NAR Antitrust Case Unveiled: Impact on Real Estate's Future

Mike Mills (Host) | 00:00:08 to 00:00:30

Hello, everybody, and welcome to the Texas Real Estate and finance podcast market update for the week of April 9. I'm your host, Mike Mills, a local North Texas mortgage banker with Geneva Financial. I do this podcast every single week, but when I'm not spouting nonsense into the Internet, I help people buy and refinance their home. So if you need help with any of your clients or solving any lending problems, please feel free to give me a shout. I'm way better at loans than I am at this stuff.

Mike Mills (Host) | 00:00:30 to 00:00:50

So yesterday, if you were in the past of the eclipse, you truly witnessed a historic event, because no solar eclipse will be visible in the contiguous United States again until 2044. I was out there with my son watching it. It really was pretty cool. Once if you were in the area where you got total coverage, you actually saw a complete blackout. Like, it went dark for about five minutes.

Mike Mills (Host) | 00:00:50 to 00:01:00

Animals were acting a little crazy. It was a little weird, and then it just brightened right back up again. So it was a pretty awesome experience. I was kind of low key, not overly excited about it. Just because, you know, just an eclipse, what's it going to do?

Mike Mills (Host) | 00:01:00 to 00:01:15

But when you actually see it, witness it, it was pretty awesome. So if you got to check it out, I hope you were as wowed by it as I was. So sorry. I've been off on the market update the past couple weeks. I had a few changes in my studio one week, had a little bit of Internet connection, and so we're just kind of getting my feet back underneath me again.

Mike Mills (Host) | 00:01:15 to 00:01:36

Getting back on the market update also got pretty busy with some loans, which is a good thing. But, you know, you got to figure out how to balance work with the fun stuff, which is this. So that's why we're back at it today. So today we're going to go over a few basic topics like we always do, interest rates, a few market trends, but we're going to be really heavy on the NAR and Department of justice and kind of the future of our industry topic. So we'll dive into interest rates, some overall housing market stuff.

Mike Mills (Host) | 00:01:36 to 00:02:14

So you guys are up to speed with what's happening in our market right now, but then we're going to dive into what's going on with the NAR settlement and the ruling last week by Us Court of Appeals in DC that the Department of Justice can reopen the antitrust case against NAR for anti competitive practices. That settlement that we got in the Citzer Burnett case is not the end of this, and the Department of Justice is now involved again so big moves happening right now, but let's go ahead and get into some housing market numbers before we dig into the meat of today's episode. We're going to start with everybody's favorite interest rates. So right now rates are around 7% to 7.375, depending on what your current situation is. There's been a lot of fluctuation in the market over the past couple of weeks

Mike Mills (Host) | 00:02:14 to 00:02:41

You know, we've gone from the high sixes to the low sevens and back and forth probably the last couple of months multiple times. And right now my expectation is that we're probably going to stay in this range all the way through the summer unless there's something dramatic that happens in the economy. Because the problem that we have right now is the recent job data that's showing that we're adding all these jobs into the economy and that the economy is going really strong. Now. Never mind that the jobs that were added were mostly part time jobs and that we haven't actually added any full time jobs to the economy since August of 2023.

Mike Mills (Host) | 00:02:42 to 00:03:08

Meanwhile, we've added almost 1.4 million part time jobs during that same exact period. So I guess the economy's booming for all the part time gig workers out there. But for those trying to hold down a full time job to support your family and trying to pay for all the stuff that's gotten incredibly expensive, it's really not looking that great because we really just haven't added full time jobs and the numbers really bear it out. But unfortunately, all we see are headlines. We don't often get the meat of the meat of the actual numbers.

Mike Mills (Host) | 00:03:08 to 00:03:30

And there's been a ton of revisions that have actually revised down the job numbers over the past several months. If you go back and look over the last twelve months, I think we've had anywhere between nine to twelve revisions to the negative side. But unfortunately, the market follows headlines, not always reality. And this week we're also getting inflation numbers. Honestly, expectations are right now that there's not going to be a ton of improvement, which also isn't good for the interest rates for mortgages.

