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Gov. Healey Rejects Calls to Veto Home Inspection Protections | Is NAR Settlement Lowering Buyer Agent Commissions? | News Nuggets
Healey Signs Housing Bond Bill, ADUs Included
Governor Maura Healey signed a $5.16 billion housing bond bill on Tuesday, August 6, 2024. A key provision allows accessory dwelling units (ADUs), or in-law apartments, by right in single-family zoned neighborhoods statewide. ADUs can be basement and attic apartments, home additions, or small detached dwellings on the property. There are still rules and regulations, but the new law allows more flexibility and options.
Key Points of the Law to Know:
No Local Zoning Approval Needed: ADUs can be up to 900 square feet or half the size of the primary home, whichever is smaller.
Occupancy Flexibility: ADU occupants are not required to be related to the property owner, which is a common restriction. An owner does not have to occupy the property, another often-seen restriction. The ADUs will require one parking space, but the law does not require any parking spaces if the unit is within 1/2 mile of a transit station.
Short-Term Rentals: Local laws on short-term rentals, such as Airbnb, still apply, but municipalities cannot unreasonably restrict ADUs.
Background: ADUs were legal in Massachusetts; however, zoning varied widely by city and town. Some communities, such as Haverhill and Burlington, had looser ADU regulations. Other municipalities had onerous restrictions, making adding an ADU to a property nearly impossible. State officials expect the new law to add 8,000-10,000 ADUs over five years.
Learn More About ADUs: What Massachusetts Home Buyers Should Know About Accessory Dwelling Units
Gov. Healey Rejects Calls to Veto Home Inspection Protections
Regarding the housing bond bill, Governor Healey rejected calls to veto language in the housing bond bill to protect prospective home buyers.
The Massachusetts Association of Realtors (MAR) asked its members to urge Governor Healey to veto the section of the housing bond bill that prohibited offers to purchase homes conditioned on waiving or limiting a home buyer's right to a home inspection. The MAR suggested that the language would "likely ... further decrease inventory." The email did not include any information or data to support the suggestion that all home buyers having a home inspection would result in homeowners choosing not to sell their homes. Not all Realtors, including myself, agreed with MAR.
In a unanimous vote (39-0) in late June, Massachusetts state senators adopted an amendment proposed by Millbury Senator Michael Moore that added the home inspection provision to the housing bond bill. The amendment specifically directed the Executive Office of Housing and Livable Communities to establish regulations stating that home purchases cannot be contingent upon the buyer waiving their inspection rights.
The House's housing bond bill passed before the Senate's version and did not include such language. The two branches of government ultimately sent a bill to the governor with essentially the same language as the amendment.
For more on the home inspection protections and the text from the housing bond bill: https://realboston.substack.com/p/breaking-news-home-inspection-waiver
Is NAR Settlement Lowering Buyer Agent Commissions?
It appears the National Association of Realtors (NAR) settlement with class-action attorneys may already be lowering the percentage of buyer agent commissions, or maybe long-term trends are continuing.
According to Redfin data released August 2, 2024, the typical U.S. home seller now pays a 2.55 percent commission to the real estate agent representing their buyer, down from an average of 2.62 percent in January. Some industry experts would argue that the buyer brings the money to the closing; therefore, the buyer is paying the listing agent's commission for the seller, not vice versa.
In Boston, the average buyer agent commission during the four weeks ending January 28, 2024, was 2.20 percent. During the four weeks ending July 14, 2024, Boston buyer agents averaged a 2.15 percent commission, according to the Redfin data.
The average buyer agent commission in Providence, Rhode Island, during the four weeks ending January 28, 2024, was 2.15 percent. During the four weeks ending July 14, 2024, the average buyer agent commission dropped to 2.05 percent commission.
Redfin believes the decline follows a yearslong trend of gradually decreasing commissions, possibly influenced by the National Association of Realtors (NAR) settlement announced in March. The settlement may have increased home sellers' awareness that they can offer any commission to a buyer's agent or none at all. It's important to note that buyer agent commissions declined in the decade before the settlement, from an average of 2.89 percent in 2013 to 2.66 percent in 2023.
Redfin analyzed MLS data covering rolling four-week periods through July 14, 2024. The analysis included listings offering a commission to the buyer's agent and excluded those without a commission or missing data. Starting on August 17, 2024, most commission offers to buyer agents will not be on the MLS, making tracking such data difficult and essentially useless.
Despite the percentage drop, the average commission paid to a buyer's agent in the United States has increased slightly in dollar terms, reaching $15,377 in July, up from $15,124 in January. Redfin attributes the increase to rising home prices.
Commission percentages have declined in all but three of the most populous metro areas in the United States since the NAR settlement. The decreases have been minimal, typically less than one-tenth of a percent.
Detroit saw the most significant decline, with the average commission dropping to 2.87 percent from 3.18 percent in January. Cleveland and Miami followed Detroit. Cleveland saw buyer agent commissions fall from 2.62 percent to 2.39 percent. Buyer agents averaged 2.63 percent in Miami, down from 2.84 percent.
In contrast, commission percentages in Cincinnati increased slightly, rising to 2.95 percent from 2.93 percent in January.
Among the 50 most populous U.S. metro areas, commissions are highest in Austin, Texas (2.99 percent), Cincinnati (2.95 percent), and San Antonio (2.91 percent). Buyer agent commissions are lowest in Nassau County, New York (1.95 percent), Providence, Rhode Island (2.05 percent), and Anaheim, California (2.11 percent).
News Nuggets
Massachusetts is the 6th Worst Place to Retire: Bankrate studied the best places to retire in the United States, considering several factors: (1) affordability and cost of living, (2) sense of community and well-being, (3) quality, cost, and proximity to health care, (4) crime, and (5) climate. At 46 overall, the Bay State ranked 48 in affordability, weighted at 40 percent. Massachusetts placed 10th for crime and 8th for well-being. New Hampshire ranked 38th overall, and Rhode Island placed 30th.
Mortgage Interest Rates Could Fall Further: According to Mortgage News Daily's Rate Index, the 30-year, fixed-rate mortgage averaged 6.34 percent on Monday, August 5, 2024, quite a drop from 8.03 percent on Thursday, October 19, 2023. Axios reports, "[e]ven if Treasury yields don't fall further from their current levels, there's still quite a lot of room for mortgage rates to continue to drop." Mortgage rates are more than 2.6 percentage points above the 10-year Treasury yield. That's way above historic levels, according to Axios. Throughout the 2010s, 30-year mortgages averaged 1.69 percentage points more than the 10-year bond yield. If the mortgage spread tightened back to that level and Treasury yields stayed the same, the 30-year mortgage rate would "fall from 6.55 percent to 5.57 percent."