A report highlights housing supply issues and how a multifaceted approach could be key to improving housing equity as well.

The nation’s housing shortage has also fueled a housing inequity problem, Bryan Greene, vice president of policy advocacy for the National Association of REALTORS®, writes in an essay included in a new report, “Housing Underproduction in the U.S.”(link is external) To close the widening racial gap in ownership, housing’s underproduction must be widely addressed, he notes.

And that problem is only worsening: The Up for Growth report puts a new number on the nation’s housing shortage—3.8 million homes, more than double where it stood in 2012. The deepening inventory crisis is widening in scope, affecting urban, suburban and rural areas alike and hitting certain minority groups particularly hard, according to the report.

“Underproduction in this country has many causes,” Greene writes. “Local zoning and land-use restrictions have, for decades, proved to be one of the greatest barriers to housing construction, affordable housing and diverse communities.”

The report notes long historical racial inequities in access to housing, such as from past discriminatory government grants and programs, widespread exclusionary zoning policies originally designed with racial segregation in mind, racially restrictive covenants written into home deeds from the 1910s to the 1940s, redlining practices that limited access to capital investments to prospective homeowners of color, and urban renewal projects that caused displacement and gentrification. These have led to a widening racial wealth gap that has stretched over generations and has made it more difficult for families of color to qualify for loans and afford homeownership, according to the report. The gap between Black and White homeownership rates has widened over recent years. These historic and systemic constraints combined with housing underproduction and high prices make homeownership even less attainable for buyers of color, the report notes.

‘Double Trouble’

In a report released earlier this year, NAR called record-high home prices and record-low housing inventories “double trouble” for real estate, particularly for Black Americans. The report found that about half of the homes for sale would require a household income of $100,000 or more to purchase. That has placed homeownership increasingly out of reach for a number of households: 50% of Asians, 65% of Whites, 75% of Hispanics and 80% of Blacks do not earn enough income to buy these homes, the report notes.

Where to Go From Here

Housing supply and housing equity can be addressed on multiple fronts such as by expanding the types of housing available for greater income levels and a broadening focus on land use. Greene points to zoning reforms, investments in new construction, expansion of financing, and tax incentives that prompt investment in housing and convert unused commercial space to residential spaces. NAR continues to advocate for incentives in the tax code to promote zoning and land-use changes, such as tax credits or other support to communities that ease zoning rules that had been limiting the supply of homes, like minimum lot sizes and bans on multifamily housing. Such policies can not only help ease housing shortages but ultimately help expand housing opportunities to more people, Greene writes.

“For more than a half-century we’ve witnessed how land-use decisions can limit housing development, affordability and equity,” Greene notes. “We cannot stand by and lament this lack of progress. Now, it is time to act.”

©National Association of REALTORS
®Reprinted with permission

As a listing agent, am I required to disclose that I already have offers on the property to any agent who wants to show my listing or any buyer who wants to see my listing?

The ethical course depends on two factors: First, has the agent or prospective buyer asked if there are offers on the property? And second, has the seller given you approval to make that disclosure?

Ask sellers upfront how they’d like you to respond to such an inquiry from a buyer or cooperating broker. If sellers haven’t given you approval to disclose, you have to respond that the sellers don’t want the presence of other offers disclosed but you would be happy to present any offer.

This is an important conversation to have with sellers at the time of listing, especially if multiple offers are typical in the market. That way you will be able to respond promptly and appropriately.

Article 1, Standard of Practice 1-15 states:

“REALTORS®, in response to inquiries from buyers or cooperating brokers shall, with the sellers’ approval, disclose the existence of offers on the property. Where disclosure is authorized, REALTORS® shall also disclose, IF ASKED, whether offers were obtained by the listing licensee, another licensee in the listing firm, or by a cooperating broker.”

(Adopted 1/03, Amended 1/09)

©National Association of REALTORS
®Reprinted with permission

Love letter ban ruled unconstitutional, but risks remain if buyers submit them.

“Buyer love letters” gained popularity a couple of decades ago as a tool for competing in a hot market. Buyers hope their letter, a personal and emotional appeal to the seller, will help their offer stand out. But in recent years, attorneys have urged caution in the use of such letters, saying the information in them could be used to discriminate. When one state took action to stop the use of love letters, a broker protested—and won.

The Case: In 2021, the Oregon legislature banned buyer love letters in the state, noting the practice could lead sellers to deny or choose an offer based on race, religion, gender or other protected classes, which would violate federal fair housing laws. It was the first such prohibition in the United States. Total Real Estate Group, an Oregon brokerage, sued the real estate commissioner, Steve Strode, and attorney general, Ellen Rosenblum, over the ban.

The Ruling: In March, a federal judge ruled in favor of the broker age, saying the Oregon ban violated the First Amendment. As a result, the state’s real estate commissioner agreed to stop enforcing the statute. 