Mike Mills (Host) | 00:03:30 to 00:04:04

In fact, with oil prices spiking up over the last several months, you'll probably see a slight increase in inflation, at least on the headline number. When you get down to the core inflation, which does strip out oil and gas prices, it kind of stays even. But either way, those oil and gas prices seep into everything because it costs to deliver goods to the market, it costs to ship things back and forth. All of this is playing a role and with higher oil prices because of all the conflict that's occurring overseas, you're starting to see that inflation not come down at the same pace that it was, because right now it's still above 3%. And with the Fed's target being 2%, that's what they're aiming for.

Mike Mills (Host) | 00:04:04 to 00:04:45

And that's ultimately where they're trying to get. So in order for the Fed to decide to pivot and start cutting rates, we either need inflation to continue to tick down at a good steady pace towards 2%, doesn't have to get to 2%, as Jerome Powell said, but it does need to start heading in that direction, or we're going to have to see unemployment tick above 4%. Right now we're sitting at a right around 3.83.9 after this last jobs report, which again, you know, when you look at the overall employment numbers, when you factor in the amount of people that have actually left the job market altogether, you know, these numbers probably aren't that incredibly accurate. But it is what it is, and this is what they're showing us on the headline. So until we get above that 4% mark, you're not going to see the Fed pivot and start to cut their Fed rate.

Mike Mills (Host) | 00:04:45 to 00:05:10

So when the Fed goes to meet next month in May, the expectation right now is that rates are going to stay the same. And actually, as we move into June, which is the next Fed meeting after that, the odds of the rate cut have been steadily declining. You know, I think at the beginning of this year, we were somewhere around 90% expectation of a Fed rate cut in June. Now we're closer to like 40%. So the market overall is not living with expectations that we think the Fed's going to pivot and start cutting rates when we get to June.

Mike Mills (Host) | 00:05:10 to 00:05:38

So even if they do, they still are sticking with the fact that they say they're going to cut rates three times this year. But it may not happen until the end of the year. And many in the market are starting to anticipate we may not get those three rate cuts. We might only get one or two at the most. So when you're talking to your clients out there and asking where rates are headed, as it stands right now, we're probably going to be somewhere between this high sixes, low sevens, maybe even up to mid sevens if we don't get true improvement over the next foreseeable future, or at least over the next couple of months, because I don't see a place.

Mike Mills (Host) | 00:05:38 to 00:06:22

Unless again, inflation starts to decline incredibly, which the numbers are bearing out that that's not really going to happen, or we start to see a higher unemployment rate, which, you know, the, the division that I should say the entity or government body that puts out these numbers, the bls that kind of compiles these, and the, and the equations that they use to come up with these figures aren't really helping our case. And regardless of if they're incredibly accurate or a true measure of how unemployment's working in the economy right now, the numbers are the numbers, and that's what they're going to base everything off of. So until there's a, until there's a change in that, you're not going to see rates come down. But there's still plenty of people out there predicting that we may get into the low sixes by the end of this year. Look, as a mortgage person hoping to do some refis, hoping to help people get back into the market, I'm all for it.

Mike Mills (Host) | 00:06:22 to 00:06:41

I just, at this point in time, I don't see that that's going to happen, but I hope I'm wrong. All right, let's move on to just the housing market in general. So in February, the median home market price was $412,000 in the United States in February of 2024. Now, that's up 0.6% compared to two months ago. So inflation is still affecting housing because prices are still increasing.

Mike Mills (Host) | 00:06:41 to 00:07:17

And in the last Fed meeting, Jay Powell was actually asked specifically about home prices not coming down. But when asked this question, he told a reporter that he's focused on overall inflation and not focused on housing, meaning that prices can continue to still go up. And I'm a broken record on this, but the reason that we still continue to see house prices go up, even with overall mortgage applications declining and even with these high interest rates, is simply because there's just not enough homes. So if there's not enough homes for sale and there's still enough demand for that, you're going to see, you're going to continue to see prices go up. And just to reiterate that point on the supply, currently, right now, there are 1.4 million homes available for sale in the United States.

Mike Mills (Host) | 00:07:34 to 00:07:56

That's true, but we're still not even close to where we were prior to the pandemic in 2019. And inventory overall fell again last week because now we're getting to the spring and summer buying season. As a matter of fact, from March 29 to April 5, inventory fell from 517,000 houses to 512,000 houses. And in this same week last year, from March 30 to April 7, inventory actually went up 1000 homes. This is a weekly change, by the way.

