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The Biden Administration’s Partisan Politics in Real Estate: A Gamble on the Wrong Side
The Biden administration is playing a dangerous game of partisan politics with the real estate industry, and they’re betting on the wrong side. They’re going against Realtors, competition, and the most affordable way to bring a property to market and sell it. Just yesterday, the Department of Justice (DOJ) responded to a National Association of Realtors (NAR) petition to honor a previous court decision to close its investigation into realtor compensation. Let’s take a look at how we got here and why I believe real estate has become a game of partisan politics to curry favor with voters at the expense of those who deal in every aspect of the real estate industry, especially home buyers and sellers.
The Timeline of Events:
- November 2020: The DOJ agreed to close its investigation into NAR after reaching a settlement earlier that year. The settlement required NAR to boost transparency about broker commissions and stop misrepresenting buyer agent services as free.
- July 2021: Under new leadership in the Biden administration, the DOJ withdrew the settlement, arguing that the terms barred regulators from investigating certain NAR rules they believe are harmful to buyers and/or sellers.
- January 2023: Judge Timothy Kelly (appointed during the Trump administration) ruled in NAR’s favor, stating that the terms of the earlier settlement were still valid.
- March 2023: The Biden-led DOJ appealed the January ruling.
- December 2023: A three-judge panel heard oral arguments from both parties.
- April 2024: The panel ruled 2-to-1 in favor of the DOJ, allowing the Department to continue its investigation.
- May 20, 2024: NAR filed a petition for a rehearing of the panel’s decision.
- Yesterday: The DOJ said a rehearing is unwarranted, paving the way to alter the landscape of real estate and how lenders and realtors conduct their business.
The Unintended Consequences:
The DOJ’s stance on decoupling commissions, where the seller cannot pay the buyer-side agent commission, will devastate buyer-side representation as we know it. According to findings from the St. Louis Fed and the Census Bureau, well over 80% of all expectant first-time home-buyers do not have enough money to pay an FHA down payment, closing costs, and commissions.
This issue will have a disparate impact, disproportionately affecting minorities, primarily Hispanic and Black Americans, and other under-served communities. The DOJ’s position will push housing and discrimination back 50 years as fewer minority groups will get representation, be pushed into alternative, less personal platforms, and get lost in the shuffle. This will ultimately be the unintended consequence of the Biden administration’s legacy on housing.
The Partisan Politics:
Two-thirds of the general public (67%) support the upcoming changes to real estate commissions, while 70% of real estate agents oppose them. Three in five Americans (61%) agree with the NAR lawsuit’s main premise. The Biden administration is trying to mobilize a voting block by pandering to the polls, where most folks have a knee-jerk reaction supporting the changes without looking at the consequences or the fallout.
We can only hope the DOJ doesn’t make a decision until after the fall elections when a new candidate could come in, remove the Biden officials from the DOJ, and sit tight with a sound decision.
