The real estate industry is facing significant changes to buyer-representation, and PSAR members need to stay informed. With the recent Sitzer-Burnett settlement, the passage of California’s AB 2992, and NOW a newly released California Department of Real Estate (DRE) bulletin, REALTORS® are navigating uncharted territory. These updates reflect an ongoing evolution in the industry, but inconsistencies between them may create challenges for REALTORS® working to remain compliant.

C.A.R. Legal is currently reviewing these documents in detail and will likely reach out to the DRE for clarification regarding the bulletin. REALTORS® can expect further guidance as these details are analyzed more thoroughly.

This blog is a first look at how these changes align—or don’t. While this is not a definitive legal analysis, it highlights important areas to consider.

Key Inconsistencies REALTORS® Need to Understand

1. Timing of Agreement Execution

• Choose: Sitzer-Burnett Settlement: REALTORS® and MLS subscribers must secure a signed buyer-broker agreement before touring properties.

• AB 2992: Allows the agreement to be signed as late as the execution of a purchase offer.

• DRE Bulletin: Reflects AB 2992’s timing, which is less stringent than the settlement.
  Impact: REALTORS® may face conflicting guidance depending on whether they are complying with AB 2992, the settlement, or MLS rules.

2. Agreement Expiration

• Choose: AB 2992: Limits agreements to a maximum of three months.

• Sitzer-Burnett Settlement: Does not specify a duration but requires clear terms.

• DRE Bulletin: Does not mention expiration limits.
  Impact: REALTORS® could face compliance issues if agreements extend beyond three months under California law, even if not restricted under the settlement.

3. Compensation Negotiation and Disclosure

• Choose: Sitzer-Burnett Settlement: Caps compensation at the agreed amount and prohibits exceeding it from any source.

• AB 2992: Allows buyers to negotiate seller concessions to cover agent fees but does not impose a cap.

• DRE Bulletin: Discusses compensation but lacks clarity on handling caps or seller concessions.
  Impact: REALTORS® may inadvertently violate settlement terms by exceeding the agreed-upon compensation if following only state law or the bulletin.

4. Scope of Applicability

• Choose: Sitzer-Burnett Settlement: Applies to all REALTORS® and covered MLS participants.

• AB 2992: Broadens applicability to all California buyer’s agents, regardless of MLS or REALTOR® status.

• DRE Bulletin: Suggests universal applicability but does not distinguish between REALTORS® and non-REALTORS®.
  Impact: REALTORS® operating outside MLS systems may face uncertainty about compliance standards.

5. Content of Agreements

• Choose: AB 2992: Mandates detailed agreements specifying services, compensation, payment timing, and an expiration date.

• Sitzer-Burnett Settlement: Requires clear compensation disclosure but does not specify other elements.

• DRE Bulletin: Mentions transparency but omits critical details about mandatory agreement elements.
  Impact: REALTORS® risk non-compliance if agreements lack required elements under AB 2992.

First Look Recommendations for REALTORS®

1. All Association members who are REALTORS(s) and all MLS members must abide by the terms of the settlement, even if AB2992 is less restrictive. Consult Your Broker: Brokers are a key resource in clarifying compliance with these changes

2. Utilize the C.A.R. Legal Hotline: REALTORS® should seek professional guidance on navigating the complexities of overlapping requirements.

3. Adopt a Conservative Approach:

   • Execute agreements before property tours, consistent with the settlement.

   • Ensure agreements meet AB 2992’s requirements, including the three-month expiration limit.

   • Disclose compensation clearly and avoid exceeding agreed-upon amounts.

What’s Next?

The DRE bulletin is brand new, and this is PSAR’s first analysis of its potential implications. While C.A.R. attorneys will undoubtedly provide a more detailed review, it’s critical for REALTORS® to begin understanding these changes now. Taking a proactive and cautious approach will help REALTORS® avoid missteps and serve clients effectively during this transitional period.

PSAR is here to support its members through these changes. Stay tuned for updates and additional resources as more information becomes available.

Ever wished you could stand out in a crowded market? Tired of competing on price and struggling to prove your worth? What if you could become the "go-to" agent in your area, the one clients can't imagine buying a home without?

It's possible. It's about creating your own "monopoly" – offering services so unique and valuable that clients won't even think of going elsewhere.

As CEO of PSAR and a seven-time home buyer, I've seen firsthand the challenges agents face today. Protecting your commission, navigating legal changes, and building client trust are top concerns. But the agents who thrive are those who differentiate themselves.

Stop Undervaluing Your Expertise!

Many agents shy away from the Buyer Representation & Broker Compensation Agreement (BRBC), fearing it might scare off clients. But the BRBC is your secret weapon! It's a commitment to a strong client-agent relationship, ensuring transparency and protecting both parties.

