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California Association of Real Estate Brokers 2nd Monthly Legislative Update
Federal
Fannie & Freddie Clarify Real Estate Commission Rules In response to NAR’s settlement in the Burnett et al and Moehrl et al cases, Fannie and Freddie announced that sellers are permitted to make concessions towards a buyer’s agent fee that are not subject to financing concession limits. This clarification provides important guidance for real estate transactions and ensures transparency in commission structures. Fannie Mae Notice RE Commission Freddie Mac Notice RE Commission
Real Estate
Market Update The U.S. economy continues to show strength, raising concerns for the housing market. Last week's strong job numbers were followed by equally robust inflation figures, leading to apprehensions that any rate cuts from the Fed may not occur until the second half of the year, if at all. Consequently, the bond market has witnessed interest rates climbing as investor demand for treasuries diminishes. Mortgage rates have risen above 7% again, marking the first time in nearly six months. While the outlook hasn't shifted significantly, we anticipate more challenges ahead as the markets digest the latest economic data.
C.A.R. March Home Sales and Price Report C.A.R. released its March Home Sales and Price Report earlier this week, indicating a decline in existing, single-family home sales compared to the previous month. However, the statewide median home price experienced a modest increase, reflecting ongoing market dynamics. Year-to-date statewide home sales saw a slight uptick, suggesting resilience in the housing market amidst evolving economic conditions.
Update on Burnett v NAR Case
Settlement and Its Implications Following the settlement in the Burnett et al and Moehrl et al cases, Fannie and Freddie have provided clarity on real estate commission rules, allowing sellers to offer concessions towards a buyer’s agent fee without limitations on financing concessions. This development ensures transparency and fairness in commission structures, benefiting both buyers and sellers in real estate transactions.
The settlement marks a significant milestone in addressing concerns related to real estate commissions and underscores the importance of regulatory clarity in the industry. By providing clear guidelines, Fannie and Freddie promote confidence and trust in the real estate market, fostering a conducive environment for transactions to thrive.
Legal Updates C.A.R. Legal has compiled resources to assist members in navigating the implications of the NAR settlement. These resources include a document addressing frequently asked questions, a quick guide summarizing the settlement terms, and additional references from Smart Zone and NAR. Members are encouraged to leverage these resources to gain a comprehensive understanding of the settlement and its implications on real estate transactions.
International
No international updates at this time.
State
Department of Insurance Public Meeting on Catastrophe Modeling Regulation The Department of Insurance will hold a public workshop on April 23 to discuss a proposed catastrophe modeling regulation aimed at restoring insurance options for all Californians. This initiative is part of Insurance Commissioner Ricardo Lara’s Sustainable Insurance Strategy, which aims to address the state’s ongoing insurance crisis. The regulation will leverage forward-looking catastrophe modeling to enhance wildfire safety and mitigation efforts, contributing to improved insurance availability and affordability across the state.
The workshop presents an opportunity for stakeholders to provide input and feedback before the regulation is submitted for approval. By prioritizing public engagement and transparency, the Department of Insurance seeks to implement impactful reforms that safeguard the integrity of California’s insurance market and promote equitable access to insurance coverage.
Legislative Day - Wednesday, May 1
This is your opportunity to unite with over 2,000 other REALTORS® at the Capitol, advocating for real estate matters and making our collective voice heard with state legislators. Engage with officials, gain insights from political leaders, and network with peers.
REALTOR® Block Party - Tuesday, April 30
Kickstart the experience by arriving a day early for the Block Party. Enjoy a closed-off city block buzzing with food trucks, music, games, and opportunities to connect with fellow real estate professionals.
CAREB Legislative Day Mixer
We are thrilled to announce an evening of networking and celebration on the occasion of Legislative Day! Join us for the Legislative Day Mixer, a prime opportunity for like-minded professionals to connect and share insights.
When: Wednesday, May 1st, 2024 Time: 7 PM - 11 PM Where: The Mermaid Bar, 1016 K Street, Sacramento, CA 95814
This mixer is not just a gathering; it's a testament to our community's vigor and commitment to shaping the future of real estate.
