Who Is To Blame For Sky-High Home Prices? An Agent Speaks Out

A lot of controversy was recently stirred up when a TLS opinion piece largely blamed real estate agents for driving up the price of homes beyond the financial means of most Lakewood families. Some agreed with Mr. Bergman’s assertions, while others, especially real estate agents, were stunned that blame for the exorbitant prices would be pinned on one group of people who are trying to earn themselves and their families a living.

Boruch Schecter, a local real estate agent, told TLS that while he understands people’s frustration and their desire to have someone to blame, the truth is that real estate agents generally have less say over how much a house will sell for than people think.

There are several important things to take into account, Schecter said. First, the market is red-hot at the moment and the prices are naturally high, without anything to do with any real estate agent. At the moment, there are too many home-buyers and too few sellers, causing nearly every house on the market to go into a bidding war. The number of people searching for a home is especially high, given that the rental market in Lakewood is out of control, causing an even bigger house crunch and sending prices higher.

Another point he made is that interest rates are at historic lows, allowing people to pay more for a house than they would if interest rates were closer to 5% or 6%, and allowing homeowners to ask for more for their homes. This isn’t the real estate agent’s doing, it’s the realities of the market.

What is perhaps the most important thing to realize, Schecter says, is that real estate agents work off of referrals. Because the agent market is so saturated, there is a ton of competition, and agents want happy clients who will refer their friends. It simply isn’t worth it to have an unhappy client who feels forced into buying a home outside of their price range so that the agent could have a few extra dollars in their pocket. The reason it isn’t worth it is that the client won’t be content with the service provided and won’t refer his or her friends to the agent for another sale. The trick to being a successful agent isn’t in selling a single house; you need to sell many houses. And to do that you need happy clients.

This isn’t to say that there aren’t any agents who help drive the prices up, Schecter said. There are several areas where it is well-known that certain agents have come in and convinced homeowners to list their homes for a lot more than what they are worth, and those agents are at least partially to blame for prices in those areas being out of control. But all in all, most agents do not do that, and actually have the client’s best interests in mind.

So, while it is easy to attack real estate agents as the cause of the home-buying headaches, says Shechter, the reality is that the prices we are seeing are not due to one single cause, but rather the confluence of multiple factors.

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  1. When a seller hires an agent, his job is to get as much as possible. That’s always been the case and will always be. Instead of blaming the agent, let’s look at the combination of a few factors that contribute to price increases. Low interest rates, covid keeping young couples from living in Israel, people selling houses in Brooklyn (iow, can afford more), etc.

    • Consider the following: Every Sukkos and Pesach approximately 500 bochurim join BMG, 1000 a year. Let’s take a conservative estimate, say 65% of them marry and settle down in Lakewood and within 3-7 years later are in the market to buy a house. So that means that there are around 650 new families a year looking to buy a house from BMG. And that does not take into account retired people coming to Lakewood to be near their kids, chassidim, who just like we are priced out of Lakewood and are looking in surrounding towns, so to are they priced out of Brooklyn and even Monsey and looking for cheaper alternatives, and not to mention working people not part of BMG. In the good old days (6+ years ago) they used to build townhouse developments to accommodate the natural Lakewood growth, however after people started complaining about “over-development” they put an end to that. Now they only build duplexes, which by nature are fewer and bigger. So natural free-market supply and demand will dictate that they will go for more. Add to this the low mortgage rates, national housing bubble…, and now additionally it seems that there are a shortage of new neighborhoods in Jackson relevant to low-budget families. People are looking into neighborhoods in Manchester and Brick over 25 min drive to town. Yes, there are a few agents who try to get the highest bid out, but to the best of my knowledge they are not the majority, and they do it as the seller’s agent, when that is their job, they are not manipulating the buyer when they are supposed to be representing them. So all this finger pointing (“the agents, the chassidim”) is both ignorance and sinas chinam. There is no cabal out there out to get us. It is the nature of free market economics, supply and demand.
      The solution? It is time for people to start looking further – there are many affordable neighborhoods in southern Toms River as well as South Toms River. Also, we can develop Lakewood further, just the infrastructure has to be brought up to par. Ideally that would mean creating many more four lane inter-city streets. Currently, there are still a few huge areas in Lakewood just waiting to be developed including: between James and Williams, between Vine and New Hampshire and the large lot owned by Yeshiva next to Avenue of the States. There already exists paper streets in some of the above areas. Perhaps they should develop those into townhouses and tack a $50,000 charge onto every house. If they can develop 1,000 a year then they can create revenue of $50,000,000 a year which can be poured into infrastructure improvement.

  2. It really started when a developer built a development and sold it in Brooklyn. He offered it at 400k when houses in Lakewood were going for 300k after that the prices just kept skyrocketing. In any area for any size house. Yes I agree supply and demand raises prices but that’s not where it started at.

  3. He is missing a major factor in the real estate prices that was directly caused by the agents..and that is all the developments that were only marketed in Brooklyn and never even offered to people living in Lakewood. The whole influx of people moving here from Brooklyn and building huge communities here was done deliberately by the real estate agents to make money.