Here's the key: Don't just present the BRBC as a form. Present it as a benefit. Showcase your expertise and the unique value you bring to the table.

12 Ways to "Monopolize" Your Market

Ready to become the "only one" clients choose? Here's how to create a unique value proposition:

1. Roll Out the Virtual Red Carpet

For relocating clients, offer virtual tours of properties, neighborhoods, and local attractions. Organize "day-in-the-life" virtual tours showcasing schools, parks, and amenities. Become their virtual concierge, providing a comprehensive "new resident orientation."

2. Become the Ultimate Connector

Forge partnerships with trusted local vendors – cleaners, landscapers, handymen, interior designers, and more. Offer bundled services or a one-time setup as part of your commission. Connect clients with home security companies, smart home specialists, and utility providers.

3. Uncover Hidden Gems

Go above and beyond the MLS. Canvass neighborhoods to identify unlisted properties that fit your client's specific criteria. This proactive approach demonstrates your commitment to finding their dream home.

4. Make Move-In a Breeze

Arrange a comprehensive utility setup service, handling water, power, internet, and other essentials before move-in day. Offer setup services for smart home and security features. Give your clients peace of mind from day one.

5. Integrate Families into the Community

Go beyond school registration. Connect clients with local parent groups, recreational clubs, and community organizations. Provide "welcome packages" showcasing client-friendly amenities and events. Become their community connector.

6. Provide Expert Property Insights

Partner with inspectors to offer pre-inspections on properties. Go the extra mile and offer a home warranty, paid for by you, to provide peace of mind and demonstrate your commitment to their investment. Include an initial maintenance plan or warranty on major home systems. Arrange regular seasonal maintenance check-ins. Become their trusted advisor for property care.

7. Become a Hyperlocal Expert with RPR® & Cloud CMA

Leverage REALTOR® Property Resource® (RPR®), a REALTOR® benefit, to generate custom neighborhood reports. Provide insights into market trends, demographics, school performance, and amenities. Utilize the CRMLS benefit Cloud CMA to easily create amazing comparative market analysis reports, Buyer Tours, Property Reports, and Flyers. Position yourself as the go-to expert for specific zip codes.

8. Manage Every Detail of Relocation

Offer relocation management services, including coordination with moving companies, packing/unpacking services, and trash-out/resale services. Simplify downsizing with partnerships for storage solutions and home organization.

9. Welcome Clients to Their New Life

Provide a post-purchase orientation, introducing clients to local organizations, social groups, and even neighbors. Arrange "meet and greet" events. Make their transition memorable and welcoming.

10. Offer Financial Peace of Mind

Arrange consultations with local financial planners or tax advisors to help clients understand the full financial impact of their purchase. Provide guidance on property taxes, deductions, and long-term financial goals. Be proactive! Schedule a reminder to call clients at the end of the year to explain their supplemental tax bill and what it means. This provides ongoing support and reinforces your value even after the sale.

11. Create a "Go-To" Resource

Develop customized home-buying guides covering local regulations, financing options, and the closing process. Include area-specific tips and links to trusted local vendors. Become their trusted advisor throughout the entire journey.

12. Maximize Efficiency with CubiCasa

Use CubiCasa, a FREE PSAR/CRMLS benefit, to offer floor plans of potential homes, saving clients time and effort. Provide floor plans as part of a property preview service for efficient evaluation and fewer in-person visits. Save your clients time and money.

Technology that Transforms

In today's digital world, leveraging the right technology can be a game-changer. A platform like Rayse (exclusively for CRMLS brokers!) can revolutionize how you interact with clients. Imagine a system where your clients can see every step you take on their behalf, from property searches to scheduling showings and negotiating offers. Rayse provides that transparency builds trust, and demonstrates your commitment to their success.

Enhance Your Skills, Enhance Your Value

Take advantage of the free online Accredited Buyer’s Representative (ABR®) course offered for free by NAR until the end of 2024. This designation equips you with specialized knowledge in buyer representation, boosting your credibility and client service approach.

Flexible Packaging for Every Client

Offer services à la carte, bundled, or in tiered packages. Designate a team member to manage specific services. Provide direct, fee-for-service options for focused assistance.

Build Your Monopoly, Build Your Success

By focusing on these unique, client-centered services, you can build a "monopoly" based on differentiation, trusted relationships, and specialized knowledge. Attract more clients, create long-term relationships, and maximize your value and profitability. Embrace tools like the BRBC to safeguard your efforts and reinforce your commitment to your clients' best interests. But your service doesn't stop at the sale. Continue to provide referrals for services like landscaping, home maintenance, and even dog walkers. Offer ongoing support and recommendations, including annual property value updates using your free CRMLS access to Cloud CMA, to solidify your role as their lifelong real estate advisor.