Mike Mills (Host) | 00:07:56 to 00:08:21

This isn't the overall homes for sale. And again, to give you context, the overall all time inventory bottom we've experienced in the market was back in 2022 when there were only 240,000 homes available for sale. And the inventory peak that we experienced just for 2023, not the entire market history, but for 2023, was 569,000. So we're already down from our peak that we experienced in 2023. So as it stands right now, I don't see a crash in home prices coming.

Mike Mills (Host) | 00:08:21 to 00:08:55

The only thing that's going to make that happen is if interest rates continue to stay high and there's some sort of super economic event where, what they call like a black swan event where banks go out or, you know, multiple companies start laying off people en masse. Whatever the case may be, that's the only thing that's going to cause home prices to go down, because it's basic supply and demand. Either you have a demand for homes that you have enough supply for or you don't. And right now, the demand, even with high rates and even with high prices, is still overall superseding the supply. So the only way that you're going to see whole prices come down is if we have a glut of supply hit the market and demand stays low.

Mike Mills (Host) | 00:08:55 to 00:09:08

And given the current conditions, I don't see where that's happening. It's not like we're building a ton of homes or have a ton of homes available that are being permitted out, that are. That are going to hit the market soon. As a matter of fact, we still have 26% of homes selling above list price. But that's kind of normal.

Mike Mills (Host) | 00:09:08 to 00:09:42

That's like a normal market average. On. On average, you're seeing about 25% to 30% of the homes listed for sale selling above list price because of certain areas, you know, get higher demand. But just to give you a better understanding of why I don't expect the supply to grow, right now, housing starts, which is just basically builders applying for permits to start building new homes in, in parts of the country are about 1.4 million per year. And in order to meet just our household demand of the growth of millennials and Gen Z on household formations, we need to be at like 1.86 million over the next ten years just to meet the current demand.

Mike Mills (Host) | 00:09:42 to 00:10:04

So if the demand increases, we are so far undersupplied that you're going to continue to see home prices go up. And when you see any headlines, when they talk about home prices for new builds starting to come down, this is also true. You are seeing the median price for new builds come down. But this isn't necessarily because people aren't buying them. What's occurring is builders are building cheaper homes, but they're not building them for cheaper.

Mike Mills (Host) | 00:10:04 to 00:10:32

You're sacrificing square footage and often construction quality. So even the new homes that are coming on the market that are lower priced, it's because you're getting instead of, instead of a 2500 or 3000 square foot home, now it's 2000 sqft or now it's 1800 square feet. And some of the construction quality isn't quite at the level that it's always been. And because of all this, our share of first time homebuyers has dropped dramatically over the last couple of years. Right now, the market share of first time homebuyers is only 26% of the total market.

Mike Mills (Host) | 00:10:32 to 00:11:01

And historically it's been closer to around 40%. So we're almost half of what we normally are for first time homebuyers penetration into the market. And that, again, comes to higher home prices, higher interest rates and just lack of option. And a trend that's not helpful right now is that investors, people that are purchasing homes to rent out of single family homes, not of apartment complexes or multi unit, but single family homes that own more than 100. So this isn't your mom and pop investor, these are people that own 100 homes or more, is up to almost 6% of the total market.

Mike Mills (Host) | 00:11:01 to 00:11:12

And it continues to grow. And this is way up from where it was just three years ago. It's almost double. So although 6% isn't a massive chunk of the market, it's still a big piece. And it's growing rapidly every single day.

Mike Mills (Host) | 00:11:12 to 00:11:35

As a matter of fact, one in ten houses in 2023 were purchased for cash, and that's one of the highest figures recorded since 1989. Now, the fact that they were purchased for cash doesn't always mean investors. It could be people that are downsizing or moving from other states to be able to pay cash because they don't want to have those interest rates. So that number can be a little deceiving. I'm not saying that that's entirely indicative of the fact that we have these large investors coming in and buying up homes.

Mike Mills (Host) | 00:11:35 to 00:12:15

But what it does tell us is that there's a lot more cash available out there that's able to purchase on the market that otherwise wouldn't have been doing when interest rates were low. And more often than not, these are not your first time homebuyers. These are people with money investors, people that have cash to play in the market and still see real estate as a good investment. And to me overall, this is just a further indication that currently the housing market is savagely unhealthy because we have high home prices, we have high interest rates, we have low demand overall. And when you pair that with all of the current lawsuits that are happening in our industry right now, it creates a lot of concern on what the future of our business is going to look like for the next five to ten years.