Save the date, dress to impress, and prepare for an unforgettable night!
For more information, visit our website at www.careb.org.
Let’s make this Legislative Day a stepping stone for future success.
California Association of Real Estate Brokers Monthly Legislative Update - April 2024
Federal Update
In our nation’s capital, developments have unfolded that may have a direct impact on our industry and overall national security. Notably, the potential impeachment trial of the Secretary of Homeland Security, Alejandro Mayorkas, appears to be swiftly heading towards dismissal. Senate Majority Leader Schumer has indicated plans to move for immediate dismissal of the charges, a procedure that requires a simple majority vote. This decision underscores a potentially less tumultuous legislative session than anticipated, possibly stabilizing aspects related to homeland security that indirectly affect real estate market sentiments.
Additionally, the federal government's recent success in thwarting a significant cyberattack targeted at Linux, an operating system prevalently utilized by federal agencies, highlights the ongoing challenges and importance of cybersecurity in our increasingly digital world. This incident has sparked a broader discussion within the cybersecurity community regarding the security of open-source code software, emphasizing the need for continuous vigilance and advancement in cybersecurity measures to protect critical infrastructure and systems that impact our sector indirectly.
Real Estate Update
The real estate sector continues to witness dynamic shifts, underscored by the strong jobs report for the third consecutive month. This robust employment growth suggests a potentially soft landing for the economy in 2024, which could bode well for the real estate market. However, this economic strength also maintains elevated levels of inflation, consequently delaying anticipated Federal Reserve rate cuts. These developments have led Wall Street to adjust its expectations, impacting interest rates and potentially influencing market dynamics. Notwithstanding, future projections still align with a 50-75 basis point decline in the policy rate this year, offering a glimmer of optimism for real estate professionals navigating these uncertain times. For the CAR Weekly Sales Data Report Link: https://car.sharefile.com/share/view/sf6e04f3596d94898ab0d5363bae985d3
Update on Burnett v. NAR Case
Let's delve into the recent developments in the Burnett v NAR case. The National Association of REALTORS® (NAR) agreed to a nationwide settlement totaling $418 million with groups of home sellers. This agreement includes the removal of Offer of Compensation fields from the Multiple Listing Service (MLS) and mandates REALTORS to enter into Buyer Representation Agreements defining representation terms and compensation. These changes are slated to take effect by mid-July, pending final court approval.
The settlement offers three compensation options: buyers paying the professional fee, sellers covering the selling broker's fee, or the listing broker offering compensation off MLS. Notably, this settlement mitigates potential damages that could have exceeded $5 billion and allows the industry to move forward with enforceable contracts covering services and compensation.
This lawsuit challenged several longstanding practices within the real estate industry, particularly around listing services and commission structures. The settlement introduces modifications aimed at enhancing transparency and fairness in real estate transactions. For instance, it mandates clearer disclosure about commission fees and prohibits practices that could discriminate against lower-priced listings. These changes are expected to foster a more competitive and consumer-friendly marketplace, impacting how real estate professionals conduct business and interact with clients. As this settlement unfolds, it's crucial for industry participants to stay informed and adapt to these regulatory shifts, ensuring compliance and leveraging opportunities to refine their service offerings.
Check out the new Legal Tools information summarizing key points of Burnett v. NAR. Link: https://www.car.org/riskmanagement/tools/burnett-v-NAR
International Update
On the international front, significant developments include Mexico's upcoming presidential debate, a pivotal event that could influence bilateral trade and economic policies affecting the real estate sector, especially in border regions. Additionally, Taiwan's recent seismic activity underscores the importance of considering geopolitical and natural disaster risks in international real estate investments. Furthermore, the U.S. Department of State's collaboration with Mexico to enhance the semiconductor ecosystem presents potential growth opportunities for real estate professionals, given the likely increase in industrial and commercial developments stemming from this sector's expansion.