PSAR/CRMLS Benefits to Assist Buyer's Agents

• REALTOR® Property Resource
• Cloud CMA
• CubiCasa
• Rayse
• Accredited buyers representation class

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Disclaimer

It’s essential for licensees to consult with their broker before making any changes to business practices, as brokers can provide guidance on legal and regulatory requirements specific to your practice. This ensures compliance and aligns with industry standards. I have 30 years of business management experience and hold a degree in marketing and business administration, but I am not an attorney or a licensed broker. 

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PSAR's mission is to empower real estate professionals.

Since 1928, the Pacific Southwest Association of REALTORS® has played a significant role in shaping the history, growth & development of the Real Estate industry in San Diego County.

PSAR has endorsed the following candidates for the November 2024 General Election.

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Measures and Propositions

National City
Vote NO on Measure R - Parcel Tax

Chula Vista
Vote YES on Measure P

California
Vote NO on Prop 33 - Rent Control

No on Prop 33 Video

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PSAR's mission is to empower REALTORS®.

Since 1928, the Pacific Southwest Association of REALTORS® has played a significant role in shaping the history, growth, and development of the Real Estate industry in San Diego County.

The National Association of REALTORS® (NAR) implemented the Clear Cooperation Policy (CCP) in May 2020, which mandates that listings be submitted to the Multiple Listing Service (MLS) within one business day of being publicly marketed. This policy, designed to ensure fairness and transparency, has sparked a heated debate within the real estate industry. Two influential voices in this discussion are Robert Reffkin, CEO of Compass, and James Dwiggins, CEO of NextHome. While Reffkin advocates for consumer choice and agent flexibility, Dwiggins argues that maximizing market exposure through the MLS is essential for ensuring sellers get the highest price for their homes. Recently Zillow also weighed on the side of Dwiggins calling out Fairhousing issues. Redfin's CEO also sided with Dwiggins while Anywhere's spokesperson called for changes to the policy.

Robert Reffkin, as the CEO of Compass, opposes the Clear Cooperation Policy, emphasizing the importance of consumer choice in how homes are marketed. He believes that before the CCP, agents had greater flexibility to act in the best interest of their clients, allowing them to tailor marketing strategies according to their client's unique needs without being restricted by MLS rules.

Reffkin argues that some sellers value privacy over broad exposure, and the CCP forces these clients to market their homes publicly even when they would prefer not to. He highlights situations where privacy is a priority, such as when sellers are dealing with personal issues like illness or divorce. In such cases, Reffkin asserts that the policy compromises the agent's ability to act in the client's best interest by mandating public marketing, which may not align with the seller's preferences.

Additionally, Reffkin challenges the assumption that more exposure always results in a higher price. He points out that many clients, including home builders, have successfully sold properties off the MLS, suggesting that not every seller believes maximum exposure is essential. Reffkin argues that consumer choice should take precedence, allowing sellers to decide how much exposure their property receives and how they want their home to be marketed.

James Dwiggins' Position: Maximizing Exposure for Better Outcomes

James Dwiggins, CEO of NextHome, presents a contrasting viewpoint. He defends the Clear Cooperation Policy, arguing that its purpose is to ensure that all listings receive maximum exposure, which he contends is crucial for sellers to achieve the best price for their homes. According to Dwiggins, the MLS system levels the playing field by making listings available to the entire marketplace, benefiting both consumers and the real estate industry as a whole.

Dwiggins stresses that before the CCP, large brokerages often held back listings for internal promotion, limiting the competition that benefits sellers. By keeping listings off the MLS, these firms reduced the pool of potential buyers, often leading to lower sale prices for homeowners. Dwiggins argues that market exposure through the MLS ensures that listings reach the widest possible audience, which creates a competitive environment and drives prices up.

While Reffkin advocates for consumer choice, Dwiggins emphasizes that most sellers—around 99%, by his estimate—want to maximize the value of their home. He highlights studies showing that homes sold off-MLS can lose anywhere from 5% to 17% of their potential value compared to homes listed on the MLS. For Dwiggins, the key to protecting consumers' financial interests lies in ensuring their property is seen by as many potential buyers as possible, rather than limiting exposure for the sake of privacy or exclusivity.

Dwiggins also warns of the legal and reputational risks of eliminating the CCP. He points to previous lawsuits filed by sellers who felt misled by agents into keeping their homes off the MLS, only to discover later that they could have received a better price by listing publicly. Without the CCP, Dwiggins argues, large brokerages would revert to promoting exclusive listings internally, hurting consumers and the industry's reputation in the long run.

