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Housing: Another class-action lawsuit targets real estate broker commissions

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Real estate broker commissions are on the hot seat again.

A new federal class-action lawsuit filed in South Carolina alleges that the powerful National Association of Realtors (NAR) and real estate brokerage firm Keller Williams Realty violated federal antitrust laws, and in turn, artificially inflated home prices in the state.

The lawsuit filed Monday comes on the heels of a similar class-action case in Missouri that resulted in a jury verdict against the NAR last week. The jury found the NAR and some of the country’s largest real estate brokerage firms entered into illegal agreements that cost home sellers in the state $1.79 billion in losses.

The damages in that case allow for “treble” or triple damages, meaning that a judge could require the defendants to pay up to $5.3 billion. The NAR’s co-defendants in the case included Keller Williams, as well as Berkshire Hathaway’s HomeServices of America (formerly Century 21 Sweyer and Associates) and its subsidiaries, RE/MAX, and Anywhere (formerly Realogy).

Anywhere Real Estate and RE/MAX reached a $138 million settlement before the verdict.

A real estate sales sign sits outside of a house for sale in Phoenix, Ariz., June 2, 2009. (REUTERS/Joshua Lott) (Joshua Lott / reuters)

The South Carolina plaintiffs are seeking class-action status on behalf of all home sellers in the state who since November 2019 used a listing broker affiliated with Keller Williams that listed their home on one of the NAR’s Multiple Listing Services (MLS).

The NAR’s rules imposed on Keller Williams, they say, placed anti-competitive restraints on the housing market by effectively enforcing non-negotiable commission structures, then requiring home sellers to pay commissions to buyers’ brokers.

“The effect of these rules is not simply that the seller must pay the buyer broker’s compensation,” the lawsuit states. “These rules effectively take the compensation structure out of the view of the buyers and sellers, masking who pays the buyer broker’s compensation.”

“Indeed, a buyer broker may not even present an offer to a seller that is conditional on the seller reducing the buyer broker commission,” the suit states.

A sale sign stands outside a home in Wyndmoor, Pa., June 22, 2022. (AP Photo/Matt Rourke, File) (ASSOCIATED PRESS)

The cases, and cases like them, could ultimately dismantle the NAR’s stronghold over a system that has long been criticized for disadvantaging sellers and buyers by setting and maintaining broker commission rates between 5% and 6% of a home’s sales price.

The NAR’s MLS databases, which in 2020 held listings for 91% of homes sold in the county, remains a primary tool to match home buyers and sellers. Brokers who are members of the NAR and list their clients’ properties in its databases must also agree to share their commissions with other MLS participants.

That agreement, the plaintiffs argued, artificially drives up home prices and deprives sellers of profit. The NAR, for its part, contends that their commission structure, which has been in place for over 100 years, benefits consumers.

The NAR said it plans to appeal the Missouri verdict.

Data from online real estate listing service and broker, Redfin (RDFN), which ended its NAR membership last month, shows that buyers paid over $41 billion in broker fees last year.

The plaintiffs in the South Carolina case are seeking a jury trial and unspecified damages, along with an order that would stop the NAR from continuing to enter into the alleged anti-competitive agreements.

The Justice Department has reportedly considered legal intervention, too. In July 2021, the department stopped moving forward with a settlement with the NAR after concluding it could prevent its ability to protect competition in the market, which “profoundly affects Americans’ financial well-being.”

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.

 

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Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

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TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.

The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.

The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.

“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.

“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”

The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.

New listings last month totalled 15,328, up 4.3 per cent from a year earlier.

In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.

The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.

“I thought they’d be up for sure, but not necessarily that much,” said Forbes.

“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”

He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.

“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.

“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”

All property types saw more sales in October compared with a year ago throughout the GTA.

Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.

“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.

“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

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Homelessness: Tiny home village to open next week in Halifax suburb

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HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.

Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.

Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.

The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.

Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.

They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.

The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.

This report by The Canadian Press was first published Oct. 24, 2024.

The Canadian Press. All rights reserved.

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Here are some facts about British Columbia’s housing market

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Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.

Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.

Average residential home price in B.C.: $938,500

Average price in greater Vancouver (2024 year to date): $1,304,438

Average price in greater Victoria (2024 year to date): $979,103

Average price in the Okanagan (2024 year to date): $748,015

Average two-bedroom purpose-built rental in Vancouver: $2,181

Average two-bedroom purpose-built rental in Victoria: $1,839

Average two-bedroom purpose-built rental in Canada: $1,359

Rental vacancy rate in Vancouver: 0.9 per cent

How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent

This report by The Canadian Press was first published Oct. 17, 2024.

The Canadian Press. All rights reserved.

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