Real Estate

NAR Under Scrutiny: Executive Perks, Tax Concerns, and the Path Forward for Housing

November 21, 2024

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NAR Executive Compensation Scandal and the Growing Housing Affordability Crisis

NAR’s Executive Spending Controversy

Recent revelations about the National Association of Realtors (NAR) have given real estate professionals another compelling reason to reconsider their membership. The organization’s executives have been found to be using member dues for lavish personal expenses and compensation packages.

Former CEO Bob Goldberg’s compensation is particularly concerning. His annual salary jumped from $1.2 million to $2.6 million during a period marked by questionable business decisions, including:

  • The sale of MoveInc
  • Relinquishing Zillow’s primary source of property aggregation
  • Failed attempts to promote .realtor domains
  • Creation of numerous questionable revenue-generating designations

Beyond his salary, Goldberg’s contract included extravagant perks:

  • Exclusive country club memberships
  • First-class personal travel
  • Expensive car allowances
  • Pet travel expenses
  • Premium entertainment perks, including “Hamilton” tickets at peak popularity

Legal and Tax Implications

As a nonprofit trade association, NAR’s spending practices could violate tax laws through “private inurement.” According to DC nonprofit lawyer Jeff Tenenbaum, “It is highly unusual, I would even say virtually unheard of for volunteer leaders and officers to receive compensation at those levels.” This violation could jeopardize NAR’s tax-exempt status.

The Housing Affordability Crisis

Meanwhile, the housing market faces severe affordability challenges. According to CNBC, home-buyers now need to earn 80% more than they did in 2020 to afford a house. Two key factors drive this crisis:

  1. Growing disconnect between housing costs and wages, as noted by C. Kirabo Jackson from the White House Council of Economic Advisers
  2. Declining new housing construction due to restrictive land-use and zoning regulations

Potential Solutions

A proposed plan includes:

  • Opening federal land for home construction
  • Offering substantial building incentives
  • Reducing permitting costs

These measures aim to significantly reduce construction costs and help restore balance to the housing market.