Mike Mills (Host) | 00:12:15 to 00:12:36

Real estate is always going to be here. People are always going to buy and sell homes. But the share of average Americans that can go in and purchase these homes at these prices, with these rates, with this lack of supply, keeps getting more and more diminished. And with the people that are representing them being basically attacked right now, you're going to see a big shift in the market over the next couple of years. And unfortunately, it's not looking like it's going to be a positive shift.

Mike Mills (Host) | 00:12:37 to 00:13:10

We might have a few instances where, you know, we get a bump down in rates and the market picks back up again. And people come into trying to purchase house because they see rates come down and that'll be great. And for those that are able to survive the slow time and make it through, they will directly benefit from that. So that'll be a good thing. But I feel like that'll probably be short lived, at least for the time being, because we're not going to have enough homes unless there is something that occurs via regulation or via a new, you know, somebody coming in like, you know, right now, hell, Amazon's offering homes that you can purchase online for like $30,000 and Home Depot is doing the same thing.

Mike Mills (Host) | 00:13:10 to 00:13:50

You're buying these tiny homes that you can finance and drop on land, but that's a whole other discussion for another day. But unless there's some sort of adjustment in how these homes are built and construction to keep the cost to where the average American can afford it, with all of the costs going up dramatically for everything else in life, gas, food, electricity, you know, all the energy costs that continue to increase, all of this stuff is going to cause more and more strain on the housing market as a whole and put individuals in a place where they're going to choose to rent, especially because right now renting is substantially cheaper than owning a home. It's just the truth now. It's not a good long term play. And, you know, renting is not good for neighborhoods and not good for housing in the United States in general.

Mike Mills (Host) | 00:13:50 to 00:14:20

We want to give people the right to home ownership. But if you're struggling to pay your bills right now or struggling to feed your family, then, and you could pay $1,000 less in housing expense because you can just rent for a little while, you're going to take that option because it's survival at this point. So all of these things are kind of coordinating together to put in, put us into a place where it doesn't feel like we have a really strong future for where housing is headed. There will be opportunity for a lot of individuals, but we are. I don't see a road where we're going back to where we were prior to 2020.

Mike Mills (Host) | 00:14:20 to 00:14:52

I think our market is going to be dramatically changed once we do come out of this, which we will. So speaking of all that, let's now that we know that rates are probably going to be higher for longer, and we know that home prices are not coming down because we're in short supply, even with the high rates and the high prices and lower demand. Let's talk about the real villain of this story overall to why home prices are so much more and why first time homebuyers can't even afford to buy. Who's the real villain in this story? If you're paying attention to what's happening in the media, it isn't the Fed for making money too cheap and exploding the demand.

Mike Mills (Host) | 00:14:52 to 00:15:21

It isn't institutional investors buying up all the single family residences and paying cash and renting them out. And it isn't builders or municipalities not building enough homes to meet demand. Nobody's talking about any of these things. The true villain that you're seeing in the media right now is you, the local realtor, making an average of about $60,000 a year, closing about one deal a month. You are the true scapegoat in this entire situation because the way it's portrayed right now, you're the problem, at least according to all the lawsuits, the media, and the Department of Justice.

Mike Mills (Host) | 00:15:21 to 00:16:04

You evil realtors have been colluding all along to rob your friends and neighbors in your community that you serve of all their money, according to all the stories out there. Never mind that this method of buying and selling homes has been in place for over 100 years and helped turn housing into 30% of our national GDP. Never mind that this system has helped first time homebuyers that have limited resources to be able to buy a home with the help of sellers paying commissions that were paid for them when they bought their home. Never mind that big corporate interests have been trying to get into the real estate market over the last 20 years with little to no success and now have a clear path to taking over the housing market since your local neighborhood realtor is now the worst person on the planet. But this is where we are.

Mike Mills (Host) | 00:16:04 to 00:16:41

And unfortunately, the reality is, is that many of you out there don't even fully realize the massive shift that's about take place in your business. It doesn't feel like it right now because rates are high and nothing has actually been put in place yet or enacted right now there's just pieces on the board being moved into position to strike when the time is right. What are some of these moves, you ask? Well, you should all know by now that Nar settled the Sitzer Burnett case and they agreed to pay out a fine. But more importantly, they agreed to remove the offer of compensation completely from the listing agreements and the MLS, going as far to say in the settlement that you probably can't even make an offer of compensation in your listing description that you put on the MLS.

