Real Estate Commissions to go Below 6%

From The NY Times email newsletter.

On Friday, the National Association of Realtors, the industry group that has enforced the rules that led to the 6 percent commission, agreed to change its behavior as part of an agreement to settle several lawsuits.

The settlement is important in its own right. Americans now spend about $100 billion a year on commissions. That number will probably decline by between $20 billion and $50 billion, Steve Brobeck, the former head of the Consumer Federation of America, told my colleague Debra Kamin.

Here’s the rub, emphasis mine.

There is also a broader significance to the settlement. It’s a case study of a central flaw in free-market economic theory. That theory suggests that capitalist competition can almost always protect consumers from businesses that charge too much.

In other words, they colluded. IMHO.