State Update
California's real estate landscape is shaped by various state-level initiatives and challenges. The potential increase in port traffic due to external factors highlights the need for infrastructure readiness, possibly impacting commercial real estate markets. Furthermore, California's stringent emissions standards for heavy-duty trucks exemplify the state's environmental commitments, affecting logistics and distribution sectors. The CPUC's proposed electric bill fixed charge and legislative efforts to address emergency room violence illustrate the complex interplay of policy, social issues, and economic factors influencing the state's real estate dynamics. Lastly, the early action agreement on budgetary measures, including significant investments in climate innovation and infrastructure, outlines the state's priorities and potential areas of growth for the real estate sector.
As we near the conclusion of Realtist Week and celebrate Fair Housing Month, it's vital to reflect on the significance of this observance and the invaluable contributions of realtists in advancing fair housing initiatives. Realtist Week serves as a tribute to the National Association of Real Estate Brokers (NAREB), established in 1947 as a response to discriminatory practices within the real estate industry.
NAREB has been pivotal in advocating for fair housing policies and combating racial discrimination in housing. Their relentless efforts culminated in the passage of the Fair Housing Act of 1968, a landmark legislation that prohibited housing discrimination based on race, color, religion, sex, or national origin. This pivotal moment marked a significant stride towards ensuring equal access to housing for all individuals.
As we navigate these complex landscapes, staying informed and proactive in adapting to these changes will be paramount for continued success and resilience in the dynamic real estate market.
California Association of Real Estate Brokers Monthly Legislative Update Newsletter - March 2024
As we navigate through the legislative landscape of California, it's crucial to stay informed about the latest developments that impact our industry, especially those pertinent to our black and minority members. Here's a breakdown of key updates from various levels of government:
Federal
The U.S. economy saw positive growth in February, with the addition of 275k jobs, reflecting resilience in the labor market despite inflationary pressures. President Biden announced expansions in healthcare initiatives, including the cancer navigator program, aimed at improving patient care options. The evolving landscape of remote work continues, with hybrid models gaining popularity, particularly among educated professionals.
Real Estate
Consumer sentiment in the housing market remains optimistic, reflecting increased demand and supply. However, rising inflation rates may pose challenges in the near term, impacting affordability and mortgage rates. The California Business Properties Association (CBPA) and NAIOP of California, in collaboration with Assemblymember Sharon Quirk-Silva, have introduced Assembly Bill 2433, known as the Private Permitting Review and Inspection Act.
Here's a summary of AB 2433 and its potential impact:
- Purpose: AB 2433 aims to address the bureaucratic hurdles often faced during construction and development projects by establishing clear timelines for permit processing.
- Key Provisions: The bill sets reasonable deadlines for permit processing, enhancing the efficiency of local government operations.
- It allows for the conditional use of private professionals for plan-checking and inspections if local agencies fail to meet the set deadlines.
- Assemblymember's Perspective: Assemblymember Quirk-Silva underscores the need to cut through red tape in the permit process, ensuring projects move forward smoothly and providing relief to local agencies facing challenges.
- Safeguards: The bill includes provisions to safeguard against delays while upholding safety and oversight standards. Significant projects such as health facilities and public buildings are exempted.
AB 2433 is currently awaiting its first committee hearing, signaling the initial steps toward potential reform in the building permit process.
The California Jobs First Council, announced by Governor Gavin Newsom, aims to boost job creation and career education statewide, potentially influencing housing market dynamics.
Update on Burnett v NAR Case
The proposed settlement in the Burnett v NAR case is poised to bring significant changes to the real estate industry, particularly regarding agent compensation structures. While listing agents may see minimal adjustments, buyer’s agents could face altered payment frameworks, potentially affecting homebuyers. The National Association of Real Estate Brokers (NAREB) is closely monitoring these developments and has appointed a special task force to assess the impact on its members and the broader community. Additionally, NAREB is ramping up its efforts to support Black homeownership and advocate for equitable policies amid these changes.
