Alberto, the summer’s first named storm, this week soaked the streets of Austin. Inside a Hyatt Regency with an unobstructed view of the Texas capital’s shiny new skyline, real estate leaders from around the country gathered to lament the hard rain falling on their business.
Higher interest rates have thrown a wrench into the housing market. A massive class-action settlement last year dealt a devastating financial and reputational blow to Realtors for overcharging customers. And affordable space is scarce pretty much everywhere, unless it’s in an office building.
“It’s a confusing time,” Shae Cottar, a Houston real estate broker, said during a panel at the National Association of Real Estate Editors’ annual conference.
Confusion is particularly acute because, against all previous experience, the office sector is slowing while the overall economy remains strong.
It’s “something I haven’t seen in my 30 years as a real estate economist,” declared Richard Barkham, CBRE’s global head of research, who is forecasting more unusual weather.
Retail, residential and industrial real estate remain “fundamentally sound,” Barkham said four times in his 30-minute presentation, but office remains the problem child. So long as lenders are willing to extend maturing loans and avoid imposing new mortgages at higher rates, problems should remain contained, Barkham assured.
“I expect by 2025, the story will be 20% vacancy, but we won’t have enough office space either,” he said. “We won’t have enough of the kind of space that businesses want to lease.”
Residential real estate is grappling with the brave new world of 7% mortgage rates. Housing prices remain astronomical in New York. But they have fallen 9% in Austin, the most of any major market, said Odeta Kushi, an economist at First American Financial.
And then there’s the mess from last year’s earthquake in the residential brokerage world, when a federal court in Missouri ruled that brokers conspired to keep commissions artificially high and extracted $100 billion annually in unjust fees from homebuyers nationwide. The National Association of Realtors paid $1.8 billion to settle the matter, and the Justice Department is considering action. Hand-wringing among industry experts was genuinely impassioned at the real estate conference inside the Austin Hyatt Regency, a 448-room hotel with glass elevators that is owned by the same real estate investment trust that has the Marriott Marquis in Times Square.
“Will real estate agents go the way of travel agents?” a moderator asked a panel of brokers, who agreed that wouldn’t happen. But “we’re going to work harder for less money,” said Mike Crowley, past president of the National Association of Exclusive Buyer Agents.
Ben Caballero, CEO of HomesUSA.com, who over the past 20 years helped sell more than 60,000 homes, suggested brokers have what’s coming to them because they didn’t cut fees even as the rise of virtual tours meant buyers no longer needed one to see inside a home.
“It makes it difficult for [brokers] to get their buyers or sellers to understand the value that they are delivering,” he said.
Aaron Elstein , 2024-06-20 19:37:10
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