Shopping for homes online once had the feel of an open-air market: crowded and sweaty, maybe, but free for anyone to drop by and see what's for sale. The experience these days, though, is quickly turning into that of a nightclub, with the hottest new listings sequestered behind velvet ropes. If you want to party with the cool kids — in this case, score access to homes before regular folks — you better know a guy.

The wide-open nature of the housing market has been breaking down for a while. Most real estate agents have traditionally taken a maximalist approach to marketing homes, sharing listings widely through local databases known as multiple listing services. Agents browse the MLS to get details on homes available for sale, while search portals like Zillow pull the data onto their own websites for regular home shoppers to scroll through. The thinking is simple: More eyes on a listing means more potential bidders, giving a homeowner the best chance of selling quickly and lucratively.

This model is even backstopped by the National Association of Realtors, a powerful industry group that sets the rules for most MLSes around the country. NAR instituted a rule in 2020 known as the clear cooperation policy, which says that once a real estate agent starts marketing a home publicly — on a website, through an email blast, or even with a "for sale" sign in the front yard — they must list it on the MLS within one day. The rule was meant to prevent freeloading and encourage participation in the MLS, keeping listings in one place for other agents and their clients to see.

In recent years, however, the clear cooperation rule has been challenged by some of the biggest players in the game, who want to act as the new bouncers for VIP rooms filled with exclusive home listings. In particular, Compass, the country's largest real estate brokerage by sales volume, wants to take charge of the aforementioned velvet rope. Compass agents are increasingly hoarding their listings internally, shunning the MLS and making homes available only to buyers who work with other Compass agents. The company's founder and CEO, Robert Reffkin, has also been crusading against the clear cooperation policy. Reffkin argues that sellers should reject the one-size-fits-all approach of the MLS and exert more control over how their home is marketed. His campaign has stoked fierce infighting among real estate agents and raised a fundamental question: Who should be able to see the homes for sale in the US?

For now, the fight is ongoing. After months of debate, NAR said Tuesday it would leave the clear cooperation policy intact while adding another rule that functions as a small concession to Compass. The apparent attempt at compromise will probably end up pleasing no one. But while clear cooperation remains in place for now, the housing market continues to hurtle toward a decidedly uncooperative future.

Those in favor of clear cooperation argue the rule is responsible for America's uniquely transparent housing market — the reason you can hop on Zillow or Realtor.com and get the lay of the land. The policy was supposed to stem the rise of so-called "pocket listings," homes marketed for sale but unavailable on the MLS. If agents stop contributing listings to the shared databases, many in the industry warn, a once unified housing market could break up into silos, with home listings distributed among clubby groups of brokers known as "private listing networks" or gatekept within brokerages like Compass.

In this world, some agents will have access to a lot more properties than others. Pick the wrong rep, and you could unknowingly miss out on your dream home. And while there are good reasons someone might not want their house touted on the MLS — a celebrity like Brad Pitt, for instance, probably doesn't want their business aired out for everyone to see — conventional wisdom says sharing a home widely is the best way to get top dollar.

"Everybody benefits when we all pool our listings, and we do so in a timely manner," Saul Klein, a longtime real estate executive who's the CEO of the San Diego Multiple Listing Service, previously told me. "And people are hurt, potentially, when we don't do that."

But it's become increasingly clear that the advocates for the open system are losing. Yes, NAR kept the clear cooperation rule in place, but it also introduced an option for privacy-conscious sellers to list on the MLS while delaying their listings from popping up on sites like Zillow or the landing pages for other brokerages. The idea is to give sellers more flexibility to market their homes as they see fit, catering to those who may prefer to "premarket" their home before blasting it out widely. The move doesn't go nearly as far as Compass would have liked, but the company still frames this as a validation of its rallying cry for more seller choice.

"With NAR introducing a new MLS policy to 'expand choice for consumers,' they acknowledged the clear cooperation policy restricted home seller choice," Reffkin said in a statement. "Expanding choice means that NAR is still not letting homeowners choose precisely how to market their homes, but this is a small step in the right direction."