Mike Mills (Host) | 00:16:41 to 00:17:13

Even if you have a motivated seller that's willing to pay the buyer agent so they could get more buyers anddrive up competition. And if that settlement is approved, this is supposed to go into effect July of this year. That's three months away. Now, based on many conversations that I've had with agents over the last several months, and even some new technologies that I've seen pop up tools that people can use for their local websites, many agents were planning on listing the buyer agent comp offer on their own personal websites because that's like a freedom of speech you can put, if it's your personal website and you want to put something on there that you can do that. And you know, honestly, this not a bad little workaround, right?

Mike Mills (Host) | 00:17:13 to 00:17:40

It's going to require a little bit more research from the side of the agents and maybe the side of the buyers. But if you have a seller that's willing to pay a buyer agent, you need to be able to put it somewhere, right? Well, hang on just a minute now. Last week, a federal appeals court in DC cleared a path for the Department of Justice to reopen the antitrust case against NAR that they closed over two years ago. And in this court ruling, the assistant attorney general to the United States said that real estate commissions in the United States greatly exceed those in any other developed country.

Mike Mills (Host) | 00:17:40 to 00:18:21

And this decision restores the antitrust division's ability to investigate potentially unlawful conduct by nar that may be contributing to this problem. Apparently in this particular case, when it comes to real estate commissions, we want to be like every other developed country, but when it comes to healthcare and other things like that, we're happy to be ourselves. Now, in this brief, the department justice went on to say that in their view, as long as listing agents can continue to make and advertise compensation offers to buyer agents, steering incentives will exist. So let that sink in. Sitzer Burnett was settled out and everybody agreed to terms, just saying that the offer of compensation to the buyer's agent just needed to be removed from the listing agent in the MLS.

Mike Mills (Host) | 00:18:21 to 00:19:00

Once that occurred, the Department of Justice immediately went in to open the antitrust case, stating, as long as listing agents can continue to make an advertise compensation offers to buyer agents, steering incentives will still exist. Now, I read that as saying that ultimately what the Department justice is trying to do is completely banned the ability for a seller to pay a buyer agent commission. And by the way, they've said this before, they feel like sellers should pay seller agents and buyers should pay buyer agents. And I understand the sentiment, but making such a dramatic shift like that over a short period of time is going to really dramatically affect the housing market. But ultimately, it looks like that's where this is headed.

Mike Mills (Host) | 00:19:00 to 00:19:27

And again, I'm not a fan of this. I'm not rooting for this. I think it's terrible, but I think there may even be more things that we haven't considered yet that the Department of Justice might throw out there as well. So in the industry, we kind of know this. But when you look at these decisions, who is this ultimately going to help, and who is this ultimately going to hurt as a realtor out there and dealing in this market, as long as you have, does anybody in our role actually expect home prices are going to be reduced now because agent commissions are probably going to decline due to these changes?

Mike Mills (Host) | 00:19:27 to 00:20:00

We really believe that sellers are going to be willing to sell their homes for less, or are they going to do like they've always done and just take the comps that have been established in the old system and use it to make more money? This time around since they don't have to pay the buyer agent who they also didn't have to pay when they bought their home. And look, I'm all for people making extra money, absolutely. But there's a lot of sellers out there that had buyer agent commissions paid on their behalf that they're not going to have to pay. So the seller is going to win in the short term, but it's not going to help the housing market overall, and it's certainly not going to help buyers.

Mike Mills (Host) | 00:20:00 to 00:20:21

And right now, the only people that are obviously going to benefit from this is the lawyers who stand to make millions of dollars from these settlements. Even the plaintiffs of these class action lawsuits don't, don't stand to make more than $100. It's probably even less than that. I hear people saying estimates of like $25 that'll get paid out to each one of these people on these settlements. 30% of that total settlement is going to go to all the lawyers that fought the case.

Mike Mills (Host) | 00:20:21 to 00:20:41

So we're going to get to the real beneficiaries of these cases here shortly. But who does this ultimately hurt? Well, it hurts realtors and their families and how they make a living. It hurts first time homebuyers who barely have enough money for a down payment and closing costs. And now we're also going to have to figure out how to pay for their representation and one of the biggest, most complicated transactions in their entire life.

