Source: Realtor.com, Julie Taylor
Photo: Courtesy of @discoveroshkosh; @downtownoshkosh; @oshkoshyachtclub

America’s hottest real estate market might be known more for sharing a name with a popular children’s clothing line—but it’s the city’s budget-friendly home prices and peaceful surroundings that are whipping buyers into a frenzy.

Oshkosh, WI, has just ranked as the most desirable market in the U.S. for the first time in the data’s history, according to the Realtor.com® Hottest Housing Markets rankings for July.

The area—which is home to the clothing line OshKosh B’Gosh, a major employer—has homes with a median list price of $374,000, which is $65,950 less than the national median.

These budget-friendly prices combined with the tranquil surroundings helped elevate this Wisconsin city to the top of July’s rankings, according to Hannah Jones, senior economic research analyst at Realtor.com.

Oshkosh, WI, has just ranked as the most desirable market in the U.S. for the first time in the data’s history, according to the Realtor.com Hottest Housing Markets rankings for July.(Getty Images)
“Situated on Lake Winnebago, Oshkosh offers buyers affordability in an idyllic setting,” she says.

Realtor.com listings in Oshkosh received 3.7 times more views per property in July than the national average. With all those eyeballs, properties sit a mere 18 days on the market before getting snapped up by eager buyers—a whopping 32 fewer days than usual nationwide.

Real estate agents around Oshkosh agree that homes for sale here don’t sit around long.

“We are still getting multiple offers in Oshkosh and even seeing some bidding wars,” says local real estate agent Kate Schlagel-Grier, of Berkshire Hathaway HomeServices.

Real estate agent Chris Siamhof, also with Berkshire Hathaway HomeServices, agrees there’s stiff competition in Oshkosh, and her clients have had to get creative to get their offers noticed.

“Clients are waiving home inspections, offering appraisal gap coverage, letting owners rent back, or even paying the owner’s property taxes for a year—anything they can do to make their offers stand out,” Siamhof says. “And we are still seeing some houses going for up to $30,000 over asking.”

Many of these home shoppers hail from bigger cities nearby like Milwaukee and are seeking cheaper places to settle down, says Schlagel-Grier.

“Oshkosh is a very nice town with a much lower cost of living than Milwaukee or the Upper Valley,” she says. “This draws many people to the area.”

Oshkosh may be leading the pack, but it’s just one of many Midwest markets that have been heating up.

“Oshkosh has ascended the hottest markets ranks over the last couple of years along with many other Midwest metros,” says Jones.

As mortgage rates started to climb in 2022—and home prices remained stubbornly high across much of the country—buyer attention zeroed in on the Midwest, according to Jones.

“As a result, many Midwest markets, such as Oshkosh, have seen inventory levels fail to keep up with rising popularity,” she explains.

Though listing levels improved 24.2% year over year in Oshkosh in July, there were 72.8% fewer homes for sale this July compared with before the COVID-19 pandemic.

“The gap between inventory and buyer demand sent Oshkosh to the top of this month’s list,” Jones says.

Following Oshkosh was Hartford, CT, at No. 2. Its listings received 4.3 times more views than the national average in July, and the average home here costs $444,000. It appeals to many because of its proximity to New York City, which is about 90 minutes away.

Manchester, NH, ranked No. 3. The state’s largest city has a median house price of $585,000. It’s just an hour outside Boston and has no state income tax. In July, the houses here spent a median of just 20 days on the market.

Rounding out the top five on the list were Rockford, IL, with a median house price of $216,000, and Akron, OH, with a median house price of $257,000.

In addition to Oshkosh, the other two places in Wisconsin that made the top 20 are Janesville (No. 9) and Green Bay (No. 18). With the lowest median price of $335,000 in the Janesville area, Wisconsin is affordable, family-friendly, and a top spot for outdoor recreation.

The trio of Ohio towns that made the top 20 are Akron (No. 5), Canton (No. 11), and Cleveland (No. 20). All three had median housing prices in the $200,000s, and Ohio is known for its low cost of living.

The towns in Illinois that made the top 20 are Rockford (No. 4), Springfield (No. 12), and Peoria (No. 16). Peoria is also the city with the lowest median housing price in the top 20, at $179,ooo. This metro is midway between Chicago and St. Louis, which are each three hours away.

In July, home prices in the majority of the U.S. remained stable compared with last year, at a median of $439,950 nationwide. However, home prices of America’s 20 Hottest Markets were still climbing, spiking 11% year over year.

Homes in July’s hottest markets also received 2.8 times more views per property than the national average. This is largely due to these areas’ high demand and low housing stock, which “drives views per property higher, upping the competition for homes in the hottest markets and leading to snappier home sales,” Jones notes in her analysis.

Houses in America’s 20 hottest markets spent just 26 days on the market on average, which was roughly half the national average of 50 days.

The five large markets that saw the biggest jump in rankings were Las Vegas, Philadelphia, Kansas City, MO, Minneapolis, and Chicago.

Las Vegas saw the biggest jump in its hotness ranking among large U.S. metros, up 73 spots over last year.

Shockingly, prices fell an average of 1.1% in these large urban markets, which was the first-ever large-market average annual decline in the data’s history.

“This suggests that large markets are starting to adjust to subdued buyer demand by lowering home prices and selling lower-priced homes,” Jones explains.

https://www.realtor.com/news/trends/hottest-housing-markets-july-2024-oshkosh-wi

Source: Realtor.com, Julie Taylor
Photo: Realtor.com; Source: Getty Images

McMansions, with their outsized proportions and price tags, are out. Instead, smaller homes are making a strong comeback—and there’s one feature designers are getting rid of to save space.

