Wednesday, October 26, 2005

Antitrust Hearing on Competition in the Industry

Questions over competition within the real estate industry have prompted Justice Department and Federal Trade Commission officials to take action on a range of matters this year, including suing the National Association of Realtors trade group over its policies for sharing and displaying property information on the Internet and investigating state laws that effectively ban real estate rebates for consumers.

Yesterday the Federal Trade Commission (in the US) held a workshop called "Competition Policy and the Real Estate Industry" in Washington. According to Inman News, the trade commission used an interesting parallel between the travel and real estate industries:

Airline ticket prices have generally dropped in price over the years, thanks to greater price competition in that industry. And it's no accident, said Michael A. Salinger, director of the Bureau of Economics for the U.S. Federal Trade Commission.

"Prices were particularly high on long distance routes," he said, though, "We deregulated prices and eliminated restrictions on entry and prices came down dramatically."

Salinger said that while some travelers may say that aspects of quality have dropped, such as the quality of food on some discount airlines, "economists who have looked at this have concluded that we are by far better off with the lower prices than we were with the higher service levels designed to attract the higher prices."

Industry leaders rebutted the charges, saying the real estate market is highly competitive, with many new people entering the field. They said average real estate commissions have dipped, to a bit above 5 percent nationally, because of new kinds of brokerage services and price negotiation.

More on this from the Washington Post

Overview of the workshop from the D.O.J. website.


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