Finance & Investing

How the NAR Lawsuit Could Affect Real Estate Prices

The recent filing of a lawsuit by the National Association of Realtors (NAR) against several real estate developers could have a devastating impact on real estate prices across the country. While the NAR Lawsuit was filed to close the homeownership gap between white and non-white households, there are mixed opinions about whether or not it will make a difference.

NAR’s Goal 

Black homeownership rates remain below White Americans, although the gap is closing. According to a recent National Association of Realtors (NAR) report, more than 30% of Black households cannot afford a home.

Several factors contribute to the widening homeownership gap, including the availability of affordable mortgages. Many lenders offer incentives to boost minority home ownership. In addition, government programs to help first-time buyers can reduce the financial burden of homeownership.

The NAR’s Snapshot of Race & Home Buying in America is designed to address the racial inequalities that affect homeownership. It uses data from the American Community Survey (ACS) to examine the characteristics of homebuyers and sellers.

Historically, Black communities have been subjected to racial discrimination. The Fair Housing Act of 1968 was designed to address this disparity. However, the laws have not yet closed the homeownership gap.

Although the fair housing laws of 1968 have helped to improve the racial disparities in the housing market, more work is still needed. There is a need for better homeownership counseling and education.

NAR’s Record on Improving Inventory is Mixed

In the real estate industry, housing supply is a limiting factor. There is only so much you can do to change that, and so many variables at play that the market is constantly in flux. For instance, in the last six months, single-family construction starts are down by 6.1%. Despite this, inventories are a little less than three months in supply.

The NAR’s latest numbers show that inventory levels increased by over 1 percent to 0.87 million. This is a big deal in a hot market. Generally speaking, this figure is derived from seasonally adjusted sales. Compared to September, the inventory number is more modest. A quick scan of Realtor.com suggests that a few homes are getting multiple offers.

According to the NAR’s estimates, the median price of a home is up 7.7% from last year. However, this is still less than the 8.95% national average. This results from a glut of new and existing homes, not a lack of buyers.

NAR’s Recent Courtroom Losses

The National Association of REALTORS (NAR) is facing several legal setbacks. One lawsuit filed in Illinois asks a simple question: Are commissions artificially inflated? It also seeks an order of injunction under the Clayton Act.

So will realtors become extinct? The NAR says that it has not acted unlawfully and that the rules are pro-competition. Several real estate professionals say that there are loopholes in the policy, The industry will likely exist and avoid extinction if realtors can mend these policies.

According to Alexander Munn, former Senior Litigation Counsel at BPE Law Group, the real estate organization’s agent and broker compensation policy is “a clear violation of the Clayton Act.” He said, “NAR’s policy does not ban ‘office exclusives’ or allow brokerages to market listings privately within their networks.”

Another lawsuit, filed in Missouri, alleges that the organization has engaged in price fixing. In April, the plaintiffs were granted class-action status. They are demanding an order of injunction under the Clayton act to stop the NAR from enforcing its rule.