Real-Estate Commissions Fall;
McMansions Face Declining Demand

Here's a look at what's new in real-estate markets across the U.S. from around the Web. (Some links may require registration or subscriptions.)

Real-estate commissions are falling

The 6% real-estate commission is becoming a thing of the past, a Miami Herald article reports. According to the newspaper, which draws upon a Realogy Corp. (which owns Coldwell Banker and franchises Century 21 and others) annual report, the average commission earned in 2006 was less than 5%, or 2.5% per agent, the Herald says. "It shows consumers are increasingly negotiating," the paper quotes Stephen Brobeck, head of the Consumer Federation of America, as saying. A real-estate commission can take quite a chunk out of a home seller's profits -- the article notes that a homeowner selling a $400,000 house would pay $24,000 at a 6% commission and $20,000 at a 5% commission. Last year, the average commission per agent rose from $8,535 in 2002 to $12,691, the article says.

Too many McMansions

Amidst sagging home sales and the subprime-mortgage fallout, the U.S. housing market may have to brace for another hit -- the large number of American baby boomers nearing retirement, according to a Boston Globe article. Baby boomers total 78 million in the U.S., 80% of which are homeowners, the newspaper says. This demographic group snatched up "McMansions" -- or sprawling suburban homes -- during the housing boom, but as they look to retire and downsize, a glut of these properties may flood the market, the Globe reports. As a result, prices for larger homes are expected to fall, while more modest houses -- better suited to the needs and wants of smaller families -- may see prices rise, the article says. For the limited group of buyers who will want these McMansions, however, the boomers' mass exodus from their stately manses to more compact abodes will be a "godsend," the newspaper quotes Harvard University economist Ed Glaeser as saying.

High land prices hurt nonprofit

Habitat for Humanity, a charity that sells homes to families at no profit and finances them with affordable loans, is facing difficulty in states like Florida, Texas and California as rising land prices send costs soaring, according to an article by the St. Louis Post-Dispatch. For example, Habitat affiliate St. Charles Habitat, located in St. Charles, Mo., now pays approximately $20,000 for a quarter acre, compared to the $1 it paid 10 years ago, the newspaper says. Habitat for Humanity , which relies on donations and volunteer labor, aims to keep its per-home cost at $60,000, the article says. Some Texas affiliates are combating the rising costs by selling the homes, but keeping ownership of the land, which detracts from the charitable group's mission, some say. "Owning the house and the property creates vested ownership in a community," the Post-Dispatch quotes the executive director of Habitat's St. Louis affiliate as saying.

Novice investors fail in Houston

Home buyers looking to capitalize on rising housing prices in Houston are falling prey to foreclosure and mortgage scams, according to a Houston Chronicle article. Some of these investors are being taken in by "questionable deals" -- such as a scheme associated with a recent indictment involving eight people and 300 homes -- while others are being done in by the city's "quirky condominium market," the Chronicle says. Finding tenants for Houston condos can be a challenge because apartments and large homes can be had for the same amount or less rent than a condo, the paper says. Another problem area investors face: paying for homeowners association fees as their units remain vacant. Foreclosures rose from 8,300 in 2004 to 11,983 in 2006 in Harris, Montgomery and Fort Bend counties, Texas, the article says.

Louisville home sales up

The Louisville housing market showed signs of improvement last month, with home sales up 8.2% over February 2006, according to a Courier-Journal article. The median home price rose 2.3% from February 2006 to $134,950, the newspaper says. The inventory of homes on the market dropped from 10 months in January to eight months, still above February 2006's total of 6.8 months. Credited for the positive movement in the local housing market are favorable interest rates -- the area has seen an increase in mortgages and refinancing, Adam Hall, the president of the Mortgage Bankers Association of Louisville, is quoted as saying.

Ms. Kim is a senior editor at RealEstateJournal.com

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