Although the court agreed with letters, saying the information in the defendants that love letters could perpetuate implicit bias and racial disparities in homeownership, it noted the letters contain a significant amount of “innocuous information,” such as compliments on a home’s style or a shared love of gardening. The court also said there are other ways to combat housing discrimination, such as greater enforcement of existing fair housing laws and requiring a fair housing disclosure in transactions—alternatives that don’t overly restrict “otherwise lawful speech.” Ruling on the First Amendment argument, the judge cited a previous circuit court case that said, “It is always in the public interest to prevent the violation of a party’s constitutional rights.”

Best Practices: NAR continues to recommend that you advise buyers and sellers about the potential risk of using love letters and avoid sharing information that could be used to discriminate. Sellers should evaluate offers using objective criteria, such as price, timing and contingencies. In addition, brokers should provide fair housing training to agents and employees. View NAR training programs here.

What’s Next: Although the Oregon ban has been struck down, legislators in other states have floated similar statutes. A Rhode Island bill is being held for further study, and some Washington state lawmakers are considering reintroducing a stalled bill on the issue.

©National Association of REALTORS
®Reprinted with permission

Not revealing known property defects to a buyer—a common problem in real estate, studies show—can land you in court. Follow these best practices to avoid liability.

When a home buyer discovers a property defect that wasn’t disclosed by the seller or listing agent, the buyer may sue, claiming the home was misrepresented. This has become a more urgent problem in real estate since buyers in last year’s frenzied market started waiving the home inspection contingency to win bidding wars. Sixty percent of sellers admit to not disclosing a known problem with their property to buyers, according to a July study from Cinch Home Services(link is external).

“Failure to properly disclose can lead to misrepresentation claims, ranging from fraud to negligence and, in some states, innocent misrepresentation,” Deanne Rymarowicz, associate counsel at the National Association of REALTORS®, warns in the latest “Window to the Law” video. She cites a court case in which an agent was ordered to pay $170,000 after being found to have shown a “reckless disregard for the truth” by not disclosing a listing’s prior water damage.

Rymarowicz offers best practices to help avoid a misrepresentation claim due to the failure of the seller to disclose:

• Do not complete a disclosure form on behalf of a seller.
• Encourage the seller to reveal all known facts and defects, and share them with the buyer.
• Review the seller’s disclosure form to make sure they answered all the questions.
• If the seller refuses to disclose a material fact or defect you’re aware of, you should disclose it to the buyer as soon as possible.
• Document any information the seller has provided to the buyer, such as answers to questions about the condition of the property. Keep any research you’ve done separately on the condition of the property as well.

©National Association of REALTORS
®Reprinted with permission

You can’t misrepresent a property, but there are ethical ways to use images generated by artificial intelligence to improve your clients’ experiences and better serve their needs.

Artificial intelligence now makes it possible for you to send a listing photo, along with commands for whatever image enhancements you want, to an algorithm—and receive the enhanced photo in seconds. This new frontier for real estate technology may open endless possibilities for your marketing efforts, but it also comes with a murky legal landscape. At this point, there are more questions than answers, experts said Saturday at the Emerging Business and Technology Forum during NAR NXT, The REALTOR® Experience(link is external) in Orlando, Fla.

AI-generated images are strikingly accurate, said Dan Weisman, director of emerging technology at the National Association of REALTORS®. He recently asked a generative AI tool to create a photo of a “transparent glass sculpture of a duck.” Weisman noted that the resulting image showed the duck with a colored background so the viewer could tell it was transparent. Weisman also generated an image of a corgi in a “house of sushi,” which proves that the algorithm understands the nuances of dog breeds and building construction.

DALL·E 2(link is external) and Google Imagen(link is external) are the primary platforms for AI-generated images right now, and the technology is free (for now) to anyone who wants to try it, Weisman said. He added that within real estate, there could be three primary purposes for AI-generated images:

1. Previewing the end result of a renovation project.
2. Modifying listing photos to help buyers envision themselves in a home.
3. Generating stock photos for marketing purposes.

Using these tactics, though, requires you to look back at the REALTOR® Code of Ethics for guidance, said Matthew Troiani, NAR’s director of legal affairs. He pointed out that Article 2 prohibits REALTORS® from exaggerating, concealing or misrepresenting pertinent facts about a property or transaction. Still, there are ways to ethically use generative AI in real estate, Troiani said. A buyer’s agent, for example, could show their clients what a home could look like with alternative features if they’re willing to do some improvement. The could help buyers think creatively at a time when low inventory makes it difficult to be picky.

But, of course, a listing agent shouldn’t put these kinds of altered photos on the MLS without disclosure. Before using photos enhanced by AI, ask yourself whether you’re trying to improve the customer’s experience or pull a fast one, Troiani said. “If you lead with transparency and in your client’s best interest, 99% of the time, you’ll be fine.” When it comes to who owns the legal rights to AI-generated images, “there are more questions than answers,” Troiani said, noting that U.S. copyright laws “protect original works of authorship fixed in a tangible form of expression.” For now, he said, legal authorship is only extended to humans and not technology. If you’re concerned about infringement, don’t share AI-generated images in a public domain, Troiani added.

©National Association of REALTORS®Reprinted with permission