Compass may not be totally happy with NAR's most recent decision, but the company has already succeeded in shaking up the real estate landscape. The brokerage has made plenty of hay by exploiting a glaring loophole in the clear cooperation rules. While an agent has to add the listing to the MLS database once they publicly put the home up for sale, the rule allows agents to share new properties within their brokerages without adding them to the MLS. This method, which Compass dubbed the "Private Exclusive" route, essentially creates a walled garden with homes that can't be found anywhere else. Compass drives traffic to its website, collects a commission from both sides of the deal, and can lure both agents and clients by offering access to its inventory. Private exclusives have become a key strategy for the brokerage giant: Reffkin told analysts in February that 35% of the company's active listings nationwide were only available by working with a Compass agent or visiting Compass.com.

This isn't just some self-serving maneuver, either, Compass execs argue. They say sellers benefit from spurning the MLS and marketing their homes within the safe confines of the Compass network. The MLS and search portals like Zillow show how long a house has been on the market and whether the price has been slashed, data points that buyers can use to put pressure on homeowners in negotiations. The Compass website doesn't show price cuts or days on the market, theoretically allowing a seller to test their ideal price without any repercussions if they have to backtrack. And if they don't sell that way, they can always turn to the MLS and go the conventional route for maximum exposure. Compass likens this strategy to beta testing a product with a smaller audience before launch.

"We firmly believe that homeowners should have full control and flexibility in choosing how they market their home, period, full stop," Ashton Alexander, the head of strategy at Compass, tells me.

Brian Boero, the CEO of 1000Watt, a brand and marketing agency for real estate companies, doesn't buy it. Compass, he says, is really after control. Under the existing rule, the company may be free to pursue its "Private Exclusives" strategy, but it can't, for instance, publicly market a home on its website without also contributing to the MLS.

"They want to make Compass.com a destination where they control the inventory publicly, and they want to have free rein to continue to expand their private listings program," Boero tells me. "So they didn't get what they wanted."

Compass is far from the only large brokerage to employ this kind of strategy — Coldwell Banker, for instance, has "Exclusive Look," Howard Hanna has "Find It First," and one large Keller Williams franchise, KW Go, has dubbed its offering "Private Collection." More companies have threatened to follow the lead and keep listings off the MLS if it helps them compete for agents and clients. The clear cooperation policy has always been tough to enforce, too, with the onus placed on local MLSes to keep agents in line. Some MLSes, fearing litigation, have already backed off enforcement, tacitly allowing agents to market homes however they like. This could enable private listing networks — groups of typically high-achieving agents from different brokerages who share off-MLS listings among each other — to flourish.

NAR's decision to keep clear cooperation is a small victory for those who favor the status quo, but it will hardly end the practices fracturing the housing market. Compass hasn't ruled out the possibility of litigation over the rule, either. For now, the real estate industry is stuck in a sort of limbo. No one doubts that secret listings will continue to rise, but the fight over the clear cooperation policy isn't going anywhere.

"Everybody loses here, in a way," Boero tells me. "Nobody's happy."

James Rodriguez is a senior reporter on Business Insider's Discourse team.

Arnab Dutta, a 40-year-old living in the Bay Area, tried buying a home a couple of years ago with the help of a traditional real estate agent. It didn't go well.

Dutta's arrangement with his agent was the same one Americans have used for decades: The agent agreed to guide him through the process — showing him homes, writing offers, and wrangling stacks of paperwork — in exchange for the standard cut of the final sale price, between 2% and 3%. The commission, likely tens of thousands of dollars, wouldn't come straight out of Dutta's pocket; sellers are the ones who fork over the cash to agents on both sides of the deal after it closes. But Dutta would be indirectly paying for his agent, since the buyer is the reason the seller has any money to hand out, and the agent's threadbare advice made him feel like he wasn't getting much bang for his buck. The whole commission thing didn't sit right with him, either. He didn't see why his agent, who was supposed to represent his interests, should make more money if the price went up, the opposite of Dutta's ideal outcome. After he lost out on several homes, his search stalled out.