“The median price of homes for sale this June remained stable compared with last year, at $445,000,” says Realtor.com® senior economist Ralph McLaughlin. “However, the median price per square foot grew by 3.4%, indicating that the inventory of smaller and more affordable homes has grown in share.”

Not all buyers will likely be happy about homes’ shrinking, especially as one standard feature, namely hallways, is quickly disappearing, according to a recent Realtor.com report.

In a new survey, architectural designers say that new homes will continue to get smaller, with hallways becoming a thing of the past. Here are the upsides—and downsides—of America’s shrinking homes.

Smaller homes are cheaper

The good news is that losing a hallway or two might be a boon for a homebuyer’s bottom line.

The increase in budget-friendly homes priced in the $200,000 to $350,000 range outpaced all other price categories for the past five months. Homes for sale in this range grew a whopping 50% in June compared with last year.

That means buyers have way more homes to choose from at a friendly price range at a time when mortgage rates remain stubbornly high.

Buyers looking for smaller and more affordable homes should head South, the region that helped fuel the rise in this type of housing stock.

New-construction homes are also smaller

A single-family home newly under construction had a median 2,140 square feet of floor space in the first quarter of 2024, according to the U.S. Census Bureau. That’s 116 square feet smaller than the median size in 2023.

“In the new-home build market, builders are striving to meet the demand of smaller-square-footage homes,” says Jason Gelios, a real estate agent with Community Choice Realty in Southeast Michigan.

Gelios adds that the number of pre-existing small homes is lacking due to the popularity of McMansions before the COVID-19 pandemic.

“Since the trend is now heading toward smaller and more affordable housing, it makes sense that builders would follow suit,” he says.

More square footage, more problems

Smaller homes are attractive to those looking for both a lower list price and a lower cost of home maintenance.

“I work with plenty of buyers who downsize to avoid the maintenance and upkeep associated with larger homes,” says Cindy Allen, a real estate agent with DFW Moves in Dallas and Fort Worth, TX. “Lower heating and cooling costs are also a bonus.”

Another truth? Most homebuyers today simply don’t need as much space for their stuff, according to Bruce Ailion, a real estate agent and attorney with Re/Max Town and Country in Georgia.

“Years ago, we had televisions that were the size of large moving boxes, and we had stereo equipment with a turntable, tape player, and speakers the size of 10-year-olds,” Ailion says. “Today, the TV is flat against the wall, and all our music is in a smartphone in our back pockets.”

Homes aren’t done shrinking

According to a recent U.S. Residential Architecture and Design survey, new homes will continue to get smaller.

Jenni Nichols, vice president of design for John Burns Research and Consulting, who conducted the survey, says that 43% of production residential designers worked on smaller projects last year than the year before.

“And 27% of production residential designers reduced the size of projects they designed last year to save on costs,” she says. “Builders are trying to build homes that people can afford to buy since people have less buying power than they used to.”

In the survey, architectural residential designers said they were four times more likely this year to plan for smaller homes than larger ones.

“As home sites get smaller, homes are also getting smaller as a result,” she explains. “You can only fit so big of a home on a smaller lot.”

Why hallways are going away

As a result of this smaller-home trend, architectural designers said they will now design homes differently.

“Circulation space like hallways use square footage, while typically not providing any function, so they become one of the features that are easy to cut back on,” Nichols says.

Other space savers Nichols has seen designers incorporate include eat-in kitchens, pocket offices, and Jack-and-Jill bathrooms.

“As homes shrink, people want and need the square footage to go to places they use, not to wasted space,” Nichols concludes.

Julie Taylor is a writer, producer, and editor. Her work has appeared in Cosmopolitan, Redbook, and other publications.

https://www.realtor.com/news/trends/americas-homes-are-shrinking-one-standard-feature-is-disappearing

Source: Fast Company, Adele Peters
Photo: Courtesy of AkiyaMart

Japan has millions of ‘akiya’ (literally, empty houses) that have been abandoned. A new site aims to connect foreigners with these inexpensive properties.

On the coast of Japan, southwest of Tokyo, it’s possible to buy a little house with a view of the ocean for $37,000. In Kyoto, you can buy a house in walking distance from historic temples for $80,000. And near the city of Kitakyushu, you can buy a traditional house from 1868, surrounded by forests and a huge garden, for $5,500.

The homes are all akiya (literally, “empty houses”) that have been abandoned. Across Japan, there are millions of similar homes, mostly in rural areas. A new site called AkiyaMart lists the properties in English for Americans and other foreigners looking for an alternative to the unaffordable housing in their own neighborhoods.

The founders, Take Kurosawa and Joey Stockermans, first met while visiting Japan as exchange students in college. A decade later, after working for years in the tech industry (in the Bay Area and New York City, respectively), they were disillusioned by the cost of living in the United States. Despite having good jobs, neither of them could afford to buy single-family homes. In Silicon Valley, where Kurosawa worked, a typical house costs well over $1 million. At the same time, they kept seeing photos of charming, cheap akiya on Instagram. When their jobs were both hit by layoffs, they started talking about buying a place in Japan.

“Both of us wanted a reason to spend more time in Japan going forward in life,” says Stockermans. “We saw these cheap properties, and the two things just kind of made sense together.”

Japan has nearly 9 million akiya, by one estimate. By 2033, there may be as many as 23 million abandoned homes, or roughly a third of all the houses in the country. That’s partly because the country’s population is shrinking, and also because most people want to move to Tokyo for work. If someone inherits a house in a rural area, they may not want it.

“It’s not just rural in terms of countryside,” Stockermans says. “It’s medium-sized cities—150,000 or 300,000 population towns—where these homes exist as well. There’s no jobs in these satellite cities for young people. Everyone wants to live in Tokyo, because that’s where the jobs are.” Though many people worked remotely during the pandemic, they were expected to go back to the office afterward, he says.