Mike Mills (Host) | 00:20:41 to 00:21:09

It's going to hurt underserved communities and low income families looking to get out from under the world of perpetual rent and always living paycheck to paycheck with very few ways to save for retirement. It's going to hurt the rate of homeownership in this country overall. That's always been correlated with safer communities, stronger families, higher education levels and higher income. But if you turn on the cable news or read a national newspaper, you would think that we've slayed the realtor dragon. Helping millions of Americans save money by not paying those commissions.

Mike Mills (Host) | 00:21:09 to 00:21:25

That's what you're being told. And now because of all this, real estate is a place where lawsuits just come and thrive. And it's starting to bleed into the mortgage world. Last week, one of the largest wholesale brokers on the planet, united wholesale mortgage, is being sued for steering they have an antitrust case coming against them. This isn't ending, folks.

Mike Mills (Host) | 00:21:25 to 00:21:43

This is all just beginning. So from my point of view, this is not doing anything but taking an already incredibly unhealthy housing market and making it so much worse. So why why did all this happen? And who really benefits from this chaos and change? Well, let me introduce you to a company, if you haven't already heard of them, called Blackrock.

Mike Mills (Host) | 00:21:44 to 00:22:04

And for that matter, Vanguard. BlackRock is a massive hedge fund that owns anything and everything you can imagine and the majority of anything and everything. And Vanguard is also an investment platform that shares in this same level of ownership. And, oh, by the way, Vanguard and BlackRock are the heaviest investors in each other. So it's basically just one company operating in two different names.

Mike Mills (Host) | 00:22:04 to 00:22:25

They own pieces of Trulia, Zillow, Realtor.com, and open door. In fact, they're the two biggest shareholders and all those companies. And between the two of them, they own massive shares, if not the most shares, and almost all of the s and P 500, from media to food to telecom to energy company, they literally own everything. But do you know what they don't own and haven't been able to own? Housing.

Mike Mills (Host) | 00:22:25 to 00:22:42

The housing market and the housing industry has been owned by local realtors and local lenders for 100 years. But the housing market is a multi trillion dollar business. It's 30% of the country's gdp. It's the most profitable money moving business in the world. And that big money, they want to control that business.

Mike Mills (Host) | 00:22:42 to 00:23:14

I don't know if you guys know this or not, but at one point, Zillow was paying NAR to access listings through several different companies. When that didn't quite work out the way they wanted, Zillow became a brokerage so they themselves could access the local mls in all major markets. And again, Blackrock owns Zillow opendoor realtor.com dot. So when 2022 rolls around and the market crashes because of inflation, all these companies stock plummet. Then magically, all of these fun little lawsuits start popping up all over the place against realtors who kept surviving while these big companies tank.

Mike Mills (Host) | 00:23:14 to 00:23:45

And through all this, they were able to establish a narrative that says that you are overpaid as a realtor, with newspapers, media outlets, and cable news running stories about this constantly. Oh, by the way, all owned by BlackRock. You see, big companies have a real issue competing against local agents and lenders because people ultimately want to work with someone that they know and trust and one of the largest transactions that they're ever going to make in their life. It's the biggest reason why they've been trying for 20 years to penetrate this market, but haven't been able to do it. But now it looks like they may have found the magic bullet.

Mike Mills (Host) | 00:23:45 to 00:24:14

All these lawsuits showing up suing for anti competitive practices. And now the Department of Justice gets to magically reopen an antitrust case that's been closed for a couple of years, because even after the settlement, again, the Department of Justice didn't feel like it was far enough. And so if all this plays out the way it's looking, that it's going to, and you have all these corporate owned entities controlling a big share of the market now, remember, realtors are not going away. I don't want you to think me telling you all this means that we're just all of a sudden, in six months, there's not going to be any realtors. There absolutely will be.

Mike Mills (Host) | 00:24:14 to 00:24:40

There'll be plenty of realtors out there that are professional, that are doing a great job, that are representing sellers and representing buyers in certain circumstances that are going to continue to make a very nice living doing their job. But if you fast forward ten years, I don't believe that's going to be the bigger share of the market. Or, hell, it might be split 50 50. Because when these corporate owned entities come into play and some of these small guys are gone or just diminished, then everything gets more expensive. And at that point, there's nothing as a consumer that you can do about it.