Dutta wasn't alone in his dissatisfaction with the traditional agent setup. He didn't know it at the time, but the rules that reinforced this relationship for decades were about to change. Last March, the National Association of Realtors, a powerful industry group that represents some 1.5 million agents around the country, agreed to settle a series of multibillion-dollar lawsuits that claimed this roundabout way of paying agents — and the NAR rules undergirding this system — had forced people to pay unfairly high commissions. The deal included new rules for paying agents, which many real estate experts predicted would nudge buyers and sellers to start negotiating over commission rates and bring costs down.

The results a year later have been underwhelming: There's little evidence that the settlement has put a dent in average nationwide commission rates, and those looking to preserve the old way of doing things have devised workarounds to ensure agents still collect their typical cut. But while many people are still doing things more or less the old way, some are taking advantage of the updated rules to usher in a brave new world of homebuying. They're owners of discount brokerages charging far less than the typical commission, entrepreneurs spinning up new real estate tech, and a small but growing number of savvy consumers flexing their negotiating power to save tens of thousands of dollars on their agents' fees. They're all betting that one day they'll no longer be outliers.

When Dutta resumed the hunt late last year, he tried a different tack. He enlisted the services of TurboHome, a brokerage founded after the NAR settlement whose agents work for a flat fee of between $5,000 and $15,000. Most real estate agents are independent contractors, reliant on hefty commission checks to make up for the lack of a steady salary. But agents at TurboHome are employed by the company — trading the uneven lump sums for consistent pay. The company, which raised $3.85 million in seed funding late last year, uses software tools to speed up mundane tasks like analyzing property disclosures and finding sales of comparable homes. Its tech frees up agents to focus on the finer details of the process while also taking on more clients at a time to make up for the smaller fees they collect on each deal.

Dutta agreed to pay the flat fee of $10,000 out of pocket, which turned out to be a useful bargaining chip in his negotiations with sellers. He didn't have to ask sellers to cover his agent's fee, which allowed them to pocket the sizable chunk of the deal that they would have otherwise had to fork over to his representation. In the pricey Bay Area, where the typical home trades for north of $1 million, that meant savings of $25,000 or more. When one of Dutta's offers eventually won out, it wasn't because he proposed the largest dollar figure; his agent, Donny Suh, tells me other prospective buyers came in higher. But without having to pay out a commission for Suh, the seller stood to net the most money from Dutta's offer. He closed on the three-bedroom home in February.

The success has left Dutta with some what-ifs from his prior home search. He recalls one house for which he was outbid by just $5,000.

"If we had this sort of tool in our hands at that time," he tells me, "we wouldn't have lost."

The battle over commissions — who pays, how much they pay, and when the money changes hands — comes down to information.

It all starts with the multiple listing services — local databases where most homes are advertised for sale. They may sound like unsexy infrastructure, but they've played a key role in propping up the typical agent commission. There are more than 500 of these databases around the country, and the vast majority are operated by local Realtor associations that follow rules handed down by the NAR. While the national organization didn't set commissions and says they've always been negotiable, it did set up rules that helped maintain the status quo. In the presettlement days, a seller who listed their home on the MLS had to fill out a little box saying how much they'd be willing to pay the buyer's agent. Since buyers already had enough up-front costs to worry about, everyone assumed that deals would go more smoothly if the suddenly cash-flush seller just paid out both sides. This setup allowed buyers to basically ignore how much their agent was getting paid — in fact, buyers' agents used to tell clients their services were free until a different legal battle ended that practice in 2020. It also meant that sellers almost always stuck to the industry standard of 2.5% or 3% of the final price for each agent, either because they didn't know any different or because offering less could risk being passed over by buyers' agents, who might "steer" their clients away from properties with lower-than-average commissions.

In the lawsuits against the NAR, the sellers who sued the organization alleged that this whole system was an elaborate scheme to pull the wool over regular people's eyes and force them to pay unfairly high commissions. Given that the median home price in the US is about $419,000, a 6% commission, split between two agents, would mean shelling out more than $25,000. While the plaintiffs pushed for commissions to be "decoupled," with buyers and sellers paying their own agents separately, the $418 million settlement last year didn't go quite that far. But it did offer enough changes to throw the real estate world into flux.