Comparing Consumer Choice and Market Exposure

At the core of this debate is a fundamental difference in how Reffkin and Dwiggins view the best way to serve consumers. Reffkin prioritizes consumer choice, arguing that sellers should have the flexibility to decide how their homes are marketed. He believes that forcing all listings onto the MLS, as the CCP requires, limits a seller’s ability to manage personal and financial concerns on their own terms. In Reffkin’s view, the Clear Cooperation Policy reduces the options available to both sellers and agents, particularly for those who value discretion and privacy.

On the other hand, Dwiggins focuses on ensuring that consumers get the highest price for their homes through maximum market exposure. He believes the CCP prevents large brokerages from monopolizing listings for internal gain and protects consumers by ensuring their property is marketed to the largest possible audience. For Dwiggins, the CCP is essential to safeguarding sellers' financial outcomes, as broad exposure leads to more competition and higher offers. He sees the MLS as the most effective tool for creating a fair and transparent marketplace, and while he acknowledges the policy can be improved, Dwiggins insists that its core purpose—guaranteeing market access—must remain intact.

Conclusion: Consumer Choice vs. Market Exposure

The debate over the Clear Cooperation Policy ultimately comes down to a question of how best to serve consumers: Is it more important to prioritize consumer choice, or is maximizing market exposure the best way to protect homeowners’ financial interests?

Reffkin argues that sellers should have the freedom to choose how their home is marketed, particularly when privacy or personal concerns are at play. He views the CCP as a rigid policy that limits both sellers’ and agents’ ability to navigate complex situations in a flexible manner.

Dwiggins, in contrast, contends that the true benefit to consumers lies in giving their homes maximum exposure to the marketplace, ensuring they receive the highest possible price. He argues that the CCP protects sellers by preventing exclusive, off-MLS listings that often result in lower sales prices. For Dwiggins, market exposure is critical to safeguarding consumers' financial outcomes.

As the real estate industry continues to debate the future of the Clear Cooperation Policy, the central question remains: Should the industry prioritize consumer choice or market exposure? Both perspectives highlight important considerations, but the answer will ultimately shape the future of real estate transactions and the value sellers receive from their homes.

Home sales slowed in San Diego County and across the state in September 2024, despite the lowest interest rates since spring, according to the latest home sales and price report from the California Association of Realtors (C.A.R.).

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 253,010 in September 2024, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2024 if sales maintained the September pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

California sales decreased 3.4% in September 2024 from August 2024, when 262,050 homes were sold on an annualized basis. Home sales statewide hit the lowest level in nine months.

In a year-over-year comparison, the statewide sales pace was up 5.1% in September 2024, compared with September 2023, when 240,840 homes were sold on an annualized basis.

The sales pace has remained below the 300,000-threshold for the past two years, while year-to-date home sales for 2024 edged up 0.9 percent compared to the first nine months of 2023.

The sales pace for home sales in San Diego County decreased by 14.6% in September 2024, compared to August 2024. In a year-over-year comparison, the sales pace was 9.4% higher compared to September 2023.

“The inventory of homes for sale has steadily improved in recent months as the market moves into the typical off-peak home-buying season,” said C.A.R. President Melanie Barker, a Yosemite REALTOR®. “With home prices likely to moderate further in the coming months, the fourth quarter could offer an opportunity for potential buyers who have been waiting to re-enter the market, especially as interest rates gradually return to historical averages.”

Regarding home sales prices, September’s statewide median price declined 2.3% from $888,740 in August 2024 to $868,150 in September 2024. The September 2024 figure was 2.9% higher than the revised $843,500 recorded in September 2023. The statewide year-over-year gain was the 15th straight month of annual price increases. 

September 2024 County Sales and Price Activity

Home prices could soften further in the coming months as the market enters the traditional off-season but should continue to post year-over-year growth for the remainder of the year.In San Diego County, the average price for an existing, single-family detached home was $1 million in September 2024. The median price in August 2024 was $1,010,000, a 1.0% difference with September 2024. A year ago, in September 2024, the median price for a San Diego home was $973,100, a 2.8% difference.

It was the seventh consecutive month the median monthly price for a San Diego County home has been $1 million or higher.

Sales in higher-priced market segments continued to have an effect on the mix of sales, but the impact on the statewide median price growth has tapered in recent months. While the sales pace for the $1 million-and-higher price segment remained moderately low in September at 3.9%, sales in the sub-$500,000 market continued to underperform, dropping 8.6% from a year ago. Moderation in the median price growth could be observed in the coming months if the share of homes priced at or above $1 million continues to shrink in the fall.

“Economic uncertainty and hopes for lower interest rates may have caused many buyers to hold off on a home purchase,” said C.A.R. Senior Vice President and Chief Economist Jordan Levine. “As a result, home sales declined for the second consecutive month, reaching their lowest level this year. However, the recent rebound in bond yields is a reminder that rates will continue to fluctuate, and waiting may not be the best strategy when it comes to homebuying.”

