Hello,
This is Corey Cohen, founder of The Roebling Group, and here's a glimpse into last week's real estate news.
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More U.S. Homeowners Sell for a Loss
A growing number of homeowners in the U.S. are selling their houses at a loss – a sign that housing values are dropping as the market continues to slow.
From August to October, over 3% of homes sold at a loss which was up from 2.4% last year, according to Redfin data. Here are a few other fast facts about today’s housing market:
The median loss was approximately $40,000.
San Francisco had the highest proportion, with one in seven homeowners experiencing losses, with a median loss of $122,500.
Other cities with high proportions of losses included Detroit, Chicago, Cleveland, and New York.
However, some markets, like Washington, D.C., have experienced a shrinking proportion of losses compared to last year.
NYC Real Estate Commissions May Face Shake-Up
A Kansas City class-action lawsuit challenging the National Association of Realtors' Cooperative Compensation Rule has the potential to impact New York City's residential brokerage community. If you haven’t already, be sure to read up on the National Association of Realtor’s ongoing woes.
The jury in this case found the defendants guilty of colluding to keep commissions high, leading to a $1.78 billion damages award. While the judge's final decision is pending, NAR has already changed its interpretation of the rule. However, the Department of Justice's commentary suggests broader changes are likely for buy-side broker commissions, and additional lawsuits could follow.
The final outcome of this case will likely have implications for the billions of dollars in real estate commissions in NYC. This lawsuit could prompt rule changes around compensation and Realtor-owned listing services. The New York residential brokerage industry is not as tightly connected to NAR as its Missouri counterpart. But, recent changes by the Real Estate Board of New York indicate a response to the growing backlash against NAR.
Another similar antitrust case known as Moehrl is set for trial in early 2024, with potential damages exceeding $40 billion. The Department of Justice is also considering action against NAR, which could have far-reaching effects on residential real estate nationwide.
Gen Z Embraces 'House Hacking' to Make Homes More Affordable
Gen Z and millennials are increasingly turning to "house hacking" as a strategy to make buying a home more affordable.
House hacking is when a homebuyer purchases a house with the intent of renting out a portion of it in order to bring in additional income. This rental income helps offset the cost of the mortgage.
A report by Zillow found that almost 4 in 10 recent homebuyers consider house hacking an important opportunity.
The practice is especially popular among younger generations, with over 50% of Millennial and Gen Z homebuyers expressing positive views on house hacking.
With rising home prices and interest rates, house hacking provides an additional income stream to help offset the affordability challenges in the current housing market. But, if you are considering pursuing this strategy, be sure to double-check the rental laws in your neighborhood – there’s a chance that renting your home might be a violation of local government or HOA ordinances.
Rapid-Fire Headlines
Bed Bath & Beyond's departure from the retail scene has created opportunities for other retailers. Many big box retailers are taking advantage of Bed, Bath, & Beyond’s bankruptcy to take over its empty stores.
Recent resales at Extell’s One57 development in NYC have shown significant price cuts. The oversupply of ultra-luxury developments is contributing to price declines.
The biggest real estate loans in October were dominated by refinancings. Some of the biggest loan deals lately have come from The Hudson Companies and Bruman Realty.
The pandemic prompted a significant number of people to make big moves to new parts of the country. However, the dream of owning a three-bedroom house with a big front yard has turned out to be a little underwhelming for some.
CoStar Group predicts an upcoming shortage of top-tier class A office space in the U.S. Buildings aged 0-3 years will represent only about 1% of inventory by the middle of 2027, according to estimates.
Have a question about buying or selling real estate in NYC? Please feel free to book an appointment with me here for a consultation.
Best,
Corey Cohen
Founder
The Roebling Group
646.939.7375
@mrcoreycohen