The first change is that sellers and their agents can no longer offer buyer-agent commissions through the MLS. In theory, this should get rid of that steering problem — if sellers aren't offering a commission, buyers' agents can't direct their clients away from the homes with less than the customary fee. But there's a huge loophole here: Sellers can advertise a buyer-agent commission pretty much anywhere else — on the broker's website, over the phone, on sites like Zillow or Redfin. If a buyer's agent wants to see how much they'll make off a home, it's easy for them to check. Given this workaround, many sellers are still offering to pay the standard commission, which makes sense in today's slow housing market. Given the low number of homes changing hands, people are wary of doing anything that could muck up a deal.

Buyers, on the other hand, face more paperwork as a result of the settlement. Before an agent so much as opens a door for a buyer these days, they'll have to get them to sign an agreement stating the terms of their relationship, including compensation. These forms, known as buyer-representation agreements, have historically been introduced much later in the process, if they were used at all. And they vary widely by brokerage and agent — some agreements are simple one-sheeters to tour a few homes, while others lock buyers into exclusive arrangements for months. It's the difference between seeing someone casually and getting married on the first date.

For now, at least, the combination of a slow market, general inertia, and lagging consumer awareness has kept the status quo relatively intact. A study by the real estate brokerage Redfin found that the typical buyer-agent commission was 2.36% in the fourth quarter of the year, down from 2.43% in the first quarter of 2024, when the settlement was announced, and unchanged from the third quarter, when the rules went into effect. But again, it's still pretty early, and many industry insiders expect the changes to eventually start knocking down commissions as agents are forced to compete on price.

"I think our projection still hasn't changed much, which is, over time, that will still come down," Joe Rath, the head of industry relations for Redfin, says. "That downward pressure still exists."

So how, exactly, could buyers and sellers start coming out ahead? A big step is simple consumer education. The real estate firm Clever surveyed 1,000 homeowners and prospective buyers and found that even after the new rules went into effect, 40% of respondents said they either didn't understand the implications or hadn't even heard of the lawsuits.

Old habits die hard, especially when there's so much confusion around these changes. And critics of the settlement say it's actually opened up new pitfalls for buyers. Before, the MLS at least showed you what almost every home was offering in commissions — now that kind of information has been scattered or isn't publicly available at all, which makes it harder to tell whether "steering" is happening. And some of the representation agreements floating around could end up locking buyers into exclusive relationships with incompetent agents.

"All these deceptive practices have been basically turned underground," Tanya Monestier, a law professor at the University at Buffalo, tells me.

But as consumers absorb these new rules and start to negotiate on commissions, both sides of the transaction stand to benefit. For sellers, the main advice boils down to this: Don't offer an exact commission anywhere. Not on the MLS, of course, but also not on a broker's website, via telephone, or a sign in the front yard, Stephen Brobeck, a senior fellow at the Consumer Policy Center, says. Instead, allow buyers to make offers on agent payment, just like they do for the home itself. One buyer might offer to pay 2.5% more than the asking price but ask for that extra 2.5% back in the form of a closing credit so they can pay their agent. Another buyer may offer the same dollar amount but ask for only 1.5% back to pay their agent's commission. Yet another, like Dutta, may not ask for any money back. At the end of the day, sellers should care about their net proceeds — the amount that goes into their pocket once all the pesky fees are settled. They can say they're open to working with buyers on their agent's commission without backing themselves into a corner by suggesting an exact percentage.

On the buyers' side, saving money comes down to asking — you can request a lower commission from your own agent or, if you can't afford to pay it out of pocket, ask for help from the seller in the form of a closing credit. "You can ask for stuff that's not advertised and still get it," Leo Pareja, the CEO of the real estate brokerage eXp Realty, tells me. Buyers make special requests all the time, like asking for a repair or for the pool table in the basement to come with the house. A credit to cover your agent's commissions shouldn't be any different.

Most sellers these days are still offering to pay a commission to the buyer's agent, as they did before the settlement's changes. But buyers who've negotiated a lower commission with their own agent could use that to make their offers more attractive in the eyes of a seller.

"I think what has changed is that there are these sort of savvier buyers out there, particularly in the high-cost markets, that are looking for any advantage that they can get," Ben Bear, the founder and CEO of TurboHome, says. The company mostly operates in California but has recently expanded to Texas and Washington.

