New NAR Report: Banks Would Concentrate Real Estate Market

WASHINGTON, DC-A white paper prepared by the National Association of Realtors’ economic research division predicts dire consequences if banks are allowed to enter real estate brokerage. The report, which was submitted to government officials in opposition to the proposal, was released on the eve of this week’s NAR mid-year legislative and trade expo, at which the issue is expected to be a big topic.

The Federal Reserve and Department of Treasury are considering whether to allow banks into property management and real estate brokerage, after the banking industry was deregulated a couple years ago. At issue is the fundamental question of whether real estate brokerage services are either financial in nature or incidental to financial transactions. If they were deemed either, banks would theoretically be allowed to enter the real estate arena.

“This proposal is a lose-lose proposition. It’s a bad idea for banks and it’s really terrible for consumers. Market concentration reduces competition and consumers end up paying more for less service and having fewer options in terms of service providers,” says NAR chief economist David Lereah.