Tokyo itself is very affordable by the standards of an American city. Even if someone only earns minimum wage, they can afford to live by themselves. In the U.S., by contrast, in more than 90% of all counties, a one-bedroom apartment is out of reach for a minimum-wage worker. Tokyo is a perfect illustration of the fact that if a city builds enough housing, that housing will be affordable. Because of the abundant supply in Tokyo and other large Japanese cities, there’s little demand for akiya elsewhere.

When Kurosawa and Stockermans started searching for akiya themselves, with the idea that they would spend part of the year in Japan and also rent out the property on Airbnb, they found Japanese real estate sites hard to navigate. “We got really frustrated—the [user interface] is just very differently geared than a Zillow or a Redfin,” says Kurosawa. So Stockermans, a software engineer, mocked up a tool that made it possible to filter listings and read details in English. “He created a prototype, and we actually found our house with the tool,” Kurosawa says. “When we launched it publicly in January, we saw a huge demand from people looking for something similar.”

Since finding the listing is just the first step, the startup is now also working with bilingual Japanese real estate agents to help buyers through the rest of the process. Part of the challenge is the fact that because the houses are so cheap, commissions are also low. Because of that, buyers who need AkiyaMart’s help finding a realtor pay a $2,000 fee, most of which goes to the local realtor. Earlier this week, the company helped a buyer close on a house that cost only $6,000. That’s the equivalent of three months’ rent for a studio apartment in San Francisco.

The houses on the site range in price; some are hundreds of thousands of dollars or even in the millions. But a large number are deeply affordable—$100,000 or far less. Even the cheapest houses are often in relatively good condition, the company says, though they may need to be modernized with insulation or earthquake-proofing.

They bought their own first house in Beppu, a city known for its hot springs, after Kurosawa visited the area on a surfing trip with his fiancé. The house cost $42,000. Because they decided to turn it into an Airbnb, they spent another $30,000 to give it high-end finishes. The house was essentially livable even without the changes, they say. They recently bought another house in Tokyo. They both now spend part of the year in Japan; Kurosawa now also owns a mobile home in California and Stockermans stays with family in Canada when he’s not in Japan. (The startup is a side project for Kurosawa, and Stockermans is working on it full time.)

Unsurprisingly, using the house as a vacation spot is easier than trying to permanently relocate. Japan allows tourists to visit for three months twice a year. The country also recently introduced a new digital nomad visa that lets remote workers stay for six months consecutively (and reapply to come back after another six months). But it is also possible for people who are self-employed to go through the paperwork to get a longer working visa.

If people who relocate are respectful of local culture and attempt to speak Japanese, they’ll be welcome, say Kurosawa and Stockermans. “When we moved into our neighborhood, we were kind of the glimmering hope—the young guys who are cleaning up the house,” Stockermans says. “I think it was really well received. People are happy even if we’re foreigners.”

https://www.fastcompany.com/91153794/japan-affordable-housing-akiya

Source: Realtor.com, Julie Gerstein
Photo: Canva Pro

In today’s high interest rate market, home prices have largely leveled off nationwide—but not everywhere. In certain places, prices are still on an alarming upswing.

Home prices reached a median of $442,500 in May, according to Realtor.com® data—that’s up just slightly from $441,000 a year earlier.

“The median price of homes for sale remained relatively stable compared with last year, growing by 0.3%,” notes Realtor.com Chief Economist Danielle Hale in her analysis.

Listing prices remained completely flat on a year-over-year basis in the South (+0.0%), “where competitive home inventory has grown the most in recent months,” Hale explains. But prices continued inching upward in the West (+0.8%), Midwest (4.4%), and Northeast (+6.1%) compared with the same time last year.

Yet despite these modest gains, some cities are seeing more extreme price jumps than others. In fact, in four metro areas, prices have increased by double-digit percentages.

Wondering if you’re shopping for real estate with runaway prices? Here are the 10 cities seeing the largest price increases since last year. Many, especially the market with the fastest price growth, might surprise you.

Buffalo, NY

This four-bedroom house is on the market for $479,900.(Realtor.com)
Median home price: $300,000
Percentage change year over year: 18.6%

Cleveland, OH

This house is on the market for $220,000.(Realtor.com)
Median home price: $274,000
Percentage change year over year: 15.9%

St. Louis, MO

This multifamily brick home is listed at $229,900.(Realtor.com)
Median home price: $312,000
Percentage change year over year: 10.9%

Pittsburgh, PA

This split-level, three-bedroom home is going for $349,900.(Realtor.com)
Median home price: $264,000
Percentage change year over year: 10.8%

Philadelphia, PA

This two-bedroom row home is listed at $315,000.(Realtor.com)
Median home price: $382,000
Percentage change year over year: 9.3%

Los Angeles, CA

This multifamily dwelling is listed at $1,195,000.(Realtor.com)
Median home price: $1,248,000
Percentage change year over year: 8.5%

Providence, RI

This three-bedroom home is on the market for $479,000.(Realtor.com)
Median home price: $586,000
Percentage change year over year: 8.5%

Memphis, TN

This four-bedroom is listed at $570,000.(Realtor.com)
Median home price: $350,000
Percentage change year over year: 7.5%

New York, NY

This three-bedroom condo is on the market for $619,000.(Realtor.com)
Median home price: $789,000
Percentage change year over year: 7.5%

Riverside, CA

This four-bedroom home is listed at $899,000.(Realtor.com)
Median home price: $620,000
Percentage change year over year: 6.8%

https://www.realtor.com/news/trends/cities-where-home-prices-rose-the-most-annually-may-2024

Source: Fast Company, The Conversation
Photo: Getty Images

Can architects and developers find ways to design buildings that serve multiple uses over several centuries rather than a single targeted use that becomes obsolete in 100 years?