Long before they start eyeing homes, buyers should also do some due diligence on their prospective agents. Studies have found that the vast majority of buyers still want a professional to guide them through their purchase, which makes sense — it's a massive transaction that most people will complete only a few times in their life. Some agents may be able to articulate exactly why they're worth every penny of the traditional commission. But there are a lot of agents out there vying for your business, and others may be willing to deviate from the standard commission to win more clients. One recently created portal, known as Fetch Agent, allows buyers to search for agents that match a set of parameters, like years of experience, location expertise, and even how much they charge in commission. In a world where buyer-agent commissions are no longer an afterthought but a key part of sale negotiations, it makes sense to shop around for an agent before shopping for a house.

"What we offer is the ability to transparently see what an agent would be open to when it comes to a work arrangement," Beau Correll, the founder of Fetch Agent, tells me. That kind of transparency — knowing exactly what you're getting from an agent and how much you'll be paying for them — is the kind of thing that could spur more agents to compete on price, which would bring down costs for consumers.

The rollout of the new rules has undoubtedly been a mess — even now, a year after the settlement was unveiled, there are many different interpretations of what is and isn't allowed. But the idea that both buyers and sellers should think about commissions — and maybe even negotiate to get a better deal — is a remarkable reversal from the old way of doing things.

"I would've liked it to go further," Brobeck tells me. "But it represents progress."

James Rodriguez is a senior reporter on Business Insider's Discourse team.

Stop me if you've heard this before: Millennials have gotten screwed by the housing market.

The lack of affordable homes is one of the biggest reasons for the generation's economic shortcomings — why they can't catch up to their parents financially, live in cities near their friends, or even have as many kids as they want to. Several suspects have been blamed for this, including house-hoarding baby boomers and greedy corporate landlords. But the main issue was timing: A huge number of millennials reached their prime homebuying years after the 2008 financial crisis, right as the housing-market bust was pushing builders to cut back on construction. When it came time for millennials to claim their share of the American dream, the homes simply weren't there.

While the country's housing shortage, now measured in the millions of units, seems intractable, there are growing signs that it may not be a permanent state of affairs. Sure, lots of people have struggled to become homeowners over the past few years, sending prices to record highs and deepening the housing crunch. But population forecasts for the coming decade suggest a monumental shift is on the horizon. And millennials, after finally lifting themselves onto the homeownership ladder, may wind up with the short end of the stick yet again.

There's no denying that Americans are getting older. Slower population growth over the next decade and beyond, with more deaths and fewer births, will mean weaker demand for housing. This slowdown could come to a head in the 2030s, when members of Gen Z — a slightly smaller cohort than millennials — take over as the primary contingent of first-time homebuyers. Baby boomers will simultaneously be aging out of the market (economist-speak for dying), freeing up millions of homes nationwide. Unless immigration picks up dramatically to compensate, the combination of more supply and less demand could cause home prices to flatline or even drop.

Don't get me wrong: Cheaper housing is a good thing. But while a dip in home prices probably sounds like a godsend to the millions of renters hoping to become owners, it could be devastating for those who bought a place in the past few years. These homeowners, mostly millennials, are counting on their properties to grow in value and deliver a hefty financial return — the gilded path enjoyed by baby boomers. Like generations before them, millennials have tied up most of their wealth in their homes, which they'll rely upon to fuel their retirements or fund the purchases of bigger places down the line. Instead, when it finally comes time for them to sell, they may find that their nest eggs have turned out a lot smaller than they'd hoped.

Population trends, unlike the constant ups and downs of the economy, follow a steady drumbeat: People grow up, settle down, and eventually die. Demographics can't tell us exactly how many homes we'll need in a decade or two, but they can offer a pretty good idea. Builders and policymakers, however, haven't been great at reading the tea leaves. A recent paper from a team of researchers led by Dowell Myers, a demographer at the University of Southern California, argues that the lever pullers who control the housing supply have been out of touch for decades, relying on old data or focusing too much on the short term at the expense of the more distant future.

