Like most Boomers, I’ve both bought and sold a house. But still couldn’t pretend to comprehend all the economic forces at work that make the housing market function. So when I downsized last year:
If the conversations between myself, my devoted Irish Rose and either the realtor or the mortgage broker got too complicated for this state college grad, I would politely ask them to dumb it down and don’t be afraid to talk to me like I’m four years old. Then remind them that everything I understand about real estate I learned from Margot Robbie in a bathtub:
Fortunately, we do have people who understand the complexities of all the forces exerting pressure on the market. The myriad of factors affecting this most essential part of The American Dream.
And this one particular expert, who has displayed a genius for predicting disasters in the past has declared another one is coming. And it doesn’t take Robbie covered in bubble bath to know the root cause is dudes not getting laid enough:
Source – A financial analyst nicknamed the ‘Oracle of Wall Street’ has said a ‘growing crisis of the young American male’ will cause house prices to fall as much as 30 percent.
Meredith Whitney, who earned the title after predicting the financial crisis of 2007 – 2008, suggested young men increasingly living with their parents and disinterested in starting families will drastically reduce housing demand.
The trend of men refusing to settle in turn means more women are remaining single into later life, leaving them without the income or need for big family homes.
But it comes as baby boomers start to downsize, meaning there will be a surplus of available properties. Much of the last decade’s gains in home values have been driven by high demand and low supply – a phenomenon, Whitney says, is reversing.
To explain the rise in men living at home, she pointed to the increasing prevalence of video games, starting in the mid-2000s. …
Whitney cited US Census Bureau data showing that before the financial crisis around 13 percent of men aged between 25 and 34 lived at home. …
The data also shows that young women have consistently been around twice as likely to leave their parents’ homes. Last year, just 12.3 percent were still at home. …
‘The biggest driver of home prices has historically been household formation,’ Whitney told DailyMail.com. ‘Household formation today is the lowest it’s been in 160 years.’
And household formation, she said, is driven by the ‘five Ds’ – ‘diamonds, diapers, divorce, debt, and death.’
‘Without at least the first two Ds, there’s no reason to buy a home,’ she said.
Before we get into this, a definition is in order:
Oracle or-e-kel – A person (such as a priestess of ancient Greece) through whom a deity is believed to speak. A person giving wise or authoritative decisions or opinions
In the world of Ancient Greece, no great decisions could be made without first consulting the Oracle of Delphi. And it’s clear that Meredith Whitney earned the nickname by predicting the housing crash that everyone but her and the Christian Bale character completely whiffed on.
So what the actual? She’s seeing another one coming because Gen Z has decided to … what, exactly? Stop trying to meet women? Reverse the entire process that has driven all living things since we were just single-celled microorganisms floating around in the primordial soup? The drive to have sex and pass on your genes? They’ve traded in the most powerful instinct in nature – the desire to procreate the species – for 8 hours a day of chasing zombies through a wasteland in Fallout?
Listen, I’m the last guy to use the played out Boomer trope of the guy “living in his mom’s basement.” That’s a tired, lazy stereotype best left for sports radio hosts who have contempt for their audience. But here it is coming directly from one of our most brilliant economists. Her depiction, not mine. And apparently it’s statically proven to be about to tank our entire way of life.
Look, I’m a Live and Let Live kinda guy. If you’d rather slap hookers or whatever you do in GTA than leave the house and try to find actual flesh and blood women who are sexually attracted to you, that’s not my concern. Go live your life. I might not think it’s a life worth living and will judge you quietly to myself, but you do you. (And if that’s you, you’re literally doing yourself.) You have the right to squander your existence and never take a desirable female to the summit of Bone Mountain all you want.
That is, until it starts to affect me. And I say this for all Boomers. I didn’t come this far and invest my entire net worth into my home just to lose it all to a bunch of people I’ve never met who’d rather sit at home on their Playstations, getting fed by their moms and the Doordash guy, instead of going out, being fruitful and multiplying.
Yours has got to be the first generation in human history to get criticized for NOT being obsessed with sex enough. And it’s time you get off the bench and into the game. The great coach called America is sending you in. You owe it us to put down the controllers, climb out the gaming chairs, get out to the bars and clubs and start doing what comes naturally. The financial health of your country – and me in particular – depends upon you to quit being such pusses and start making the babies, already.
It’s not a big ask, afterall. It’s not like your great grandfathers being handed rifles and told to storm Omaha Beach or Iwo Jima. Now get out there and do your patriotic duty. We’re counting on you.
Things are about to get weird for homebuyers and sellers.
I wrote late last year that 2024 would mark the beginning of a great experiment in real estate that would upend the way homebuyers and sellers pay their agents. Well, the experiment officially got underway Friday when the National Association of Realtors agreed to a $418 million settlement to bring to an end a series of class-action lawsuits over agent commissions.
