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Two problems with this thought. 1) On average in my jurisdiction, people sell their houses once every 10 years. So the 6% Fees would account for only (6%/10 =
by JacobAldridge 10y ago
Two problems with this thought.
1) On average in my jurisdiction, people sell their houses once every 10 years. So the 6% Fees would account for only (6%/10 = 0.6%) annual growth, not the whole 6%.
2) You could compare this to an area where agent fees are much lower. For example, most of my real estate industry experience is in Queensland, Australia where until last year Agent Commissions were capped at 2.5%. If your theory were correct, we would have seen growth rates closer to 2.5%, when in reality they average about 6-8% per annum here as well.
I like your thinking though!
- davemel37 10y agoTo your first point. Comparable housing units are used to price new listings, so even if a specific home is only sold every 10 years, there are comparable homes sold every year that drive up the value by 6% yearly. To your second point, I can't speak to specific markets, but assuming other market forces for the most part balance out over time and the only things that constantly change are inflation and increased brokerage fees, it could still show 6% growth.