The tumult of 2024 leaves actual property on a cliffhanger

Whether or not it’s refining what you are promoting mannequin, mastering new applied sciences, or discovering methods to capitalize on the subsequent market surge, Inman Join New York will put together you to take daring steps ahead. The Subsequent Chapter is about to start. Be a part of it. Be a part of us and 1000’s of actual property leaders Jan. 22-24, 2025.

Three and a half many years in the past, TV skilled certainly one of its best cliffhangers.

The 12 months was 1990 and Star Trek: The Subsequent Era was a juggernaut. On the helm of the present was Patrick Stewart’s Captain Picard, a pillar of sound management and ethical rectitude.

TAKE THE INMAN INTEL INDEX SURVEY FOR DECEMBER

Within the present’s third season finale, the zombie-like Borg kidnapped Picard and turned him into certainly one of their very own. The finale ends with Picard as a Borg telling his now-former crew that they, too, can be became automatons. Picard’s right-hand man provides the order to destroy the Borg, then the credit roll.

Viewers needed to wait months to seek out out if Picard or any of the Trek forged would survive (Spoiler: They did).

The second was revolutionary within the pre-streaming period, and many years later, it’s nonetheless described as the very best cliffhanger in TV historical past.

But it surely’s price mentioning right here as a result of it provides a type of metaphor for what occurred to the true property trade in 2024. Because of authorized motion, authorities strain, a tough market and different forces, actual property has confronted one of many roughest and most disruptive years in dwelling reminiscence.

But additionally, like an action-packed TV present, it’s not likely clear proper now the place the story is headed. Will consumers abandon brokers? Will the federal government carry down the hammer? Will lawsuits destroy the established order? Is resistance futile?

Inman has in latest weeks got down to reply many of those questions in our ongoing year-end protection. But additionally, many questions merely lack solutions. The previous 12 months have been stuffed with tumult, however what that tumult means or the place it leads remains to be to be decided.

In different phrases, actual property finds itself in a situation not not like the one in that outdated Star Trek finale. As 2024 attracts to a detailed, the trade has ended up with a cliffhanger.

So with that in thoughts, listed here are the most important tales that dominated 2024 — and which nonetheless have us on the sting of our seats.

Fee litigation dominated

When every part is alleged and completed, there was actually only one story that eclipsed all others in 2024: antitrust fee litigation. You in all probability know the broad strokes, however to refresh: homesellers in recent times filed lawsuits accusing trade gamers of holding prices excessive, and a jury sided with these homesellers final 12 months.

However the story took a flip in 2024. Most notably, NAR settled its case within the homeseller lawsuits in March, agreeing to pay $418 million and make varied coverage modifications. These rule modifications went into impact in August, and NAR’s settlement notched its closing approval final month. The NAR settlement coated smaller brokerages, with varied bigger brokerages settling over the course of the 12 months.

So, case closed proper?

Improper.

Certainly, the fee lawsuits might signify the most important cliffhanger actual property has ever confronted. Proper now, excellent questions stay over the destiny of appeals and the longer-term response of each regulators and the general public.

Leaders who spoke to Inman agreed that there are numerous extra chapters to this story. For instance, Russ Cofano — an trade veteran and CEO of Collabra Expertise — described 2024 as a “point of inflection for the industry.”

“I think it will be looked at historically as being a significant catalyst year in terms of changing business practices for the industry,” he mentioned. “I think we’re going to see some changes that actually come about in the years to come.”

Actual property strategist Rob Hahn supplied the same interpretation, describing 2024 as “the year that changed everything” — however including that it was “the introduction of the first chapter” of actual property’s subsequent act.

“I would say this is like the first chapter of the new book,” Hahn added.

These characterizations have been widespread amongst leaders who spoke to Inman. And so the purpose is to not reply each remaining query, however slightly to notice that the questions stay. We’re in a two-part episode (not less than) and we have now to attend for the subsequent season for the conclusion.

Catch up: 

Consolidation looms

Fee lawsuits signify actual property’s greatest cliffhanger heading out of 2024, however there are many others — and Compass epitomizes one of many greatest. A part of that has to do with CEO Robert Reffkin main the cost to finish NAR’s Clear Cooperation Coverage (extra on that under).

But additionally, it’s as a result of Compass made enormous acquisitions this 12 months. Within the spring, for instance, Compass picked up Latter & Blum. Then, earlier this month, the brokerage made even greater information by revealing that it had acquired @properties Christie’s Worldwide Actual Property.

This brings up principally two points. The primary is just that Compass had an excellent 12 months. Certainly, in conversations with varied trade executives for this story, Compass persistently got here up greater than another brokerage. And so one of many issues to observe for in 2025 is how nicely Compass can preserve its profitable streak.

However second, Compass’ strikes are indicative of a bigger pattern towards consolidation. Think about in spite of everything that it was solely three years in the past that @properties itself acquired Christie’s. Compass coming in and getting the mixed manufacturers is paying homage to mergers within the meals trade, which in latest many years have left only a few huge names standing. That’s why Pepsi makes Lays potato chips, and why Nestlé makes DiGiorno pizza.

The true property trade has an extended solution to go earlier than it consolidates to the identical extent because the meals trade. However many times, consolidation got here up in conversations as each a theme of 2024 and one thing to observe for in 2025.