  4. The reality is that even deep out in Jackson, the houses are going for 425-550k. in many cases homes that were purchased just one year ago for 180-250 are being flipped for double the price.
    What your claiming is Double talk, houses are in higher demand since interest rates are cheaper, therefore we raise the prices and you wont gain from lower interest rates?!, yes we can assume that it will go up slightly, but the notion that homes went up 50- 75 percent due to low interest rates is ludicrous.
    ALL IT TAKES IS ONE AGENT TO RAISE THE PRICES!. I am aware of an agent who “claims” that he has offers on the house and tries to milk you for a higher offer but in reality there are very few offers.
    I had an agent call me that a home is available but since there are many offers i need to offer an extra 40k above the listing price. after 20 minutes when he realized that its above my budget, he told me there are only 2 offers and the home can be mine for 5-10k over the asking price.
    you may be wondering what he gains, how selfish can one person be, but let me tell you the dirty secret, when he convinces you that there are many offers etc..he gets you to give a high offer 30k over any other agent he assures himself the prize of the commision and being the top selling agent.
    there is No shortage of homes in Jackson. The vast majority of homes where they are selling now past brookwood 4, are populated by Non jews who are not tied down to a shul or Mikvah or crowd. and are more than happy to sell for another 50k than what they bought it for. any non jewish area in jackson is selling for alot below jewish areas, so who is causing this great shortage? The agents that convinced you there is a shortage to drive up the prices and to cause everyone to panic buy and give an offer an hour after the home is listed.
    Case in point there was a home in brookwood 1, that was listed this week by a non jewish agent for 364k, where usually homes in that area go for an easy 65k-to 80k higher. within one hour the agents kabal gave a doorknock offer in order to keep the prices up.
    so why are prices high you ask near aldrich road in Jackson, well the agents want it high to get their offer thru, and to cause the great panic buying where people are willing to settle on homes which they never would have bought had they thought it thru.

  5. On a more knowledgeable note ;
    “ let’s start at the very beginning ???? , a very good place to start ….”
    Massive advertising in the Brooklyn , Williamsburg neighborhoods ,
    Transplantation initiatives ,
    La la la La la….
    This is what you get.
    We were not meant to be a city …
    Life was peaceful, a horn was used respectfully and life was not a rat race ..
    A monster has been created .
    Our children are priced out , our values are diluted and many yeshivos and schools have bowed to the culture that is slowly becoming more than more acceptable .
    Nothing less than sad and unfortunate .

  6. I am not one to ever comment on public websites but as someone with a husband in koller and looking for a house for several months now I can’t help but give all those in my position a voice. While the agent above does say many true points, I have seen time and time again when agents will tell people just put 5k or 10k (fill in the blanks) more and you will get the sale. Stop and think for one second what you are saying! A jew most likely put in a fair offer was accepted and here you are swiping it away. Not only is this strictly against halacha, would you be happy if that happened to you?? How about we let the first Jew that puts in an offer for at least the listing price take it. Everyone else back away!! Bidding war gone!

    • @anonymous

      I am sorry to hear you are having a hard time. I do not think it is against halacha to put in an offer for over the asking price. I f you actually are aware of the halacha , kindly let us know

    • There is nothing against halacha or hashkafa to put in a bid while the seller is still accepting bids. A house usually gets many bids during that time and nowhere does it say that the first person to come along and give a bid gets the house. It is only a problem of ani hamehapech b’charara once the seller accepts someone’s bid and it goes under attorney review.

  7. This article was very well written.
    After reading the entire article, it is pretty obvious to me that he is speaking the truth to the best of his understanding.
    Thank you and a Good Shabbos to everyone

  8. Thank you for your insight. Not sure though why you feel it neccessary to preface your explanation by saying you are shocked that ppl would blame it on the people who are trying to earn a living. That is not the point . Everyone is trying to earn a living. The discussion at hand is whether people who are trying to earn a living are taking advantage of others or not. So feel free to explain how you are not.

  9. In Israel they gur chasidim have way to keep prices down :
    They have committees who oversee purchase and anyone who would like to buy apartment gets on list and they only allow few contracts weekly and don’t allow people to pay over standard price for this type of apartment not to inflate the market

  10. I am a local agent .
    The bidding wars are going on all over the country .
    I have a real estate coach that coaches many agents in many different states .
    This is an issue in many areas, not in frum areas and has nothing to do with agents trying to make money!
    This market is very difficult for many agents . I go from house to house doing showings Sunday and I don’t get paid for that . I rely on my offers to get accepted to pay for my time .
    This market is not easy for us because of the constant bidding wars it is very hard and I hate to have to pressure a buyer to look and make an offer right away .
    Two years ago the market was regular with sitting inventory and it was a lot easier for us agents . We didn’t choose this or create this .
    It is going on in many states . There are many many buyers for a number of reasons and it’s something we can’t control .

  11. This latter is full of rubbish, the brokers making bidding wars to make bidding wars.
    It’s time for buyers to stop buying until they bring price down to fair value.
    Unfortunately us yidden can gefin another and need to out bid them.

