Critical analysis of real estate
December 14, 2011 12:29 PM   Subscribe

I'm looking for websites and information - both academic and more polemical - that critically analyze the process by which real estate is generally bought and sold in the US, and the consequences of that process for individual buyers and the economy as a whole.

The best known example of what I'm thinking about is probably the Freakonomics argument that real estate agents' incentives run counter to those of potential buyers and sellers and result in higher prices for buyers and lower ones for sellers. (Found here and, here, for example.)

Other examples might be discussions like:
- Are the customary 6% commission and MLS systems functional monopolies?
- To what extent did this system contribute to the housing bubble and collapse?
- Does the 6% commission act like a tax and reduce liquidity in the housing market?
- What changes would make the real estate institutions (i.e. laws, rules, organizations, etc) better serve individual and economic objectives?
- Is there analysis of the lobbying done by the real estate industry in support of its interests?

I am interested in both academic research and more polemical advocacy.
posted by RandlePatrickMcMurphy to Law & Government (5 answers total) 7 users marked this as a favorite
My wife reads this site, and they're pretty hard on realtors, aka, REALTORs (TM). A lot of it strikes me as ignorant polemics, but it may be a start.

I'd be interested to see what you track down. Housing is the domestic public policy issue of the decade as far as I'm concerned, and the role of promoters/middlemen/agents in that cannot be underestimated.
posted by resurrexit at 3:02 PM on December 14, 2011

Thanks r. I agree and am struck by the lack of information, discussion and even response here.
posted by RandlePatrickMcMurphy at 7:22 AM on December 15, 2011

I'm not familiar with any specific research, but I know the real estate department at UW-Madison has academic economists who focus on these topics. I also recommend checking out the research papers put out by the various branches of the Federal Reserve.
posted by mullacc at 7:49 AM on December 15, 2011

I did a google scholar search on "economic effects of real estate commissions" that turned up some potentially interesting academic papers, although you will need some sort of acess to an academic library or other source to see a number of them.
posted by TedW at 12:07 PM on December 15, 2011

Also, someone who preferred not to be identified memailed the following and said it'd be OK to post:

You example questions are mostly focused on the role of Realtors --- I'm not sure if that's the main thing you're worried about, or if you're just as interested in the housing crisis as a whole. The former is, oddly, a little tougher. There's a lot of writing about the crisis, because lots of people want to analyze and solve the crisis. There's less writing about the ongoing structural inequities of the housing system --- most of the writing about Realtors that I'm aware of is aimed _at_ Realtors, and so is therefore reasonably pro-Realtor. Of, course, I'm certainly biased on this front.

On the issue of political influence, I’d check to see who’s giving the Realtors money and who’s getting their money, ditto the Mortgage Bankers Association and the National Homebuilders. NAR is widely acknowledged as one of the largest and most influential trade lobby groups, precisely because the have so many members. However, they've been worried about the recently.

Earlier this year, NAR raised dues in order to fund more political advocacy, a move which pissed off a lot of realtors, as a matter of fact. Here’s a blog post about the controversy:

and here’s a link to the internal powerpoint shown to the big wigs at NAR to sell them on the “Realtor Party Political Survival Initiative”

The blogger in those link, Rob Hanh, is a consultant to the industry and therefore pro-RE, but he also loves to write bomb-throwing blog posts which spark controversy, gives you a good sense of what people in the biz are worried about. Here's one of his more explosive recent efforts, on the subject of whether the syndication/IDX threat could lead to the break up of the MLS system:

NAR settled an anti-trust suit with the DoJ a few years back which does contain some provisions that prevent it from, among other things, preventing online real estate site from displaying info that offline sites have access to.

There are some companies trying to break the 6% standard --- Redfin is the usual example, in large part because their CEO is ex-Silicon vally and quite savvy in his media relations --- but there are others, sprinkled here and there.

If you are interested in info/critiques of the housing/mortgage industry as a whole, want to know more about the crisis and how the whole thing blew up, then I’d start with This American Life's The Giant Pool of Money, if you're looking for a gripping generalist introduction.

That's straight up one of the best pieces of journalism on the crisis, bar none. But more than that, the deeper you dive in, the more technical things get, and personally I find having a grounding sense of the big picture to refer back to is helpful. The show takes you through the whole chain of the industry, from homebuyer to Wall St., stopping at every stage on the way to talk to actual people who did the work. Even if you listened to it when it first came out, you might want to give it a go again if you want to dive into this topic.

If you’ve already been there/done that, then I might recommend looking at
--- Calculated Risk. (
Number 1 with a bullet, that blog. It's written by a private investor, now semi-retired I believe, who began blogging about the housing crisis in 2005 when he began to see signs of the bubble as it grew. He also posts on general economic topics. Especially, you will want to look into his archives for posts written by Tanta, a former mortgage industry insider (she sadly passed away in 2008) who wrote extremely clearly and well about how the industry actually works. If you could only read one thing on this giant list I’m gonna send you, read Tanta:

---Naked Capitalism. (
An econ blog written by the pseudonymous Yves Smith, who is that rara avis, a former investment banker and raging liberal. She and her numerous guest posters write frequently on many aspects of economics, but she’s been especially strong in her coverage of the housing crisis. Her views are both lefty and somewhat apocalyptic, I try and take her with a grain of salt for that reason. But she is cogent, perceptive and frequently devastating. Take an especial look at her posts on MERS, robosigning and New York trust law.

--- Credit Slips. (
Group blog written by a number of academics, the one most relevant to housing is Adam Levitin, a Georgetown law professor who has testified before Congress on mortgage securitization

Books: The Subprime Virus, Oxford University Press.

A little dry, written by two law professors, one’s at Suffolk the other’s now with the Consumer Financial Protection Board. Traces the rise of the subprime mortgage industry, dating from the late 90s, and how it blew up. Readable and extremely comprehensive.

And, if you’ve really got a strong stomach and can suffer some dry, technical, legal discussion, I would recommend a recent decision handed down in U.S. Federal Court, Culhane vs. Aurora. (

Basically this is a case where a federal judge took a relatively simply legal proceeding as an opportunity to spit some science, and pops off for 59 closely-written pages on the state of foreclosure law in Massachusetts. This is definitely on the Advanced Course List --- the case concerns a challenge to the legality of a servicers’ standing to foreclose on a loan registered with MERS as the nominee, and only if you have understood that sentence would I recommend you try reading it --- but the footnotes contain some of the best, clearest descriptions of the conflicts of interest inherent to the servicers’ role in a declining market, which, IMHO, goes to the core of why we still haven’t solved the housing crisis.
posted by RandlePatrickMcMurphy at 12:38 PM on December 15, 2011 [6 favorites]

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