“In Trulia’s hometown of San Francisco, tensions are high over the lack of affordable housing and the growing wealth of technology companies and their workers.” — 5 Truths of Tech-Hub Housing Costs, Trulia blog
Techies driving up housing costs? is a question Trulia and Boston.com are asking; but without looking at a broader context, the query may blame techies prematurely, instead of other factors including games real estate agents play with pocket listings / whisper listings, bidding wars, and more.
At the start of previous real estate cycles, professor Chip Case, co-founder of the [Case-Shiller] Index, has quiped, “there’s a whistle that sounds that only dogs and home buyers can hear.” With one in five properties in Cambridge selling for $50K or more over asking price and one in thirteen selling for more than $100K over asking price during 4Q2103, my hypothesis is that there are at least two other groups heeding that whistle:
1. Real estate speculators; and
2. Buyers who are encouraged to bid over asking price by their counterfeit buyer agents (designated dual agents).
This year, Cambridge has attracted interest from international investors, so additional research would be necessary to identify what role techies really have “driving up” housing costs. My guess is that real estate speculation events like http://RealtorToInvestor.com, which encourages real estate agents to become property flippers, do at least as much or more to create a “frenzied” housing market as techies (who some Boston.com readers are smart enough not to overpay). Regardless of the quality of the upcoming seminar, when real estate agents change from advocating for their buyer clients to competing with them, a practice known as “self-dealing;” industry regulators and consumer advocates should pay attention.
Beyond individual agents turned speculators, anyone want to take a look at what role large real estate brokerages, who insist they can simultaneously help buyers get the lowest price and sellers get the highest price in the same transaction, are having on runaway bidding wars? We’ve got ideas about how to get that conversation started and want to tap into the energy of a new generation of civic activists:
— Bill Wendel (@RealEstateCafe) February 7, 2014
After attending an event last night at MIT where Code for America‘s founder was honored, my hope is that change agents — including techies, “alternative” real estate agents, consumer advocates, agency law experts, open data activists, and academics – can collaborate to cocreate an open, transparent real estate ecosystem. Anyone want to use Cambridge as a lab to wake the “sleeping giant of the consumer movement,” and turn bidding war backlash into something transformative?