The proposed settlement follows a lawsuit challenging the traditional commission-sharing system between home sellers’ and buyers’ agents. If approved, it will require negotiations outside of official listings, potentially burdening homebuyers with additional costs. NAREB is committed to assisting its members in navigating this transition and ensuring continued advocacy for fair housing and community empowerment. CAREB has also established a Task force committee to monitor the impact this will have on the California Realtist Community.
The NAR settlement in the Burnett v NAR case has significant implications for real estate professionals, particularly regarding agent compensation structures. The National Association of REALTORS® (NAR) reached a significant nationwide settlement totaling $418 million with groups of home sellers. One major change involves removing the Offer of Compensation fields from the Multiple Listing Service (MLS). Additionally, REALTORS® will now need to enter into a Buyer Representation Agreement with clear terms of representation and compensation.
Here's what you need to know:
- Timeline: By mid-July, NAR-governed MLSs must remove the Cooperating Broker Compensation field(s). While final approval is pending, NAR plans to implement this rule change by mid-July.
- Impact on Business: You'll need to enter into a buyer representation agreement before showing homes, with clear terms and compensation. Consult your broker for guidance on implementing these changes.
- Compensation Options: The settlement offers three compensation options, including buyers paying your fee, sellers paying the selling broker's fee, or the listing broker offering compensation off MLS.
- Positive Aspects: Despite challenges, the settlement amount is significantly less than expected, and it resolves uncertainty in our industry. The terms also release claims against many REALTORS®, teams, and brokers.
- Adaptation: While changes are ahead, homes will still be sold, and successful agents will continue to provide value to clients. Becoming familiar with the Buyer Representation Agreement is essential.
- In conclusion, while changes are on the horizon, REALTORS® have a history of resilience and adaptation. We're here to support you through these transitions and will provide updates as they develop.
International
Cross-border initiatives and collaborations are underway to enhance regional economic integration and manage migratory flows effectively. Efforts such as the Fast Lane Pilot Program in Tijuana aim to streamline border processes, benefiting students and facilitating trade. Furthermore, discussions on immigration reform underscore the importance of inclusive policies in fostering community cohesion and economic growth.
State
California is advancing regulations on various fronts, including AI usage in business operations and single-use packaging laws. Initiatives such as mapping groundwater systems and wastewater management legislation highlight the state’s proactive approach to environmental sustainability and resource management. Additionally, ongoing efforts to support small businesses and address unemployment underscore the state’s commitment to economic resilience and inclusive growth.
This legislative update aims to provide insights into key developments impacting the real estate landscape across federal, state, and international levels. As the industry continues to evolve, staying informed and adapting to changing regulations and market dynamics remain crucial for success.
Capital Opportunities & Resources: Various capital opportunities and resources are available for businesses and individuals affected by recent disasters and economic challenges Link. From federal disaster assistance programs to local small business grants, support avenues are accessible to aid in recovery and resilience efforts. Additionally, initiatives such as the California Competes Tax Credit provide incentives for business growth and investment in the state.
Stay updated on upcoming public input opportunities and hearings to engage with policymakers and contribute to decision-making processes. Your participation in the CAREB Legislative Committee is vital in shaping policies and initiatives that impact our communities and industries.
Market Update
Consumer sentiment in the housing market remains positive, with increased demand and supply dynamics observed in recent months. However, rising inflation rates and potential interest rate hikes may impact affordability and market competitiveness in the near term. Despite these challenges, the real estate market is expected to remain resilient, with opportunities for growth and investment. Both supply and demand increased in February and the competitiveness of the market appeared to be heating up as we entered the spring homebuying season. With the inflation data coming in stronger than expected in the past couple of weeks, rates began to trend up again, which could create some headwinds for homebuyers in the near term. While the market may see more moderate sales in March, housing demand should pick back up in the later part of the home buying season as inflation shows more signs of easing and rates begin to trend down again.
