I came across this piece on Ben’s blog this morning. I’m positing it here because I feel it is rather significant. If you’ve studied any economics you know the theory behind a perfectly competitive markets. If you don’t, the model theorizes a type of market where no producer or consumer can influence prices directly. The model has five requirements for this to be possible:
1) Atomicity – A large number of buyers and sellers
2) Homogeneity – Good and services are perfect subsititutes
3) Perfect and complete information – All firms and consumers know the prices set
4) Equal access – All fims have access to information, technologies, resources
5) Free entry – Any firm may enter the market
The real estate market most certainly achieves the first requirement of atomicity. The second requirement is arguable in either direction, but does involve quite a bit of subjective taste. The third and fourth requirements, however, are very important in the real estate industry.
Why?
Because as long as the real estate industry controls the information and do not share it, there exists an information asymmetry in the market that gives a significant advantage to the real estate industry. This asymmetry allows those insiders to manipulate the market. Why? Because the industry has a vested interest in the market.
So why am I bringing this up today? Because of this.
Home sales on a slide across the county
Over the past several years, the News-Press has obtained sales and median price data for the South Coast from the Santa Barbara Association of Realtors. The group recently told the News-Press that it now refuses to make this data available to the newsroom. Other associations of Realtors across the county willingly continue to share sales and price information with the paper.
Is this the beginning of a disconcerting trend to hide data and statistics from the public? If so, the Realtors would be able to spin the market any way they wish. It would only be through anecdotal stories and stale data that we would be able to know the market direction.
Hopefully, intelligent readers will realize that hiding this data from the public only further damages public trust for Realtors and the real estate industry. God knows that the Realtors were not shy with their information in a rapidly appreciating market. So why change now? Well, because the market is falling apart, and it is in their best interest to do everything they can to hide it.
Caveat Emptor!
Grim
You can still get that data from the county tax offices, I’m sure. Certainly a newspaper should be able to get it. I don’t see the point of the realtors actions in this case.
You forgot the fifth on entry into the market. The MLS has served to keep it a cartel. Only time will tell if it can be opened up to others not in the 6% game.
As a realtor, overall trend information should be available.
I have a problem with letting the
public acess the MLS. Its a site
paid for by realtors with dues
for other realtors. It should be
open to all realtors (regardless
of their commission structure).
If housing is going to be pitched as an investment. Then it should be held to the same standards as other ‘investments’.
Thus, open and unbiased access to all information and statistics.
Imagine if the stock markets decided to withhold information and only publish “market reports” filled with nothing but ambiguous terms.
Would you invest?
What if a stock broker came forward and told you that these actions were acceptable, because the broker had to take licensing exams and pay a membership fee.
Would you still invest?
grim
I’m glad the housing bubble blogs are picking this story up. Now we just need the mainstream media to pick it up.
David
Bubble Meter Blog
Great piece on NAR credibility..
Being A Lighthouse: Now Is Not The Time For The NAR Hard Sell
grim
the NAR is a cartel, bottom line.
they hoard information to prevent competition.
the collude to prevent prospective buyers from seeing FSBOs and discount realtor represented properties.
the list goes on and on.
the NAR is going down when this bubble pops. the entire RE industry will be vastly different, more open, competitive, and cheaper.
all of these last minute panic maneuvers by realtors are just digging the hole deeper
“If housing is going to be pitched as an investment. Then it should be held to the same standards as other ‘investments’.
Thus, open and unbiased access to all information and statistics.”
I think one of the positive outcomes of the post-pop RE bubble will be serious reform in the RE industry. The industry will be open for more competition and hopefully an SEC style market monitor will be created to ensure fair access to market data.
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