Take the current housing crunch. For years, demographic forecasts made it clear that a huge chunk of millennials would be looking to settle down in the late 2010s, signaling a need for a lot more houses. But homebuilding activity in 2011 dropped to its lowest level in 60 years, and credit availability tightened, making it harder to get a mortgage and creating more pent-up homebuying demand. Cue tough times for millennials.

But some real estate experts are starting to pay more attention to the underlying realities. I recently had lunch with Nik Shah, the CEO of Home.LLC, a housing analytics, consulting, and AI conglomerate. Shah and his team have gained prominence over the past few years for accurately predicting changes in home prices despite a tumultuous market. I was surprised, then, when instead of talking about the coming months, he mostly wanted to discuss the long term. Shah told me he's bullish on home prices for the next handful of years, forecasting mild year-over-year increases. But based on the demographic data, Shah expects home prices to stall out in the 2030s.

"Demographics play a critical role in home prices," Shah says. "And right now, the future projections on demographics are not rosy."

The biggest factor is deaths. In the coming decade, baby boomers will begin "aging out of the market" in droves. The size of the generation's adult population is second only to millennials, with roughly 66 million members who range in age from 61 to 79. But their numbers are projected to shrink by about 23%, or 15.6 million people, in the next decade, and by another 23.4 million people from 2035 to 2045. Boomers own about 41% of real estate nationwide, worth roughly $20 trillion, per the Federal Reserve. Their exodus will represent a sea change in the housing market.

All those boomer deaths, combined with a slight decline in birth rates over the next two decades, will work out to slower population growth. The result will be a lot less demand for homes. Data from the Harvard Joint Center for Housing Studies indicates that the total number of households in the US is expected to increase by 8.6 million over the next 10 years. In the past three decades, that figure ranged from 10.1 million households, in the 2010s, to 13.5 million, in the 1990s. From 2035 to 2045, household growth is expected to retreat even more, to a net increase of just 5.1 million, which would be the lowest growth rate in a century.

With more deaths and fewer births, the total number of US-born people in the country will shrink. The trajectory of the country's population, Daniel McCue, a senior research associate at the center, wrote in a report, will therefore be "entirely dependent on future immigration." Those household-growth projections from the Census Bureau assume that net immigration holds steady at 873,000 people a year for the next decade, roughly in line with the past 30 years. But even if you assume significantly higher immigration, McCue tells me, household growth is expected to decline over time.

The next generation of new homeowners won't represent a steep dropoff in demand. Harvard JCHS estimates there are now roughly 68 million Gen Zers, aged 16 to 30, compared to 68.8 million millennials. McCue says the real problem comes from the other end of the population equation, since a steady handoff to Gen Z homebuyers won't offset the wave of boomers exiting the housing market.

"It's not going to be enough to keep up with the pickup in losses, because the baby boomer generation is just so much bigger than previous generations," McCue tells me. "The pickup in mortality is going to outpace that."

Given the shifting demographics, the center says America probably needs to build about 11.3 million homes over the next decade and just 8 million new units between 2035 and 2045 to keep up with demand from new households (not factoring in the current shortage). These are fairly modest goals — in the 2010s, which included the weakest years for new construction in more than half a century, builders still finished almost 10 million units. In the 2000s, they built 17 million. As demand for homes slows down, McCue says, construction should have a chance to catch up.

That possibility should sound tantalizing to anyone hoping for an end to our housing shortage. But the imbalance between supply and demand has fueled an extraordinary run-up in home values — if that lopsidedness goes away, millennial homeowners may not see the same financial windfalls as their predecessors.

Millennials aren't young upstarts anymore. In 2030, they'll range in age from 34 to 49, according to Pew Research's cutoffs, which means many will be looking to move up the rungs of the housing ladder as they buy their first places or upgrade to bigger homes. They've already made up considerable ground in this department, with more than half the generation now owning their homes. For these fortunate millennials, the past few years of home-price gains have padded their net worths and contributed to a sunnier financial outlook.

While things are looking up, that may not last. A slowdown in home-price growth, or even outright declines, could leave a large chunk of millennials in a weird spot. Sure, for those who don't yet own a home, a breather in home-price appreciation could offer a chance to play catch-up. But among the millennials who are actually doing pretty well financially, most wealth is tied up in real estate and retirement accounts. An analysis by the Federal Reserve Bank of St. Louis suggests that from 2019 to 2022, the typical person born in the 1980s, otherwise known as an elder millennial, saw the value of their assets balloon by a whopping 57.3%, even after adjusting for inflation. Most of that increase — 41 percentage points — came from real estate.