It took a global pandemic to convince American businesses that their employees could work productively from home or a favorite coffee shop. Post-COVID-19, employers are struggling to find the right balance of in-office and remote work. However, hybrid work is likely here to stay, at least for a segment of workers.

This shift isn’t just changing lifestyles—it’s also affecting commercial spaces. Office vacancy rates post-COVID-19 shot up almost overnight, and they remain near 20% nationwide, the highest rate since 1979 as tenants downsize in place or relocate. This workspace surplus is putting pressure on existing development loans and leading to defaults or creative refinancing in a market already plagued by higher interest rates.

Office tenants with deeper pockets have gravitated to newer and larger buildings with more amenities, often referred to as Class A or “trophy” buildings. Older Class B and C buildings, which often have fewer amenities or less-desirable locations, have struggled to fill space.

High vacancy rates are forcing developers to get creative. With reduced demand for older buildings, along with housing shortages in many American cities, some downtown buildings are being converted to residential use.

These projects often include some percentage of affordable housing, underwritten by tax incentives. In October 2023, the Biden administration released a list of federal loan, grant, tax credit, and technical assistance programs that can support commercial-to-residential conversions.

As an architect, I’m encouraged to see these renovations of older commercial buildings, which are more economical and sustainable than new construction. In my view, they are fundamentally changing the character of our cities for the better. Even though only about 20% to 30% of older buildings can be profitably converted, architects and developers are quickly learning how to grade these structures to identify good candidates.

FROM WORKPLACE TO LIVING SPACE

Converting commercial buildings to apartments didn’t start with the pandemic. In the decade leading up to the outbreak of COVID-19, developers converted more than 110,000 apartments from outdated hotels, office buildings, factories, warehouses, and other buildings across the U.S. According to industry data, more than 58,000 apartments are currently being converted from office buildings.

Several characteristics of older Class B and C buildings make conversion particularly attractive. These buildings typically have smaller floor plates—total square footage of space per floor. Importantly, they also have shorter “core-to-shell” distances—the distance from the building core that contains stairs and elevators to the window wall.

Residential building codes generally require that natural light reach most rooms. Since living spaces, bedrooms, and bathrooms are often separated by walls, a smaller core-to-shell distance allows more rooms to access natural light, making the conversion easier.

In contrast, typical new office buildings have larger floor plates and core-to-shell distances that sometimes can exceed 50 feet. This makes them more difficult to convert to residences.

But it’s not impossible. One creative solution involves moving the window wall inward by several feet to create outdoor decks. That’s an appealing amenity, but also an extra cost. In some conversions where the core-to-shell depth is greater than needed, developers have added interior vertical shafts or window wells to bring daylight to interior spaces.

Many older commercial buildings also offer higher ceilings, which are especially desirable in the residential market. Apartments and condos typically don’t need to conceal mechanical and electrical services with suspended acoustic tile ceilings, as offices do, so they can provide 12 feet or more of clear ceiling height.

Some older buildings, including many made of brick or stone, have large windows, which also are desirable in residential use. Conversely, smaller windows or higher sill heights may be disincentives to conversion.

Many older buildings were constructed before air-conditioning was widely available, so they have operable windows. This is yet another plus for residential conversion since occupants typically desire natural ventilation in their dwelling unit.

OBSTACLES TO CONVERSION

Some characteristics of older buildings can make residential conversion more difficult. For example, location always matters. Buildings that are far from other amenities, such as restaurants or grocery stores, may be less desirable.

Buildings with more unusual floor plates or geometric forms that work for office use may be difficult to carve up into residential units. Older structures that contain asbestos or lead paint can require expensive remediation.

Zoning laws may bar residential use or otherwise limit what can be done with a building. Cities can play an important role in encouraging residential conversions by revisiting zoning codes or offering tax incentives to developers.

One of the biggest costs of a residential conversion is the need to replace building systems such as plumbing and heating. Plumbing requirements in commercial office spaces, for example, are largely met with restroom facilities in the building core. Apartments or condos each require their own bathroom and kitchen, adding significant cost.

A RETURN TO “WALKABLE CITIES”

Despite these challenges, if residential conversions bring people and energy back to downtowns outside of the workday, stores, restaurants, entertainment, and other amenities of a vibrant lifestyle will follow.

Architects, planners, developers, and politicians are increasingly interested in “walkable cities” or “20-minute cities.” Both of these concepts allude to providing necessary amenities like grocery stores, schools, and restaurants that are accessible to residents on foot, reducing the need to own a car and promoting a more sustainable lifestyle.

Walkable cities aren’t a new idea. Throughout the 19th century, people in U.S. cities like New York and Chicago lived, worked, shopped, and socialized within mixed-use neighborhoods.

The growth of car ownership post-World War II separated these uses into residential suburbs, office parks, shopping malls, and cineplexes. Many critics view suburbanization as a failed experiment that has promoted sprawling development, reliance on cars, and economic inequality

As more downtown office buildings are converted to residential use, many of them are likely to house restaurants, daycare facilities, grocery stores, and other service businesses, typically on their ground floors. These amenities contribute to the financial success of a project and to the vibrant lifestyles of its residents.

All of these shifts prompt questions. Can architects and developers find ways to design buildings that serve multiple uses over several centuries, rather than a single targeted use that becomes obsolete in 100 years? Can mid- and high-rise buildings be envisioned as flexible structural grids, with lower-cost and easily changeable modular inserts? Such structures could accommodate ever-changing needs, some of which we may not yet know will be critical to the urban infrastructure.

