A National Settlement Has a Local Impact on Home Buyers
Article published in Northampton Living
(May 2024)
Since my last column, there has been a major development in court regarding buyer agency agreements. Before I get into what’s happening with local housing inventory, here’s the lowdown on the landmark settlement.
Buyers Beware
On March 15 the National Association of Realtors (NAR) proposed a settlement to an antitrust lawsuit known as Sitzer-Burnett v. NAR, in which the plaintiff accused NAR of stifling competition by posting compensation for buyer’s agents on the Multiple Listing Service (MLS).
NAR has agreed to put in place a new MLS rule prohibiting offers of broker compensation on the MLS. This would mean that offers of broker compensation could not be communicated via the MLS, but they could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals.
What does this mean for homebuyers? This industry change will require that buyers pay for their own buyer’s agent if a seller is not willing to pay the fee. Under this proposed settlement, buyer’s agents will now be required to have buyers sign exclusive buyer agency agreements. In addition to their down payment and closing costs, buyers may be required to come up with additional funds to pay for their representation.
But Good News: Inventory is Up and Sellers are Eager
Housing inventory in Massachusetts was up by over 10% in February year on year; and nationally, Zillow data showed new listings of existing homes in February jumped 20.8% year on year. This is by no means a reversal of the historic low inventory levels we’ve seen, but it is certainly a step in the right direction. (Remember, inventory was down by 30% last year.)
Additionally, homeowner surveys suggest that an increasing share of homeowners expect to sell in the next 3 years.
Affordability is Relative
Interest rates are down from their 20-year-high peak in October. However, due to strong job growth, the Fed halted interest rate cuts this quarter, keeping mortgage rates at around 7%. Despite this robust labor market, Lawrence Yun, National Association of Realtor’s chief economist, notes that home prices are outpacing wage growth, intensifying affordability challenges. Economists predict home prices will rise this year by 3 to 5%.
In the Pioneer Valley, single-family home sales were up 6.5% in January, year-on-year. Despite this increase, prices continue to rise, with the median sale price at $317,000, up 9.3% over the same period last year.
If I can help you navigate the market or the impacts of the lawsuit, please reach out to me at 413-923-2344 or Ruthieoland@kw.com.