  12. To the person who said he doesn’t think there is a halachic problem with offering more than asking; there could very well be a problem, i spoke to a dayan and he gave me guidlines when and when not, so i advise you speak to a competent dayan about it.

  13. My opinion is that there is a supply and demand issue. However it was partially created by marketing and importing buyers from NY where they are used to much higher prices. 2 things happen- all land in Lakewood now is only marketed to ppl from NY who not only create additional demand they also have no problem paying another 40-50k than the going rate because they are used to much higher prices in NY. So it’s true that in a day to day market the agent basically tries to get the most he could for his client which is his job in an open market. He also tries to represent his buyer and get them the house they want and advise what it will take to get it.

    The listing agents do have an incentive to get the highest price. With the competition out there they get referrals from their sellers that they can “get the best prices” as long as they do not use deceptive practices like saying there are offers when there are not, etc… they are doing their job. They windup be not honoring their commitment to their seller if they didn’t do all they can to get them the best price.

    Bottom line- when the markets are soft there’s nothing an agent can do to get better prices. They lower the price till it sells. The reality is that today there is strong demand. Maybe created by marketing to out of state ppl but the deals is there.

    Probably the most helpful thing ppl can do is be educated on the markets and do not panic and offer too much. Another house will come along. I know that’s easy to say because ppl do need housing and it’s easy to say for another X amount, I’m just going to grab it. There is no “buyers group” and everyone does what’s best for them.

    This is the definition of an open market. It’s actually a surprise that Lakewood remained below the prices of other frum areas for so long. What’s happening now is natural growth of the population. You can blame the ppl that convinced ppl to move here but when did you move here? A few years before the other guy

  14. Also if the market is so hot why use an agent at all? Just put a 4 sale sign and ppl will flock. Then it can be sold cheaper and the owner pockets the same money.

  15. You want big homes you are gonna have to pay the big price, but in Lakewood seeing a home going for over 500k with no land and even less of room between you and your neighbor is rediculous. Building in clusters is making our tiny town explode. There is no more room!! stop building on every little strip of land in the town. For example, Cherry St, small dead end street over 30 Large new houses going in. The street cant be widened and there will be a minimum 3 cars per house. Where are they all going to park? when will you see.

  16. i agree!!!!
    can someone tell me why its anti Semitic to point out that this town is busting at the seams and we should STOP building more duplexes!!!!
    the builders are sacrificing us on the alter of their greed while we have to sit in crazy traffic all day. Can we have a trump style politician drain the swamp in the zoning board #MLGA

  17. The agents who wear the streimel and go to the tish. Are going to one day be judged by the high court. It is very unfortunate but this is the reality. It is very difficult to do Teshuva. The damage is so great.

  18. Interesting article. Great perspective hearing from the agents side.
    However, I’m not sure what he means by “Client”; did he mean his client, the Buyer or his client, the Seller.
    Not so clear.

    If his client is the seller, his jib is to get the highest price. I just sold a house. I’m not a broker. We had 27 views in 3 days. I told the broker, wait for the highest and best. Of course it went over asking.

    Did I do something wrong ?

  19. No one is to blame. Maybe everyone is? Let’s blame Brooklyn. But all they want is affordable houses to raise a family too.

    Then it must be the realtors. But they are overall honest, or they don’t get recommendations.

    Maybe we can blame the sellers, for being willing to take a high bid? But who wouldn’t do the same?

    Okay, that only leaves supply and demand. B’H the population is still exploding. Look at the number of high schoolers against the number of children in playgroups. And who can argue with the mitzvah? But running out of rooms for schools and houses makes it harder to afford in the area.

    I can’t picture my children leaving town to afford life, but the way life is here, I can only see Lakewood moving to an affordable place the way Brooklyn came here.

  20. I personally know Boruch Schecter , the agent in the above article . He speaks the truth , his points are well taken. It’s a well balanced explanation of the current situation . Not all agents are good apples , but Boruch is someone I would trust !

  21. There is no real solution except to keep moving further out deeper into Jackson beyond the arm of the “Lakewood Real Estate agents” also look into purchasing a home in Adelphia next to the Yeshiva or Lancaster Pennsylvania, Cleveland Ohio , centerville indiana , Linden NJ etc

  22. From experience.
    A real estate agent will want to convince someone to sell. He does it by telling him that he can sell for a very high price convincing the owner to sell. This plays a large role in the high prices. Also the real estate agents have a large incentive to hike the prices as they work on commission, the higher the price the greater their earnings. If one agent manages to get a high price for a house all other prices automatically go up as “if he got so much, so can I” syndrome plays on. This is what’s driving up prices in Lakewood, Toms River, Jackson, etc.
    Real Estate Agents make a living through sales and they need to make sales even if it means driving up prices.

  23. 1. Make it clear to your agent that you will not be part of a bidding war.
    2. Get together with a few friends & purchase homes beyond the bidding territory. Within a month or two there will be more frum people in your neighborhood.

    As a chassidishe woman who has just moved from Brooklyn, I take offense at your words. Especially since the landowners who sold me my overpriced piece of property were full-bred litvaks.
    Perhaps you should check the facts properly before sounding like a non-Jew from Jackson.

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