The $1.78 Billion Verdict
This is Corey Cohen, founder of The Roebling Group, and here's a glimpse into last week's real estate news. Please feel free to book an appointment with me here for a consultation.
The National Association of Realtors Found Guilty of Collusion
After roughly two weeks of testimony, the National Association of Realtors (NAR) was found guilty of colluding to inflate real estate prices in order to capitalize on higher commissions.¹
The real estate franchises HomeServices of America and Keller Williams were ordered to pay $1.78 billion in damages to the sellers of homes in Missouri, Kansas, and Illinois.
The heart of the matter? Agent commissions. Specifically, the seller’s fees to the buyer’s realtor. Existing rules require sellers to include a fee offer to the buyer’s agent when listing a home. This fee is visible to the buyer’s agent but usually not to the buyer. This was ruled as collusion since agents can steer their clients to properties that offer compensation.
If this guilty verdict holds then it will most likely spawn new legal action in other states. We’ll continue to keep you updated in our next newsletter with any more developments. ¹https://www.axios.com/2023/10/31/nar-lawsuit-brokers-fees-verdict-sitzer-burnett
The Housing Market Outlook 2024
Housing market predictions for 2024 suggest that low inventory levels continue to favor sellers, with high mortgage rates and steep home prices deterring potential buyers.¹ The median sale price for existing homes in the U.S. was $394,300 as of September 2023, and the average 30-year mortgage rate reached 8.01%, the highest in over 20 years.
While there's anticipation for a potential cooling of mortgage rates in 2024, experts predict that the new normal of higher rates is likely to persist. Home sales have softened, with existing home sales declining to an annual pace of 3.96 million homes in September 2023, a 15.4% drop year-over-year. Housing inventory remains low, with the overall number of existing homes on the market at 1.13 million units, an 8.1% decline since last year, representing a 3.4-month supply, well below the 5 to 6 months needed for a balanced market.
Despite challenges, experts expect a modest rise in home prices of around 3 to 4%, maintaining the seller's market unless there is a significant uptick in inventory. The complexities of high mortgage rates, steep home prices, and low inventory levels make the 2024 housing market challenging for both buyers and sellers, but a potential cooling of rates could stimulate market activity. ¹https://finance.yahoo.com/news/housing-market-predictions-2024-041505011.html?guccounter=1&guce_referrer=aHR0cHM6Ly9uZXdzLmdvb2dsZS5jb20v&guce_referrer_sig=AQAAABss_xr8J0ZkOEO8_I7fpISX5Vvs2EOgTjMQjbON_2HFGtDZwt4Gz1nYy8sw8fcmOruLHWFftAycoO7Mladfs8PhpzPkGDVy3zneqtasVx1vLw4ocmPMoOtu9366LMxme2NgKruj3bQdqHb5EvkjuZyZn6DRZXZHoC7BqmzfNhWK
Advancing Affordable Living in East New York
A major affordable housing project has moved forward in East New York.¹
The Alafia Affordable Housing Project – set in East New York – has moved forward with the second phase of the $1.2 billion state-backed Alafia development. The project is situated on the former Brooklyn Developmental Center grounds. It is being spearheaded by L+M Development Partners in collaboration with Apex Building Group and RiseBoro Community Partnership.
The project aims to create 2,400 affordable apartments across six phases, with the first phase of 576 units expected to welcome tenants in January 2025. Inspired by Blue Zones, the development focuses on well-being and healthy living.
Rents will be capped at 30 to 80 percent of NYC's median income, fostering inclusive housing in Brooklyn's historically poorest area, East New York. ¹https://therealdeal.com/new-york/2023/10/23/brooklyn-housing-project-will-add-634-new-apartments/ Billions in Federal Funding Deployed to Transform Empty Offices
The Biden administration is taking steps to address the affordable housing crisis by encouraging the conversion of old office spaces into housing units.¹
The U.S. Department of Housing and Urban Development has updated its guidance for the Community Development Block Grant program, allowing cities to use the funds to purchase, rehabilitate, and convert commercial properties for mixed-use and housing developments.
The Department of Transportation is also offering guidance on using funds for transit-oriented housing, with over $35 billion available from two programs. The White House released a guidebook outlining more than 20 federal programs across six agencies to support such projects, aiming to boost the supply and quality of affordable housing nationwide. ¹https://www.route-fifty.com/infrastructure/2023/10/biden-administration-looks-spur-office-housing-conversions/391575/
Buyers yield nearly 10% on state-issued muni bonds. UBS Financial Services Inc. is advising investors to buy the debt of U.S. states, whose credit quality is among the highest in the municipal bond market.
San Diego's Realty Income agreed to buy Dallas-based Spirit Realty Capital in an all-stock deal valued at $9.3 billion. Additionally, Healthpeak Properties and Physicians Realty Trust struck a deal to combine in an all-stock merger of equals valued at $21 billion.
NYC's largest real estate loans for August and September have been unveiled. The largest loans include ambitious construction-debt refinancing for major multifamily and commercial projects.
Have a question about buying or selling real estate in NYC? Please feel free to contact me at 646.939.7375.
The Roebling Group