Home Sales Even Worse Than Reported Says the Primary Agency That Reports Them

Far fewer homes have been sold over the past five years than previously estimated, the National Association of Realtors said Tuesday.

That's from a CNNMoney.com report by Blake Ellis.

While NAR hasn't revealed exactly how big the revision to home sales will be, the agency's chief economist Lawrence Yun said the decrease will be "meaningful." ...

Yun said the database NAR uses to track existing home sales, the Multiple Listing Service (MLS), has led the real estate agency to over-count existing home sales for several reasons.

The MLS database only includes home sales listed by realtors, and excludes homes listed by owners, providing a very narrow view of the market. And because more people are using realtors to list their homes instead of selling them independently, realtor-listed sales numbers have become artificially inflated, said Yun.

I cannot make sense of that last paragraph; can anyone else?

FWIW, back in 2007 we ran a Quorum on this blog asking the question "Is it time to believe in the housing bubble?" Lawrence Yun was one of the respondents:

Want to Jump-Start the Housing Market? Get Rid of the Realtors!

Okay, okay, that's not quite the message of a new working paper by Panle Jia Barwick and Parag A. Pathak called "The Costs of Free Entry: An Empirical Study of Real Estate Agents in Greater Boston." But for those of us who have thought about the Realtor's role in the housing market, it's tempting to jump to that conclusion. Here's the full version of the study, and here's the abstract:

This paper studies the real estate brokerage industry in Greater Boston, an industry with low entry barriers and substantial turnover. Using a comprehensive dataset of agents and transactions from 1998-2007, we find that entry does not increase sales probabilities or reduce the time it takes for properties to sell, decreases the market share of experienced agents, and leads to a reduction in average service quality. These empirical patterns motivate an econometric model of the dynamic optimizing behavior of agents that serves as the foundation for simulating counterfactual market structures. A one-half reduction in the commission rate leads to a 73% increase in the number of houses each agent sells and benefits consumers by about $2 billion. House price appreciation in the first half of the 2000s accounts for 24% of overall entry and a 31% decline in the number of houses sold by each agent. Low cost programs that provide information about past agent performance have the potential to increase overall productivity and generate significant social savings.

Freakonomics Quorum: Is It Time to Believe in the Housing Bubble?

Barbara Corcoran, Robert Shiller, N.A.R. chief economist Lawrence Yun and others discuss whether housing bubbles exist (and, if so, whether we're in one)

Finally, Some Love From the Real Estate Industry

While it may be true that we have no fans at the National Association of Realtors, at least there is someone in the real estate industry — a commercial leaser in Memphis — that likes us. Enough, at least, to rip us off. I have to say, I really like the subtle shadowing they did […]

Freakonomics in the Times Magazine: Payback Time

In their June 10, 2007, column for the New York Times Magazine, Dubner and Levitt present some interesting new research on real estate sales. No, it's not what you're thinking: more Realtor bashing! Although it is true that they have written before about the imperfect nature of the Realtor's commission model, this column takes a somewhat different tack. It's about a little-known trick known as a cash-back transaction, in which a buyer receives a "rebate" to finance his own down-payment - a rebate that the lending bank never finds out about. This blog post supplies additional research materials.

How Much Is a Realtor Worth?

We’ve got a column appearing in the June 10 issue of the New York Times Magazine, which is a special issue on the U.S. wealth divide. Our piece deals with some interesting new research on real-estate sales (more on this later today). I know what you’re thinking: more Realtor bashing! Well, no. Even though we’ve […]

This Week In Reader E-Mail

Rarely does a reader express his sentiment so cogently as in this case, from one “Fred Peck”: Your article that tries to shed light on Realtors is probably the dumbest and most pointless thing I have ever read. Rogue economists, huh? You idiots sound more like cynical morons that think they know everything. I guess […]

Meet the New Realtor: Google

Although it is in a fairly primordial stage, this new home-finding tool from Google may turn out to be as formidable a challenge to Realtors as the Department of Justice. It does little more than aggregate public information (as is Google’s wont), but when the public information in question is the listings of homes for […]

Even Jerry Seinfeld Can’t Avoid a Realtor’s Fee

And a N.Y. State Supreme Court justice says so.

Academic Research on Realtors Confirmed by 1983 Novel

A reader named Gerard Mulligan was good enough to let us know that a 1983 novel he was reading, Scenes From Later Life by William Cooper, contains a passage that, if the section from Freakonomics about real-estate agents were ever made into a film, could practically serve as the script. (If the film were British, […]