America’s housing crisis has become impossible to ignore. The U.S. is short more than 4.7 million homes. Sky-high prices, punishing mortgage rates, and relentless NIMBYism are crushing the American dream for millions of families. And yet one of the biggest drivers of unaffordability receives far too little attention – the Realtor cartel that forces homebuyers and sellers alike to pay 5–6 percent commissions on every transaction.
Ending this hidden “Realtor tax” could unleash up to $50 billion in new capital for the housing market – money that would go directly into homes, not brokers’ pockets.
Commissions this high are not a nuisance – they are a massive drag on affordability. For first-time buyers, inflated fees mean saving tens of thousands more for a down payment. For seniors, high fees encourage postponing downsizing. Above all, these high commissions fall hardest on young Americans, the very people locked out of ownership in growing numbers. The National Association of Realtors (NAR) itself acknowledged last year that the share of first-time buyers had plummeted to just 24 percent of home sales, a historic low.
Renters aren’t spared either. Fees levied on builders make housing more expensive to construct and slow the addition of new supply. With rents rising faster than personal income for two decades, half of all renter households now spend more than 30 percent of their income just to keep a roof overhead.
The Realtor tax worsens the affordability crisis, undermines social and labor mobility, suppresses construction employment, and inflates both rents and home prices.
It doesn’t have to be this way. Compared to peer nations, the United States is a glaring outlier. Commissions average 3 percent in Australia, 2.4 percent in Sweden, 2.2 percent in the United Kingdom, and just 1.8 percent in Ireland. Or compare Realtors’ fees to the fees and commissions of other sectors. In the past, it made sense for agents to command higher fees. Consumers relied on them to access listings and visit homes for a showing. But today, buyers and sellers do most of that work themselves. With a few clicks, anyone can view high-resolution photos, tour interiors virtually, map neighborhoods, and check school districts.
In every other industry touched by digitization, whether airline tickets, stock trades, or mutual funds, fees have collapsed toward zero. Why is real estate the exception? It is not because the market demands these high commissions, but because NAR and its members have rigged the rules.
That rigging is on clear display in Real Estate Exchange (REX) v. Zillow & NAR, a cert petition now before the U.S. Supreme Court. REX was launched to break the cartel, offering commissions 50–75 percent lower than the industry average. Consumers embraced it, and REX was on track for a billion-dollar IPO. But in 2021, Zillow adopted NAR’s “optional” no-commingling rule, which segregated REX listings from Zillow’s default search results. Overnight, REX’s web traffic collapsed by 90 percent. The company, and the competition it promised, was crushed.
REX sued, arguing that NAR’s “optional” rule was an antitrust violation. But the Ninth Circuit handed down a ruling that, if upheld, would gut antitrust enforcement across industries. The court held that if a rule is labeled “optional,” it cannot be challenged, and if an agreement is informal, it cannot be a conspiracy. Both positions contradict Supreme Court precedent and rulings from the 1st, 3rd, and 5th Circuits, along with the U.S. Department of Justice.
Worst of all, the Ninth Circuit’s decision undermines the consumer-welfare standard that has guided U.S. antitrust law for decades. If left standing, it would give every powerful trade association in America a roadmap to evade scrutiny. All you would have to do is to call your cartel rules “optional,” and collude informally. Consumers would have no recourse.
By taking this case, the Supreme Court can close these dangerous loopholes, reaffirm that optional rules can still be conspiracies, and restore the principle that antitrust law exists first and foremost to protect consumers.
The Court, if it chooses to resolve this significant circuit split, is really the only route to reform. NAR’s 1.5 million members have unmatched lobbying clout. They have blocked even the discussion of reform in Congress. They intimidate politicians from state legislatures to the White House. Left unchecked, NAR will continue to protect an outdated commission structure that drains billions from families while freezing new entrants out of the market.
Only the Supreme Court can stop this. Americans deserve a housing market that works for them – not one rigged to enrich a protected guild. The housing shortage is crushing families. The rigged market in real estate commissions makes it worse. The Supreme Court should act now to end it.
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