Mike Mills (Host) | 00:24:40 to 00:24:56

Like I stated earlier, right now it's cheaper to rent. It really is. And any, if you're ever going to tell your clients that it's not, it's not the truth currently right now, because there are more rental units available than there are homes to purchase, it is cheaper to rent, but it comes with renting. You have no equity. You're renting forever.

Mike Mills (Host) | 00:24:56 to 00:25:22

You're living paycheck to paycheck, moving from place to place. And as the housing supply dries up and they stop building rental units, which they have already, and people, more and more people move into renting, then you're going to start to see rents go up, because at that point there'll be a captive controlled market. But it's like the frog boiling in the water. You have no idea that it's occurring because you're just living your life to day to day. And then you look back three years and you were paying $1,500 in rent, and now you're paying $2,500 and you're like, what the hell happened?

Mike Mills (Host) | 00:25:22 to 00:25:45

And you have no other choice because now home prices have gone so high that you couldn't afford it even if you tried. And with home builders not building enough homes to keep up with demand, I don't see where this problem gets alleviated. And, oh, by the way, the biggest investors of these builders are also the same guys, Blackrock Vanguard. So now the question is, how do we fight this, and what do you do? Well, think of your business like the ice wall in Game of Thrones.

Mike Mills (Host) | 00:25:45 to 00:26:09

On one side of the wall, we bicker and fight with each other for business and space to try to see who's going to be the dominant person in that particular market. But on the other side of this wall are these things that have been trying to get to you for years, and they're more dangerous than anything that could possibly be on the wall that we're on the. On the side of the wall that we're on. But here's the thing about that wall. That wall is represented by your connection to your community, your friends, your family, your relationships.

Mike Mills (Host) | 00:26:09 to 00:26:21

That's the thing that Blackrock does not own and cannot ever own. And this is your advantage. This little David against a big Goliath coming to try to take your business. But you have weapons. You just have to use them.

Mike Mills (Host) | 00:26:21 to 00:27:04

And like I've said multiple times through this episode, there's always going to be a place for realtors in the market, at least for the foreseeable future. Just like there are cpas that still earn a really good living despite the fact that turbotax exists. Just like there are still really good travel agents out there that people are willing to pay, even though you can go on to expedia and book your travel. And just like there are still reputable lawyers, even though in this case, I'm not real big fan of those guys that get paid very well and make a great living, despite the fact that the law dogs and Texas hammer and legal zoom exists. You see, the secret to winning in this shifting market is to continue to harbor and create strong relationships and become a master at your craft, and then learning how to tell the world about what you do and why it is so incredibly valuable.

Mike Mills (Host) | 00:27:04 to 00:27:25

But this is not easy. And many people out there, heck, most people out there won't be able to do this and will be lost to all of this change. But there are going to be plenty that survive and plenty that absolutely thrive. It's just going to be up to you which one of those you are. Look, guys, my feeling right now is that we might have about six more months of what I would call business as usual.

Mike Mills (Host) | 00:27:43 to 00:28:05

Just like Darwin. Survival of the fittest. If you can adapt to the new environment, you will have success and you will make a career out of it and you will continue to earn a great living. But sticking your head in the sand and not acknowledging that all of these threats are entering the market is naive. You have to be willing to recognize the train that's coming down the path and adjust your business to make sure that you can survive past and all it takes is work.

Mike Mills (Host) | 00:28:05 to 00:28:22

Well, guys, that's all for today. Again, I'm really not trying to be doom and gloom, but this is all just the reality of the situation and you got to know what's happening so you can make the changes accordingly because you still want to keep providing for your family in a career that you've built your entire life around. It is not ending. It is just changing. And change, as always, breeds opportunity.

Mike Mills (Host) | 00:28:22 to 00:28:46

Hope you guys can tune in this Thursday when I talk to Mister John Liss. John is the CEO of true footage and he has a fresh take on how appraisals may be handled going forward. But he also wrote his entire thesis in college about real estate commissions and Nar and how they interact and has a very unique take on how all this stuff plays out. And he's going to tell us all about it on Thursday. But until then, be good humans and keep grinding because life is what you make it.

Mike Mills (Host) | 00:28:46 to 00:28:47

So make it great.