ZillowGroup and other real estate stocks took a hard hit today following a lawsuit filed against the National Association of Realtors. This lawsuit cost the NAR $1.8 billion USD after claims were made against how real estate agents are paid. Scrutiny is falling upon the commission-sharing system that dictates a 5-6% cut of a home's final sales price, to be split between the owner's agent and the buyer's representative. This lawsuit can potentially reshape the way real estate deals have been done for decades, with the federal government considering banning the commission-sharing system as a whole.
This is big news as the real estate industry has been struggling recently due to mortgage rates nearing 8% and home sales reaching lows comparable to the 2008 Foreclosure Crisis. In addition to this, notable real estate group such as ZillowGroup, Redfin, Opendoor, and others are all suffering major stock price losses. This may be a potential success for regular-joe stock traders looking to buy while the market is cold and prices are cheap. In terms of the macro trends, this lawsuit will solely affect the United States as countries like Australia and the UK have a far less expensive commission system in place.
https://finance.yahoo.com/news/zillow-plunges-verdict-real-estate-183108068.html
I find the fluctuation of the housing market over the past few years to be interesting. With the mortgage rates rising and the lows that are comparable to the 2008 Foreclosure crisis I wonder if there is anything we can do to learn from last time. is there a way economists can stop this or is it already to late and what could even be the solution. This is definitely a major talking point for people and anyone that owns a house because the market could crash again at anytime.
ReplyDeleteThis is really interesting to see as it draws a lot of parallels with one of my other classes, economic geography. I personally think the whole real-estate industry is a bit of a scam because I don't think that a lot of the work justifies the pay. I think the dictation that an agent gets to eat up that large of a portion of the overall value of the house is incredibly problematic, especially for the middle/lower class. It also makes a lot of sense to me that the home sales are beginning to reach lows comparable to the 2008 Foreclosure Crisis. It seems like the costs of homes almost everywhere have significantly increased in the last few years.
ReplyDeleteWith what we are learning about the 2008 market crash, it is really interesting to see how the government has responded. I wonder if economists or the government are being cautious, or trying to justify what happened in 2008.As well I wonder if Zillow and other major companies will be able to respond due to low rates and major stock loss.
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