Architects, planners, and developers are beginning to explore these questions. Converting downtown offices to residential use could be just the starting point. And it’s a reminder that dynamic cities can reinvent themselves in response to challenges.

John Weigand is a professor of architecture and interior design and interim dean at the College of Creative Arts at Miami University.

https://www.fastcompany.com/91140659/cities-converted-empty-offices-housing-important-questions

Source: The Mercury News, David Goldman and Anna Bahney
Photo: Ronnie George on Unsplash

The 6% commission, a standard in home purchase transactions, is no more.

In a sweeping move expected to dramatically reduce the cost of buying and selling a home, the National Association of Realtors announced Friday a settlement with groups of homesellers, agreeing to end landmark antitrust lawsuits by paying $418 million in damages and eliminating rules on commissions.

The NAR, which represents more than 1 million Realtors, also agreed to put in place a set of new rules. One prohibits agents’ compensation from being included on listings placed on local centralized listing portals known as multiple listing services, which critics say led brokers to push more expensive properties on customers. Another ends requirements that brokers subscribe to multiple listing services — many of which are owned by NAR subsidiaries — where homes are given a wide viewing in a local market. Another new rule will require buyers’ brokers to enter into written agreements with their buyers.

The agreement effectively will destroy the current homebuying and selling business model, in which sellers pay both their broker and a buyer’s broker, which critics say have driven housing prices artificially higher.

By some estimates, real estate commissions are expected to fall 25% to 50%, according to TD Cowen Insights. This will open up opportunities for alternative models of selling real estate that already exist but don’t have much market share, including flat-fee and discount brokerages.

Homebuilder stocks rose Friday midday on the news: Lennar shares gained 2.6%, PulteGroup shares added 1.1% and Toll Brothers shares added 1%.

For the average-priced American home for sale — $417,000 — sellers are paying more than $25,000 in brokerage fees. Those costs are passed on to the buyer, boosting the price of homes in America. That fee could fall by between $6,000 and $12,000, according to TD Cowen Insights’ analysis.

“While the settlement comes at a significant cost, we believe the benefits it will provide to our industry are worth that cost,” said Kevin Sears, president of the NAR, in a statement.

In November, a federal jury in Missouri found the NAR and two brokerages liable for $1.8 billion in damages for conspiring to keep agent commissions artificially high. Because it was an antitrust case, the NAR was potentially on the hook for triple those damages — $5.4 billion.

The NAR had pledged to appeal the case, but other brokerages settled — and, eventually, so did the NAR, on Friday.

“NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers,” said Nykia Wright, interim CEO of NAR, in a statement. “It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This settlement achieves both of those goals.”

The NAR had required homesellers to include the compensation for agents when placing a listing on a multiple listing service. Although NAR has long said commissions are negotiable and that the structure helped making housing more affordable for buyers, critics have long argued that the fees were expected and homesellers felt they would lose buyers if they didn’t offer them.

Settlement could lead to lower homebuying costs

Homesellers who brought lawsuits against the NAR have argued that in a competitive market, the cost of the buyer’s agent’s commission should be paid by the buyer who received the service, not by the seller. The sellers who brought the lawsuit against the NAR and the brokerages said that buyers should be able to negotiate the fee with their agent, and that the sellers should not be on the hook for paying it.

This settlement, which is subject to a judge’s approval, opens the door to a more competitive housing market. Realtors could now compete on commissions, allowing for prospective buyers to shop around on rates before they commit to buying a home. Brokers could begin to advertise their fees, allowing customers to choose lower-cost agents. The NAR, in its announcement, did not set a suggested fee.

This marks the biggest change to the housing market in a century, said Norm Miller, professor emeritus of real estate at the University of San Diego.

“I’ve been waiting 50 years for this,” Miller said.

Although it’s unclear what the future of the housing market will look like, Miller said he expected homebuying to pick up somewhat as costs fall dramatically for homebuyers.

“There are all kinds of models we might see in the future, and no one knows what they are,” he said, suggesting some brokers may charge, say, a $3,000 fee for selling a home, while others will offer a competitive commission.

The agreement will bring sweeping reforms for millions of Americans, said Benjamin D. Brown, managing partner of Cohen Milstein Sellers & Toll and co-chair of its antitrust practice, who helped craft the settlement.

“For years, anticompetitive rules in the real estate industry have financially harmed millions of Americans,” said Brown.

Individual sellers often feel powerless to negotiate a better deal for themselves, given the risk that offering lower commissions could cause brokers to steer buyers to other properties, said Robert Braun, a partner in Cohen Milstein’s antitrust practice.

“For far too long, home sellers have faced a system recognized by many as blatantly unfair. This class action and settlement provides justice for our clients and will require important changes that help future home sellers,” said Braun.

Although most realtors are included in the settlement, agents affiliated with the brokerage HomeServices of America continue to fight the case in court, the NAR said.

The NAR said it had encouraged HomeServices of America to join the settlement, but said it was pleased to have more than 1 million of its members on board with the agreement.

“Ultimately, continuing to litigate would have hurt members and their small businesses,” said Wright in a statement. “While there could be no perfect outcome, this agreement is the best outcome we could achieve in the circumstances.”

Miller said the settlement could lead to a mass exodus of brokers from the industry — potentially half of the 2 million or so agents in America. But he said most brokers are making a living from the commissions — even if they sell just one home a year.

Lower fees mean mediocre agents are likely to leave the field, but top brokers will get more business. “The good ones will absolutely do better,” he said.

America’s fees are significantly higher than in foreign countries, Miller noted. In Israel, Singapore and the UK, brokers charge between 1% to 2% for the same thing that agents do in the United States.