“I do think that there will be more and more consolidation,” Jason Aleem, Redfin’s chief of actual property companies, mentioned in a dialog earlier this month.

“I think we’re going to see a lot of consolidation, a lot of opportunities, a lot of companies being sold or coming together,” Chris Heller, president of OJO/Movoto, informed Inman final month.

“We’re very aggressive and bullish right now in terms of M&A,” Hoby Hanna, CEO of Howard Hanna, mentioned.

That is however a sampling of comparable commentary Inman collected recently. And the fundamental gist of the argument is that the disruption of 2024 might give an edge to firms with bigger scale. But it surely stays to be seen who can be acquired — or, if you’ll, assimilated — by whom.

Catch up:

The patron query

One other huge query proper now has to do with shoppers’ subsequent strikes.

To date, polling from Inman Intel suggests that almost all consumers will not be negotiating low charges with their brokers and that almost all sellers will not be averse to paying consumers’ brokers. So, the established order persists — one thing that’s itself a serious takeaway from 2024.

Nonetheless, Intel findings additionally point out that there’s rising downward strain on commissions and that sellers not less than now know that they don’t should pay consumers’ agent charges. On prime of that, hundreds of thousands of postcards, emails and different notices have gone out to shoppers concerning the settlements, additional elevating consciousness concerning the scenario. And critically, actual property professionals who responded to Intel polling this fall indicated that it’s too early to inform how shoppers would possibly reply.

So, cliffhanger. To be continued.

In conversations with Inman, some leaders predicted that the longer term might look comparatively just like the current, however there are different doable permutations as nicely. One, floated by TurboHome CEO Ben Bear, is that the NAR settlement might drive consumers to low cost or flat-fee brokers.

“That thesis is proving true,” Bear informed Inman. “So, we’ve launched in the Bay Area and are rolling out in Texas and Washington State as well. And have done about $18 million in transactions in two months.”

It’s price noting that flat-fee brokerages had a tough run in 2024. For example, once-buzzy Homie has shrunk and is suing NAR for basically dooming it. Certainly, the struggles of flat-fee brokerages and different techie housing ideas (see additionally: iBuying) was a big subplot of 2024. However Bear not less than argued to Inman that the NAR settlement will increase client consciousness of how brokers receives a commission, doubtlessly pushing individuals to attempt newer fashions.

That’s only one idea, although Bear was not the one individual to carry this up. For instance, when Inman requested Hahn if fee litigation would possibly give rise to low cost brokerages, he replied, “Absolutely.” Hahn — who not like Bear doesn’t run a discounter — additionally speculated that conventional brokerages would possibly finally undertake traits historically related to low cost brokerages.

It’s additionally price noting right here that 2024 is proving to be one of many worst years for dwelling gross sales in many years, and that mortgage charges haven’t fallen in the way in which many had hoped. So certainly one of 2024’s greatest cliffhangers is how quite a few transferring components — charges, stock, litigation, new fashions and extra — would possibly reshape client conduct.

Catch up: 

The Nationwide Affiliation of Realtors’ tough trip

Although NAR’s fee litigation consumed trade consideration in 2024, a slew of different points associated to the commerce group additionally made headlines — and stay unresolved. Arguably the most important is NAR’s battle with the DOJ, which the commerce group needs the Supreme Courtroom to adjudicate. Few leaders had any concept the place that story goes subsequent.

“I don’t think anybody really knows where the DOJ’s head is at,” Cofano, capturing a standard sentiment, mentioned. “And if they say that they do, I think they’re just blowing smoke.”

It’s additionally vital to keep in mind that the DOJ is a good greater wildcard than typical as a result of Donald Trump received November’s presidential election and can thus appoint new management on the company. Most leaders who spoke to Inman didn’t assume Trump’s victory would fully eradicate the DOJ’s curiosity in the true property trade. However many did speculate that Trump’s win might alter the NAR-DOJ battle.

Apart from the DOJ, there’s additionally a simmering battle proper now over NAR’s Clear Cooperation Coverage, which requires brokers to place their listings into an NAR-affiliated MLS. This difficulty sharply divided leaders in 2024. However thus far, NAR has not taken any motion, which means the rule’s subsequent act received’t come till subsequent 12 months.

Lastly, NAR has confronted a gradual stream of criticism in 2024 for varied governance points. This story really started with scandals in 2023. These scandals finally led to present NAR President Kevin Sears entering into his function in January . Sears has spent 2024 touring the U.S. to reassure members and break down the group’s stand on issues like fee litigation. Sears seems to have steadied the ship considerably, however NAR has however confronted rising scrutiny recently over points reminiscent of funds and spending.

All of those points make it appear like 2024 put NAR on the ropes, and lots of who spoke to Inman imagine the stage is now set for change.

“Undoubtedly, NAR is at a crossroads,” Amy Lessinger, president of RE/MAX, informed Inman. “They are the largest trade organization in the U.S. that has advocated for property rights and supporting real estate professionals. And I think that’s still an important piece of the value they provide. But I think the scrutiny they’ve faced in recent years does highlight the need for meaningful evolution.”

That evolution is but to return into focus. And that implies that, like so many different issues in actual property, NAR is ending 2024 on a cliffhanger.

Catch up: 

Electronic mail Jim Dalrymple II