Information and Events for You and Your Agents
Upcoming NAREB REALTIST Week starts April 7th through April 13th with events planned on the National, State and local levels. C.A.R.’s upcoming Fair Housing Day on April 16 offers valuable insights into California’s fair housing laws and provides opportunities for networking and education. Additionally, initiatives such as the Realtist Toolkit and Black Developer Academy aim to support NAREB members in navigating industry changes and expanding their expertise and opportunities
As we navigate these evolving landscapes together, staying informed, engaged, and adaptable is essential for success in the real estate industry. We encourage all members to take advantage of available resources and participate in upcoming events to further their professional development and contribute to the growth and resilience of our industry and communities.
California Association of Real Estate Brokers Monthly Legislative Update - March, 2024
In the federal arena, California's US Senate race was a hot one which culminated in this months primary election. With five major candidates vying for the seat, their diverse views on critical issues highlight the importance of this race. Additionally, the Centers for Medicare and Medicaid Services have introduced a new rule aimed at reforming the prior authorization process, addressing concerns regarding care denials and enhancing patient care efficiency. Notably, bipartisan efforts led by Representative Scott Peters and Representative Bill Huizenga have brought forth the Fiscal Commission Act, signaling a united effort to address long-term national debt concerns.
Real Estate
The California real estate landscape continues to evolve, with significant developments in legal matters and market dynamics. Amidst ongoing commission lawsuits, it's crucial for Realtists to maintain transparent discussions with clients regarding compensation structures and the value they bring to transactions. Furthermore, recent market updates indicate a robust housing market as we head into the Spring homebuying season, despite fluctuations in mortgage rates. CAREB in Collaboration with C.A.R. remains committed to providing resources and support to agents navigating these changes, including legal guides and educational materials.
Update on Burnett v NAR Lawsuit
In the ongoing Burnett v NAR lawsuit, multiple class action antitrust lawsuits have been filed challenging NAR rules related to cooperative compensation. Several cases have emerged in federal courts in California, with C.A.R. named as a defendant in two cases. While litigation is in its early stages, C.A.R. has retained experienced antitrust defense counsel and is evaluating strategies to defend its position. Realtists in California are encouraged to stay informed and engage in open discussions with clients about compensation and the value they provide in real estate transactions. C.A.R. is named as a defendant in two of those cases in the Central District, Gael Fierro and Patrick Thurber v. NAR et al. and Andrea Freedlund v. Redfin Corp. et al. You can read about this on the CAR media page (Second Copycat Lawsuit Filed Against C.A.R. (car.org))
International
On the international front, diplomatic efforts are underway to address migration challenges, with discussions between senior officials from Mexico, the U.S., and Guatemala aimed at alleviating pressures on the U.S.-Mexico border. Additionally, agreements have been reached to tackle issues such as human trafficking and transboundary pollution, signaling collaborative efforts to address shared concerns. Meanwhile, the Academy Awards nominations have sparked conversations, highlighting the global impact of cinema and cultural representation.
State
In California, recent developments include a ruling barring the use of bonds to fund the Delta Tunnel Project, underscoring ongoing debates surrounding water management and environmental protection. Senate President pro Tem Toni Atkins' entry into the 2026 governor's race adds intrigue to state politics, while new laws such as SB 960 aim to address staffing shortages in law enforcement agencies. These state-level initiatives impact various sectors, from infrastructure to public safety, shaping the future of California's governance and policies.
Independent Contractor Regulations
Effective March 11, 2024, the U.S. Department of Labor's new regulations on independent contractor classification introduce a "totality-of-the-circumstances" test, impacting real estate agents' classification. While California law provides clarity on independent contractor status, the federal regulations bring additional considerations. Brokers are advised to adhere to practical guidelines to ensure compliance and mitigate potential risks. Consulting with employment law specialists can provide further insights into navigating these regulations and safeguarding agents' status. Where can I find more details about the DOL’s new regulation? Please see DOL’s Frequently Asked Questions - Final Rule: Employee or Independent Contractor Classification Under the FLSA | U.S. Department of Labor (dol.gov)
Stay informed, stay engaged, and continue to uphold the highest standards in real estate practices. For further updates and resources, visit the California Association of Real Estate Brokers' website.