Years of trouble for NAR

The NAR has been fighting off US antitrust officials and litigation for years regarding alleged anti-competitive practices. But November’s verdict marked the association’s biggest setback yet — and ultimately led to the downfall of the rules that have long protected its compensation model.

The association also faces scrutiny from the US Department of Justice, and it’s unclear whether this settlement with sellers will impact the government’s scrutiny of the brokerage industry.

The trade group has also undergone severe leadership turmoil over the past year.

In January, the former president of the NAR, Tracy Kasper, stepped down, after she said she received a threat to disclose a past personal, non-financial matter unless she compromised her position at NAR. Sears replaced Kasper earlier this year.

Kasper had just taken over the role in August 2023, after Kenny Parcell, the former president, resigned amid sexual harassment allegations that were first published by the New York Times. NAR employees reportedly said Parcell improperly touched them and sent lewd photos and texts. In the Times article, Parcell denied the accusations.

In November 2023, the chief executive of NAR, Bob Goldberg, also stepped down, and was replaced by Wright. Goldberg stepped down two days after the $1.8 billion judgment against the NAR.

https://www.mercurynews.com/2024/03/15/realtor-settlement-on-commission-fixing-could-create-seismic-changes-in-how-americans-buy-homes

Source: Fast Company, Megan Malas
Photo: Eyestetix Studio/Unsplash, Mantas Sinkevičius/Pexels

In a new report, Goldman Sachs analysts say some obstacles are still standing in the way of more office-to-multifamily conversions.

Underutilized office buildings, due to the surge of remote work, have increased the U.S. office vacancy rate to 13.5%, the highest level since 2000. Over the next decade, Goldman Sachs analysts expect the office vacancy rate to rise to 18%.

According to Goldman Sachs, about 4% of U.S. office buildings may no longer be viable. And in the cities most affected by remote work, between 14% and 16% of offices may no longer be viable. These are typically office buildings located in suburban areas or central business districts that were built more than 30 years ago, have not been renovated since 2000, and currently have vacancy rates exceeding 30%.

However, only 0.49% of office inventory was converted into multifamily units in 2023, compared to 0.23% in pre-pandemic 2019. Goldman Sachs expects that figure to rise to just 0.74% by 2028.

That’s according to a recent report published by Goldman Sachs, which concludes that the high costs of converting office buildings to multifamily housing units are hindering a more significant acceleration.

“The office-to-multifamily conversion rate is [still] quite low, suggesting that there may be substantial financial and physical hurdles to conversion,” wrote Goldman Sachs analysts Vinay Viswanathan and Elsie Peng in the report.

According to analysts at Goldman Sachs, office prices still haven’t fallen enough to entice developers to do more conversions.

Goldman Sachs analysts found that: “For the top 5 metropolitan areas that are most affected by remote work, we estimate that office acquisition prices would need to fall almost 50% for conversion to be financially feasible. This suggests that most of these offices will likely remain underutilized in the near term.”

In part, office prices haven’t fallen further because institutional barriers to reevaluating office space have resulted in many lenders extending or modifying office mortgages that might otherwise default. As a result, forced property sales that would have otherwise already happened have not occurred.

The report states that another obstacle to conversion is safety codes. Residential building codes require bedrooms to have certain sizes of windows, but it is impossible to restructure some office buildings with deep floor plates—common in large buildings—in a way that provides all units with proper windows, Goldman Sachs analysts explain. Additionally, transforming an office’s existing plumbing, ventilation, and electric system for each residential unit can be challenging.

“The annual conversion rate from office to multifamily will remain low and only increase slowly to 0.74% in the next four years, delivering about 20,000 additional multifamily units per year,” wrote Goldman Sachs. That’s a drop in the bucket compared to the total of 468,000 multifamily units that were built in 2023.

Big picture: Office-to-residential housing conversions are on the rise; however, economic and financial barriers mean that it still remains a small segment of the residential housing market.

https://www.fastcompany.com/91047378/housing-market-empty-offices-apartments-goldman-sachs

Source: Business Insider, Dan Latu
Photo: Florida, Miami Beach, aerial of Icon South Beach Luxury Condos. Jeff Greenberg/Universal Images Group/Getty © Jeff Greenberg/Universal Images Group / Getty

Rising insurance costs and HOA fees are forcing some Florida condo owners to sell.

Buyers are wary of the same costs, however, causing home prices to slide in major cities.

It’s a symptom of the insurance crisis and affordability problems plaguing Florida homeowners.

The Florida condo market is caught in a storm.

Owners are trying to unload units in the face of the skyrocketing costs of maintaining an apartment in Florida. At the same time, prospective buyers are driven away by those same fees.

“It’s definitely been a slow-motion train wreck,” said Joe Humphfner, who owns a condo in Jupiter, near West Palm Beach.

Listings have soared as prices fall in major Florida cities, according to a new report from real-estate listings site Redfin. The number of listings in February jumped nearly 30% in markets like Jacksonville and Miami compared to the same time last year. Meanwhile, prices dropped by as much as 7% in Jacksonville, to $254,000, and 3% in Miami, to $385,000. By contrast, median condo prices nationally rose 8% over the same period, to around $340,000.

It’s a symptom of the increasing cost of property ownership in the Sunshine State, where the rusk of flooding and worsening weather have scrambled the homeowners’ insurance market. Florida homeownership has become increasingly expensive in general as home prices continue to rise, mortgage rates remain frustratingly high, and property taxes keep climbing.

“A lot of us have known that this is on the horizon,” Holly Meyer Lucas, a real-estate agent with Compass in Jupiter, told Business Insider. “It’s a long road ahead for us to get insurance even remotely affordable for people.”