Other key points from C.A.R.’s September 2024 resale housing report include:

• At the regional level, home sales in Southern California increased 1.1% in September 2024 when compared to last year’s sales level.
  
  
• At the regional level, median home prices in Southern California experienced a 3.7% increase in September 2024, compared to September 2023.
  
  
• Home prices in September 2024 continued to grow on a year-over-year basis on a county level throughout the state, with median sales prices in 38 counties rising from a year ago.
  
  
• The statewide unsold inventory index, which measures the number of months needed to sell the supply of homes on the market at the current sales rate, increased in both month-over-month and year-over-year comparisons. The index was 3.6 months in September 2024, up from 3.2 months in August 2024 and up from 2.8 months in September 2023.

September 2024 County Unsold Inventory and Days on Market

• The unsold inventory index of available existing homes for sale in San Diego County was at 3.2 months in September 2024, compared to 2.8 months in August 2024, 2.6 months in July 2024, 2.7 months in June 2024 and 2.5 months in September 2023. The index measures the number of months needed to sell the supply of homes on the market at the current sales rate.

• Total active listings at the state level rose 36% on a year-over-year basis. It was the eighth consecutive annual gain in for-sale properties and the seventh straight month of double-digit active listing increases.
  
  
• With the market entering the off-season and housing demand likely to improve in the next couple months, housing inventory could begin to tighten up as we move further into the fall. 
  
  
• New active listings at the state level improved from a year ago for the ninth consecutive month, with eight of them recording a double-digit increase. Despite a decelerating growth rate in listings in September 2024 for the second straight month, new listings increasing by double-digits this late in the year continues to be an encouraging sign for the supply side.
  
  
• The median number of days it took to sell a California single-family home was 24 days in September 2024, up from 22 days in August 2024 and 18 days in September 2023.
  
  
• In San Diego, the median number of days it took to sell an existing, single-family home was 18 days in September 2024, compared to 17 days in August 2024 and 14 day sin September 2023. For previous months in 2024, the figures were 16 days in July, 14 days in June and 12 days in May, April and March. The median represents the time when half the homes sell above it and half below it.
  
  
• C.A.R.’s statewide sales-price-to-list-price ratio was 100.0 percent in September 2024 and 100.0 percent in September 2023.
  
  
• The statewide median price per square foot for an existing single-family home was $424 in September 2024, up from $416 in September a year ago.
  
  
• The 30-year, fixed-mortgage interest rate averaged 6.18 percent in September, down from 7.20 percent in September 2023, according to C.A.R.’s calculations based on Freddie Mac’s weekly mortgage survey data.

The Accredited Buyer’s Representative (ABR®) designation is for real estate professionals passionate about working with buyer clients and who want to acquire enhanced business skills that lead to service-level excellence.

Who Should Consider the ABR® Designation?
This prestigious designation is tailored to real estate buyers' agents committed to enhancing their expertise in assisting buyer-clients throughout the home-buying process. REALTORS® who achieve the ABR Designation will stand out in a competitive market.

What Benefits Does the ABR® Designation Offer?

1. Advanced Education

Embarking on the ABR® designation journey enriches your understanding and skills, making you a more competent agent in the eyes of potential home buyers. This program offers a robust educational experience focusing on the needs and trends relevant to home buyers, ensuring you are well-equipped to handle various buyer scenarios effectively.

2. Exclusive Resources and Tools

As an ABR® designee, you gain exclusive access to members-only publications, marketing tools, and comprehensive resources crucial for remaining in the forefront of a fast-evolving real estate marketplace. These are tools that will enable you to market your services more effectively and efficiently.

3. Networking and Referrals

Joining the ABR® community opens up networking opportunities with other real estate professionals. Relationships lead to referrals and collaborative prospects, expanding your business reach and potential client base.

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How to Earn the ABR® Designation

• Take this two-day Core Designation Course (free to PSAR Members*)
  
• Complete one of the ABR® elective classes
• Document five completed transactions in which you acted solely as a buyer representative. (These transactions do not need to fall within a specific period of time.)
• Membership in good standing in the National Association of REALTORS® (NAR).
• Membership in good standing in REBAC

Application Process and Future Cost

• Submit the application and documentation of five completed buyer-agent transactions.
• The first year of REBAC membership is free
• The second year is $110, but prorated based on the month you joined REBAC
• $110 per year thereafter

The ABR® Designation is earned only by completing a series of achievement benchmarks, each of which demonstrates your superior skill set and advanced knowledge. 

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PSAR's mission is to empower real estate professionals.

