, the Netherlands and Sweden, among other countries,” Coy added – which is irrelevant considering those countries are considerably smaller and their housing markets are significantly different at multiple levels when compared to the American environment.
Over at Yahoo Finance, Seana Smith took credit for something called “Realtor commission change delivers a boon to homebuilders, a blow to real estate platforms.” I was a little surprised to learn that the NAR settlement will help builders, but the article carries a single quote from National Association of Home Builders CEO Jim Tobin that said, “As commissions come down, I hope we will see costs to builders come down as well. That translates into lower home prices for consumers.”
Sadly, Smith never bothered to ask Tobin a follow up question regarding which costs to builders will be coming down thanks to the NAR settlement – are we talking about the price of building materials, the wages paid to construction workers, permitting costs, insurance, taxes, or is there something else that is specifically tied to realtor commissions that makes it so expensive to build a new home?
Smith’s article also quotes KBW analyst Ryan Tomasello, who declared, “This will reshape the housing market in the greatest fashion we’ve seen in over 50 years.” Oh, please, where do they find these people?
And then there is Washington Post opinion columnist Megan McArdle, whose piece “We’ll soon find out the true value of real estate agents” is littered which such witticisms as “Arguably, the value of brokerage services has been dropping since NAR was founded in 1908” and “Many sellers find their brokers by getting recommendations from friends, which probably selects for amiability, rather than skill.” Seriously, these people are getting paid to write this stuff?
Within the journalism world, there is a great deal of introspective bafflement regarding why so many people have stopped paying attention to mainstream media outlets. When you take the time to read the nonsense that is being published today, it is easy to understand why readership is dwindling and the mainstream media is not being taken seriously anymore.