The settlement came after a yearslong battle in which hundreds of thousands of sellers claimed that they were forced into paying unfairly high commissions to real-estate agents. In addition to the monetary penalties, the agreement could enable more buyers and sellers to start negotiating those commissions, which for decades have hovered between 5% and 6% of the sale price. The deal could also push more buyers to forgo hiring an agent or work out an alternate payment structure.
These changes, spread out over millions of transactions a year, have the chance to reshape the housing market. Some industry observers have predicted that the new commission rules could lead to a drop in both home prices and commissions. Buyers could even save as much as $30 billion every year, a recent working paper from the Federal Reserve Bank of Richmond estimated. But there’s also the possibility that the Department of Justice decides this settlement doesn’t go far enough, which could set up a showdown between the NAR and the DOJ. In other words, while the real-estate revolution is underway, this thing is far from over.
To grasp the scope of the settlement, it helps to understand how agents are paid. In most home sales, the seller uses a chunk of the final sale price to pay out the agents on both sides of the transaction. When a seller lists their home on the multiple-listings service — a database of local homes for sale where agents go to find homes to show clients — they advertise how much they’re willing to pay the buyer’s agent. For decades, sellers have generally offered buyers’ agents 2% to 3% of the final sale price, even though they can technically offer as little as $0. That’s because sellers fear that if they offer less than the industry standard, buyers’ agents will direct their clients away from their homes, a practice called “steering.” Don’t offer the standard rate; don’t get seen. To fix this issue, the plaintiffs in the lawsuits and the Department of Justice have pushed for a practice called “decoupling,” in which buyers and sellers just pay their agents separately. They argue that this would eliminate steering and push down commissions, saving people money and perhaps forcing many subpar agents out of the industry. A lot of agents are already barely scraping by — if their earnings fall, they might decide to exit the business altogether.
The newly announced settlement doesn’t go quite that far. While sellers will no longer be required to say how much they’re offering a buyer’s agent when they list their homes on the MLS, they’re not expressly prohibited from offering that compensation somewhere else — it just can’t be anywhere on the MLS. There will likely be “a thousand work-arounds,” Bret Weinstein, the founder and CEO of the Denver brokerage Guide Real Estate, told me. A buyer’s agent could just call up the seller’s agent and ask what commission they’ll get, or the listing agent could advertise the commission tied to the home on their website. In theory, a seller might still offer compensation to a buyer’s agent because they want to get as many offers as possible on their home. If you’re a seller and you don’t offer anything, then any buyer who wants your home will have to pay their agent out of pocket, and a lot of cash-strapped buyers simply can’t do that. In some cases, sellers might still feel pressured to offer the going rate, so the agent’s commission could end up looking pretty much the same as it does today.
On the other hand, we’re likely to see both sellers and buyers negotiating on commissions in ways they simply haven’t before. If sellers are in a desirable market, they might start offering less commission to buyers’ agents, or none at all. On a $1 million home, a seller may save $30,000 if they don’t promise anything to the agent on the other side of the deal. This would force buyers’ agents to get more creative. They could work for a flat fee or cut their commission rate to attract price-sensitive clients. Some might offer varying levels of service for different prices — the white-glove treatment still goes for 3%, but just setting up a few showings is a cheaper rate. Other buyers might choose not to hire an agent at all or just get a lawyer to review contracts and make sure the transaction doesn’t go off the rails.
As for home prices, I’m not convinced they’ll actually drop as a result of this settlement. It’s hard to imagine a seller shaving 3% off their listing price just because they’re not offering a commission to the buyer’s agent, especially if a comparable house down the street is selling for a similar amount. Sales have slowed down with higher mortgage rates, but the seller still has the upper hand in most parts of the country.
The NAR will pay out a staggering amount of money to the class-action members (and their lawyers), but that $418 million pales in comparison to the billions of dollars in damages that the NAR and other major brokerages were facing as part of these lawsuits. In the first case to go to trial, in October, a jury slapped the NAR and its codefendants with $5.3 billion in damages. The settlement also doesn’t mean that the organization is off the hook just yet: One of the biggest remaining questions is what the Department of Justice will think of this proposed settlement, which still needs approval from a federal judge. Earlier this year, the department threw its support behind the idea of decoupling, or just having both sides pay their agents separately. It has made it clear that it doesn’t want sellers offering compensation to buyers’ agents. Instead, it proposed an alternative in which sellers don’t promise anything but buyers can still make offers that are contingent on getting some money back so they can pay their agent: “I’ll pay you $500,000, but you give me back $15,000 so I can cut a check to my broker.” The key difference is that the amount requested is negotiated between the buyer and their agent, not set by the seller.
So it seems like the newly announced settlement could fall short in the eyes of the department. But even if the DOJ isn’t able to push for more changes, this settlement could usher in a new era for the industry — one in which buyers and sellers no longer default to the standard commission rates that have prevailed for decades.
This settlement isn’t the end of this saga. The experiment is just beginning.
James Rodriguez is a senior reporter on Business Insider’s Discourse team.