Home sales were lower in San Diego County, as well as in California, in August 2024 as buyers held out and adopted a “wait-and-see” approach, despite interest rates at the lowest level since spring, according to the latest home sales and price report from the California Association of Realtors (C.A.R.).

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 262,050 in August 2024, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2024 if sales maintained the August pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

Statewide, the August 2024 sales pace fell 6.3%, compared to the 279,810 homes sold in July 2024. Home sales were up 2.8% from a year ago in August 2023, when a revised 254,820 homes were sold on an annualized basis. The sales pace has remained below the 300,000-threshold for 23 consecutive months.

Year-to-date statewide home sales through August 2024 edged up 0.5%, compared to the same period last year.

In San Diego County, the sales pace for home sales decreased by 4.7% in August 2024 from July 2024. Year-over-year sales between August 2024 and August 2023 were 3.2% higher.

“Home price growth in California continued to moderate in August as the market neared the end of the traditional home buying season,” said C.A.R. President Melanie Barker, a Yosemite REALTOR®. “With the Federal Reserve signaling it will lower interest rates soon, mortgage rates are expected to ease well below their recent peaks. As such, housing affordability will improve in the fall, and buyers will benefit from lower costs of borrowing in the coming months.”

Regarding home prices, the statewide median price was essentially flat, inching up 0.2% from $886,560 in July 2024 to $888,740 in August 2024. California’s median home price was 3.4% higher than the revised $859,670 recorded in August 2023. The year-over-year gain was the 14th straight month of annual price increases, albeit the smallest since September 2023. 

August 2024 County Sales and Price Activity
(Regional and condo sales data not seasonally adjusted)

Home prices could soften further in the coming months but should continue to register year-over-year growth for the rest of the year.

Sales in higher-priced market segments continued to influence the mix of sales, but the impact on the state-wide median price growth has been reduced in recent months. While the sales pace for the $1 million-and-higher price segment decelerated in August to 3.6%, sales in the sub-$500,000 market also had a lackluster performance, dropping 9.0% below the year-ago level. Moderation in the median price growth could be observed in the coming months if the share of homes priced at or above $1 million continues to shrink in the fall.

In San Diego County, the average price for an existing, single-family detached home exceeded $1 million in August 2024. It was the sixth consecutive month the median price has remained at more than $1 million.

The median sales price in San Diego for August 2024 was $1,010,000, a 1.0% decrease from the $1,020,000 posted in July 2024. A year ago, in August 2023, the median price for a San Diego home was $1 million.

“Despite a slightly better lending environment in recent weeks, closed home sales pulled back in August as buyers evaluated whether to wait for the Federal Reserve to cut rates before entering the market,” said C.A.R. Senior Vice President and Chief Economist Jordan Levine. “Pending sales, along with mortgage application trends, however, suggest that housing demand has been slowly improving in the past few weeks. If mortgage rates remain at their current low or dip further in the coming weeks, home sales should rise steadily as we move toward the end of the year.”

Other key points from C.A.R.’s August 2024 resale housing report include:

• At the regional level, home sales in Southern California fell 2.3% when compared to last year’s sales level.
  
  
• At the regional level, median home prices experienced a 4% increase in August 2024, compared to August 2023.
  
  
• Home prices continued to grow on a year-over-year basis throughout the state, with median sales prices in 36 counties registering price increases in August 2024, compared to median sales prices a year ago in August 2023.
  
  
• The statewide unsold inventory index, which measures the number of months needed to sell the supply of homes on the market at the current sales rate, increased both month-over-month and year-over-year. The index was 3.2 months in August, up from 2.9 months in July and up from 2.4 months in August 2023.

August 2024 County Unsold Inventory and Days on Market
(Regional and condo sales data not seasonally adjusted)

• The unsold inventory index of available existing homes for sale in San Diego County was at 2.8 months in August 2024, compared to 2.6 months in July 2024, 2.7 months in June 2024 and 1.9 months in August 2023. The index measures the number of months needed to sell the supply of homes on the market at the current sales rate.
  
  
• Active listings at the state level rose more than 39% from the year-ago level. It was the seventh straight month of annual gains in for-sale properties.
  
  
• New active listings at the state level improved from a year ago for the eighth consecutive month in August 2024. Despite a decelerating growth rate in August, the increase in new listings at the tail end of the buying season is an encouraging sign that supply conditions in California will continue to improve in the coming months. 
  
  
• The median number of days it took to sell a California single-family home was 22 days in August, up from a revised 17.5 days in August 2023.
  
  
• In San Diego, the median number of days it took to sell an existing, single-family home was 17 days in August 2024, compared to 16 days in July 2024, 14 days in June 2024 and 13 days in August 2023. For previous 2024 months, the figures were 12 days in May, April and March. The median represents the time when half the homes sell above it and half below it.
  
