Landmark Settlement Breaks Up the Real Estate Cartel
There are far too many goods and services for which you can say Americans pay the highest prices in the world. One of those outliers was likely put to an end last week, thanks to a remarkable settlement in a private antitrust case. The outcome shows that too many of America’s high costs are often a function of power, and that the tools to check that power and lower those costs cannot be unilaterally found at the Federal Reserve.
The National Association of Realtors (NAR) has agreed to end the age-old practice of 6 percent agent commissions for residential home sales, which is six times the level of the UK According to The New York Times, which first got the news, the settlement could drop US commission costs by as much as 30 percent, which comes out to more than $8,000 on a home sale with the average purchase price of $417,000. It’s not going to suddenly make housing affordable, although the collusive arrangement did tend to drive home prices higher. And given that real estate commissions are a $100 billion-per-year business, we’re talking about $30 billion in savings, a not-incidental amount at a time when housing costs are