A deepening insurance crisis for Florida homeowners

The rising cost of insurance has been a long-simmering problem in Florida.

The climate crisis and corresponding increase in extreme weather events like hurricanes have prompted major companies, including Farmers Insurance and Bankers Insurance, to cut back coverage offered in the state or pull out entirely.

For those who can still get insurance, it’s more expensive than ever.

Homeowners insurance in Florida costs three times the national average, according to Redfin, and is escalating at a rapid pace. In Cape Coral, on Florida’s west coast, flood insurance more than doubled in a year, from nearly $1,800 to $4,800, according to federal data cited by the Wall Street Journal.

Homeowners’ association fees are rising as older buildings make needed upgrades.

The Surfside tragedy of 2021, when a 12-story condo building in Miami collapsed and claimed 98 lives, has caused many Florida buildings to initiate major renovation and safety projects. Fees called assessments are being levied on condo owners to pay for these updates to infrastructure, which can include redoing concrete, revising balcony safety, and other measures.

These assessments can add thousands to the annual cost of ownership.

“People don’t just have $10,000 or $30,000 lying around,” Meyer Lucas told Business Insider.

Condo buyers and sellers alike are losing interest

Anthony Forina, 43, has been investing in South Florida for over 20 years. Recently, he walked away from buying a $300,000 condo in North Palm Beach that would have come with a $4,500 annual insurance bill.

Just a year ago, he estimated, that insurance bill would have been around $2,900, and worries it will only climb higher in the coming years.

Forina compared the rent he could charge per month with how much it would cost to own the apartment and determined it would no longer be a sound investment.

“We’ve hit a point where the numbers just don’t make sense,” he told Business Insider.

On his own single-family home in Palm Beach Gardens, Forina added, his annual insurance premium, which was $2,600 in 2017, jumped to $8,200 in 2024.

Humphfner, the other Jupiter condo owner, bought his pad for $140,000 in 2020. Rising costs have made him consider selling already, he said.

HOA fees on his one-bedroom unit have jumped from $200 a month to $500 a month. Much of the increase, Humphfner said, has come from the increased cost of the building’s annual insurance payments, which have ballooned from $30,000 per year in 2020 to $100,000 this year.

Humphfner, 25, predicted that many owners like him will be forced to sell their units because of increases like these. Many of South Florida’s older buildings, he added, will be scooped up by investors and turned into new ultra-expensive luxury buildings as condo owners sell their properties at discounted rates to escape the rising costs.

“Unless there’s a miracle in the insurance market,” Humphfner said, “I don’t see it being sustainable.”

https://www.msn.com/en-us/money/realestate/florida-condo-owners-are-stuck-in-a-train-wreck-as-prices-drop-and-mounting-insurance-rates-scare-away-buyers

Source: Knowledge@Wharton, Susan M. Wachter

More young adults are choosing to live with their parents as affordable housing dwindles, according to research co-authored by Wharton’s Susan Wachter.

In recent years, there has been a sizable uptick in the number of young adults living with their parents, a trend not seen since the Great Depression nearly a century ago. This phenomenon inspired Susan Wachter, a Wharton professor of real estate and finance, to explore the underlying factors driving this marked shift in Gen Z and Millennial living arrangements.

The study, penned with co-authors Arthur Acolin from University of Washington and Desen Lin at California State University, Fullerton, found that about one-quarter of the 9 percentage point increase between 2000 and 2021 can be explained by the decline in housing affordability, along with higher unemployment and delays in people getting married and rearing children.

Recent census data underscores the magnitude of this trend, with almost half of those aged 18–29 currently dwelling with their parents, marking the highest level observed since the Great Depression era (1929–41). After the economic boom following the end of World War II, the number of young adults living with their parents dropped to a low of 27% in 1960. Since then, this figure has been steadily increasing, reaching 40% in 2000, 47% in 2019, and 49% in 2021.

Despite Increasing Salaries, Gen Z and Millennials Can’t Afford Houses

“This is a resilient response to the very dramatic increase in rental burden. The average proportion of a person’s income that goes to rent was 25% in 2000, and it’s now 40%. That’s really a striking increase,” Wachter said.

Overall, the paper found that delays in getting married and having kids account for most of the increase in Gen Z and Millennials living with their parents. But the study focused on the period from 2000 to 2021, during which housing affordability significantly deteriorated. Since 2021, both household income and housing costs have risen, but rent and housing prices have outpaced wage growth. The study’s estimates suggest that the worsening affordability explains one-fourth of the increase in the share of young adults living with their parents in the aggregate and as much as twice that for minorities.

Notably, the connection between soaring housing prices and young adults residing with their parents is particularly strong in areas where housing costs are highest. “This reflects the deepening affordability crisis in the U.S.,” Wachter said. “There would be 2 million more households occupying housing units but for this alternative solution of seeking financial shelter with one’s parents. So the excess demand for housing is lessened, which is a good thing in the current housing affordability crisis where there’s high demand and lack of supply.”

Broader Economic Conditions Also Affecting Trends

From 1960 to 2000, the increase in young adults living with their parents was primarily due to fewer young men participating in the workforce. However, the decline in housing affordability has driven an even more rapid increase in co-residence in the past two decades, reaching 49% in March 2021 from 39.9% in 2000, according to the study.

Moreover, this may explain why, despite a surge in co-residence during the Great Recession, the number of individuals living with their parents did not significantly decrease during the subsequent economic recovery period. “This is happening due to housing costs outpacing income growth,” said Wachter.