  
• C.A.R.’s statewide sales price-to-list-price ratio was 100% in August 2024 and 100% in August 2023. Sales-to-list-price ratio is an indicator that reflects the negotiation power of home buyers and home sellers under current market conditions. The ratio is calculated by dividing the final sales price of a property by its original list price and is expressed as a percentage. A sales-to-list ratio with 100% or above suggests that the property sold for more than the list price, and a ratio below 100% indicates that the price sold below the asking price.
  
  
• The statewide median price per square foot for an existing single-family home was $427, up from $416 in August a year ago.
  
  
• The 30-year, fixed-mortgage interest rate averaged 6.50% in August, down from 7.07% in August 2023, according to C.A.R.’s calculations based on Freddie Mac’s weekly mortgage survey data.

Understanding Rent Control and Proposition 33

Rent control policies, such as those proposed under Proposition 33, aim to limit the amount landlords can charge for rent. While these policies are often introduced to protect renters, they can lead to unintended and harmful consequences for renters, property owners, and the broader housing market. Proposition 33, in particular, seeks to expand rent control by eliminating the protections provided under the Costa-Hawkins Rental Housing Act, which currently exempts single-family homes and new construction from local rent control ordinances.

Distortion of Supply and Demand

Rent control disrupts the natural balance of housing supply and demand. By capping rents, developers and property owners lose the financial incentive to build or maintain rental properties, leading to a reduction in the overall supply of housing. As the supply decreases, demand continues to rise, particularly in high-demand areas, resulting in a housing shortage. This shortage makes it increasingly difficult for renters to find available units, driving up competition and ultimately exacerbating the very affordability issues rent control aims to address.

Impact on Single-Family Homes and Property Owners

Proposition 33 would remove the current protections for single-family homes under Costa-Hawkins, allowing local governments to impose rent control on these properties. This change would have far-reaching effects on homeowners, including retirees, service members, and others who might want to return to their homes after renting them out. These homeowners could be restricted from setting their own rental rates, limiting their ability to use or sell their properties as they see fit.

For property owners looking to sell their rental properties, Proposition 33 would further complicate matters. Under rent control, the value of these properties may decrease, limiting the pool of potential buyers. Instead of selling to first-time homebuyers or middle-class families, owners may be forced to sell to wealthy investors who can navigate the complexities of rent-controlled properties. This dynamic could further exacerbate housing inequality and reduce homeownership opportunities for many Californians.

Does Rent Control Truly Benefit the Poor?

While rent control is often marketed as a tool to help low-income renters, it does not require that applicants pass a means test to qualify for these benefits. As a result, rent-controlled units are sometimes occupied by higher-income tenants who do not need the financial assistance intended for the poor. This situation creates an unfair advantage for wealthier individuals who secure these below-market rents at the expense of property owners, who are forced to subsidize these tenants.

Moreover, wealthier individuals living in rent-controlled units are unlikely to leave, as they continue to benefit from artificially low rents. This reduces turnover and makes it more difficult for new residents, especially those from low-income backgrounds, to find affordable housing. In some cases, these individuals can even maintain their rent-controlled units while subletting them to others at higher rates, further distorting the market and benefiting those who do not need the help.

This inequity highlights a fundamental flaw in rent control policies: they do not necessarily target those most in need of housing assistance. Instead, they can provide significant benefits to those who are already financially secure, exacerbating the challenges faced by low-income renters who are unable to compete in a market with limited affordable housing options.

Landlords Targeting “Better” Tenants

Another unintended consequence of rent control is that it incentivizes landlords to be more selective about the tenants they accept. Knowing that they could be stuck with a tenant indefinitely, landlords may prioritize applicants with higher incomes, stable jobs, and strong credit histories, effectively shutting out lower-income renters. This selective process can deepen inequalities in the housing market, making it even harder for vulnerable populations to secure housing.

In some cases, landlords may even choose to convert rental units into condominiums or sell their properties to avoid the restrictions of rent control altogether. This further reduces the availability of rental housing and can contribute to gentrification, where lower-income residents are displaced from their neighborhoods.

Impact on Local Governments

The ripple effects of Proposition 33 extend to local governments as well. As property values decline due to the reduced profitability of rent-controlled properties, so too does the property tax revenue that local governments rely on to fund essential services like public safety, education, and infrastructure. In cities where rent control is widely implemented, these reductions in revenue can lead to budget shortfalls, forcing cuts to critical services that impact the entire community.

Additionally, as the rental housing market contracts, the housing shortage could worsen, leading to increased homelessness and placing further strain on government resources. Local governments may find themselves in the difficult position of having to address the unintended social consequences of rent control, from increased demand for social services to the need for more affordable housing construction, which itself may be hampered by the disincentives created by Proposition 33.

Conclusion

Proposition 33 and the expansion of rent control might seem like a solution to California’s housing crisis, but they are more likely to exacerbate existing problems. Rent control distorts the housing market by reducing supply and increasing demand, often failing to benefit the low-income renters it is supposed to help, and encourages landlords to be more selective, shutting out those most in need of affordable housing. Additionally, the policy threatens to reduce property tax revenues, which could lead to cuts in essential public services and worsen the state’s housing shortage.

Furthermore, by allowing rent control on single-family homes, Proposition 33 risks harming retirees, service members, and other homeowners who may wish to return to or sell their properties. It also limits opportunities for first-time homebuyers, favoring wealthy investors who can navigate the complexities of rent-controlled properties. The opposition from leaders like Senator Toni Atkins and Mayor Todd Gloria underscores the potential damage this proposition could do to housing development and affordability.

Moreover, rent control does not require means testing, which can lead to situations where wealthier individuals benefit from below-market rents at the expense of property owners and those who truly need affordable housing. This lack of targeting makes rent control not only ineffective but also unfair, as it can allow wealthier tenants to remain in rent-controlled units indefinitely, further reducing opportunities for low-income renters.

For these reasons, it is crucial to oppose Proposition 33. Instead of expanding rent control, California needs policies that encourage the development of more housing, improve the quality of existing rental units, and truly address the needs of low-income renters. Only by addressing the root causes of the housing crisis can we create a more stable and equitable housing market for all Californians.

BEST Practice

Once a property is sold, in both SDMLS and in CRMLS, to make your listing to be available for comparables, input the entire Concession Amount into the Concession Comment Field so agents in both MLS systems know what it is.  It is critical that agents list all concession amounts and what they were allocated towards so that other agents know what was given as a buyer concession vs a commission concession.  Find out why by reading this post.

Key Differences Between SDMLS and CRMLS when Researching Comparables Post Settlement. These Fields are available to complete after a property has sold and is being moved from pending to sold status.

SDMLS Approach:
SDMLS has specific guidelines regarding the disclosure of seller concessions. According to their Q&A on policy changes post-settlement:

“Seller-offered concessions should be mentioned in the Confidential Remarks field with the instruction to contact the listing agent for details.”

In SDMLS, agents can use the “Concessions Comments” field to input details about seller concessions. This field allows for flexibility, with comments that may include text descriptions or numeric values. For example, agents might see comments like:

• • “$2,990 for wood-destroying pest repairs”
  • “Closing costs covered by the seller”
  • “$5,700 Seller Credit”

While these comments provide valuable information, they can be inconsistent in format and detail, which may complicate property comparisons.

CRMLS Approach:
CRMLS still includes the flexible comment section and this is the field that will be shown in the SDMLS system, but CRMLS takes a different approach to reporting concessions. The CRMLS system provides a breakdown of seller concessions at the close of a transaction, with the mandatory fields categorized as follows:

• • Closing Costs (e.g., escrow and title fees)
  • Property Improvements (e.g., repairs and upgrades)
  • Financing Costs (e.g., loan origination fees, discount points)
  • Buyer Broker Fee (amount the seller paid directly to the buyer’s broker)
  • Other

This breakdown ensures that agents and their clients have a clear understanding of how concessions, were applied.

Viewing Concessions Across the Two Systems

When navigating concessions in the dual MLS marketplace, agents will see different displays depending on the MLS they are accessing.

For CRMLS subscribers, the report for CRMLS listings will include a detailed breakdown of concessions by category (circled in red.) The example below shows how these details are presented. If an SDMLS agent included a remark in the “Concessions Comments” field, those details will appear in the highlighted sections shown in yellow here:

CRMLS Paragon View (Actual PSAR listing)

For SDMLS users viewing CRMLS listings, the screen (below) will display the structured concession breakdown on the right side, while any SDMLS-specific remarks will be visible on the left:

SDMLS Paragon View (Same Actual PSAR listing)

CRMLS Paragon View (Actual SDMLS sold listing)

SDMLS Paragon View (Actual SDMLS sold listing)

Understanding these distinctions is essential for agents who need to pull comps from both MLS systems. Accurate comparisons require not only the ability to see the numbers but also to understand the context in which they’re reported.

Navigating the Differences

For agents working in either MLS system, it’s important to recognize how each handles concession disclosures and reporting. When pulling comps, take note of the differences between SDMLS’s more flexible comments and CRMLS’s detailed breakdown. Adjusting for these variances allows you to deliver more precise market analyses to your clients, ultimately helping them make better-informed decisions in San Diego’s dynamic real estate market.