Looking into specific time periods, the study finds that both housing affordability and job market conditions played a key role in more people living together — both during the COVID-19 outbreak and earlier in the 2000s. For instance, during the pandemic when unemployment rates surged, more individuals resorted to living with their parents, akin to trends observed during the 2009 global financial crisis.

Affordable Housing Issues Disproportionately Impact Minority Groups

Moreover, the study highlights the disproportionate impact of housing affordability on minority populations, particularly Asian, Black, and Hispanic young adults, who are more likely to live at home with their parents. “These groups tend to start off with fewer people living with parents but then see a quicker increase, surpassing the average for white non-Hispanic people,” said Wachter.

The findings further suggest that the increasing trend of young adults living with their parents might be influenced by factors related to wealth and limitations on borrowing money — a subject warranting further research. “Previous studies have shown that when housing becomes less affordable, fewer people can afford to buy homes. An alternative for those who can’t afford high rents or home prices is to live with their parents,” said Wachter.

https://knowledge.wharton.upenn.edu/article/will-gen-z-be-able-to-afford-houses

Source: Realtor.com, Lisa Johnson Mandell
Photo: Realtor.com

It’s a good thing houses aren’t like people—you don’t have to use euphemisms like “mature” or “golden” for homes (like you do with certain TV bachelors).

When it comes to private residences, you can boldly declare they’re just plain old.

So let’s celebrate the true geezers of the bunch. The oldest of America’s five most seasoned homes dates all the way back to 1658. Yet that one and the others are still in fine shape—most of them move-in ready.

Historic homes, however, do not come cheap. This quintet of old houses range in price from $639,000 to $1,720,000. But you truly get what you pay for, and then some. One has a history that links it to founding father George Washington.

All five of these properties still have original features, including planked floors, brick, and many fireplaces. Let’s dial the clock back three centuries and have a look.

5. 55 Middle Rd, Brentwood, NH
Price: $699,000

Year built: 1705

Charm and character: Once you set foot inside this house, you’d never know it was over 300 years old. Known as the Henry Marshall Garrison, the home has “primitive rooms with built-ins, ancient paneling, [and] hardware,” according to the listing details. But the rest of the three-bedroom, 2,383-square-foot house has been updated and restored fairly recently.

A newly renovated kitchen and dining area are especially spacious and lovely, with vaulted and beamed ceilings, granite countertops, and stainless steel appliances. The bedrooms are uncommonly spacious, and there are five fireplaces scattered throughout the house.

In addition to the main house, there’s a barn with plenty of storage and garage space on this 1-acre, wooded property.

4. 2494 Simonson Rd, Farnham, VA
Price: $1,720,000

Year built: 1699

Rich in history: There’s nothing rustic about this luxuriously elegant abode known as Indian Banks. The property gets its name from its location on Morattico Creek, where it joins the Rappahannock River. Spanning 17 acres, it was part of a land grant to Captain Thomas Glasscock, who married Ester Ball (a cousin of George Washington), and created this family home on the parcel.

The main residence has been beautifully restored and renovated to the highest standards. The Manor house has four bedrooms and 3,684 square feet of living space. Distinctly English in its architecture, it features Flemish bond brickwork and a rare scrolled soffit above the main entrance. There is a total of seven fireplaces, a timeless kitchen with modern appliances, and beautiful river views.

The property also includes a dock on the water, a cabin, smokehouse, barns, stables, sheds, and various other outbuildings.

3. 3097 N Route 9, Seaville, NJ
Price: $795,000

Year built: 1695

Cozy colonial comfort: The Reeves-Iszard-Godfrey house was expanded in 1800, and moved to its current location in New Jersey in 1962. It’s listed on both state and national historic registers, and while it might take a little work to bring the shingled three-bedroom home up to date, it has many virtues—including an 8.4-acre lot.

Beyond the sturdy beams, decorative gunstock posts, and wide-plank wood floors, the home has numerous highlights. There’s a spacious, repurposed laundry area and utility room, along with another multipurpose room that could easily be used as a den, library, or sitting room.

The property also includes a newer, two-story barn or garage with three bays, storage areas, a utility room, and a second-floor workshop. Plus, the property comes with a charming, 18th-century, one-room house with a brick fireplace and a second-floor bedroom.

2. 13 Great Neck Rd, Wareham, MA
Price: $639,000

Year built: 1683

If these walls could talk: Brimming with character, this historic home is the epitome of antique charm accentuated by modern amenities. Its history includes an occupation by Revolutionary War Lieutenant, Prince Burgess, and a restoration by master craftsman Gerry Pearle in 1973.

The three-bedroom residence includes a large kitchen with a cathedral ceiling, a dining room with the original fireplace, and a library. Outside, there are workshops and a greenhouse.

Situated on a verdant acre with vegetable and herb gardens and plenty of mature trees, it’s located near beaches, a golf course, and highways to Boston, Providence, and Cape Cod. While the place could use a little work, its potential is endless.

Wareham, MA
1. 162 Cherry St, Wenham, MA
Price: $925,000

Year built: 1658

Historic treasure: The Newman-Fiske-Dodge House was built over 100 years before the Declaration of Independence was even conceived. Considered a “historic landmark” in Wenham, it’s been expanded and renovated over the decades. But much of its original structure remains, including oak-wood beams, wood floors and paneling, five fireplaces, and brick walls.

There are now five bedrooms and four baths, spread across 4,000 square feet. The 2-acre lot includes a spacious and picturesque barn that can be used for cars, storage, and gatherings. It also has rolling, grassy lawns and wooded areas.

Newer features include a large, modern kitchen with skylight; a sun porch; and a three-room in-law apartment with a separate entrance and dedicated driveway.

https://www.realtor.com/news/unique-homes/5-oldest-homes-for-sale-in-america