So let's say household formation slows down as expected, relieving some of the pressure on home prices to keep going up, up, up. The team at Home.LLC projects that in this scenario, even if immigration holds steady, home prices will stay flat, maybe increasing by about 1% in some years and dipping slightly in others. That's a long way from the kind of market crash we saw in 2008, but it would mean far less wealth gains for today's millennial homeowners.

To illustrate this tension, compare a hypothetical baby boomer with a hypothetical millennial. Each buys a $300,000 home during their heyday. The boomer bought the house in 1994. Thirty years later, it's fully paid off and sells for about $1.21 million — a stunning gain of 305%, based on the typical home-price appreciation in the US over those decades. The millennial buys the house in 2010 and also holds on to it for 30 years. Its value grows by 2.5% each year from 2025 to 2030 and by just 0.5% a year from 2031 to 2040. The home ends up being worth about $813,000, a 171% increase. That's nothing to sneeze at, but you'd take the boomer's gains any day of the week.

"Obviously, the difference is pretty huge," Sid Samant, Home.LLC's lead economist, tells me.

But even the elder millennial in this example is lucky, because they got to ride out the historic home-value increases from the the pandemic. In Home.LLC's model, someone who bought a house in 2022 — say, a millennial who finally found their foothold in the housing market — would see their home's value increase by just 31% through 2040.

Forecasting home prices a decade from now is a fraught endeavor. Nobody expected baby boomers to stay in their homes as long as they have, throwing the housing market out of whack for everyone else. For policymakers, immigration is the easiest lever to pull in counteracting demographic realities, which also makes it the biggest question mark. And there's no way of knowing how future changes in the economy will alter construction activity or the homebuying calculus.

But demographic change is inevitable. And even McCue, the Harvard researcher who lives and breathes this stuff, is still wrestling with the downstream effects of our aging population.

"The extent to which we're going to start losing households was very eye-opening," McCue tells me. "I think we still need to get our heads around the implications of that."

If the housing shortage does indeed go away, it will hardly be mourned. But any big shift usually comes with some collateral damage. In this case, it could be homeowning millennials who get burned.

James Rodriguez is a senior reporter on Business Insider's Discourse team.

Renters have quietly enjoyed a nice run over the past two years. A historic wave of apartment construction has tamped down rents from their pandemic-era peak — last year developers finished the most units nationwide since 1974. With so many shiny high-rises hitting the market, landlords are fighting to fill their spaces, offering major discounts and perks to lure tenants. One housing economist even declared 2025 "the year of the resident."

But as the cost of building has increased, the number of cranes on the horizon has dwindled. Formerly eager developers are cutting back on fresh construction plans, laying the groundwork for another apartment squeeze. In other words, the good times for renters are running out.

Time's not up just yet. Developers are projected to deliver another half a million new apartments this year, down slightly from 2024, which should force property managers to focus on keeping their buildings full instead of jacking up rents. The outlook for renters, though, turns gloomier once you look at 2026 and beyond. Apartment supply boomed over the past few years, but demand kept pace — there's no glut of empty units. And the construction pipeline has slimmed down significantly since the glory days of cheap money, when it was easier for developers to secure loans for new projects. While plenty of rentals opened their doors in 2024, apartment builders broke ground on the fewest units in more than a decade.

"The available inventory of rental housing units may quickly tighten," says a recent report from RealPage, a software company that helps landlords set their rents. The real estate analytics firm Yardi Matrix has characterized 2025 as a "year fraught with change."

Translation: Snag those apartment deals while you can. They probably won't last much longer.

The past few years have been chaotic for apartment dwellers. Demand for apartments soared in 2021 as renters upgraded to bigger places, moved out of their parents' houses, or said goodbye to roommates in favor of solo living. This surge in "household formation" pushed up rents even as people decamped from crowded cities to single-family homes in the suburbs. Zillow found apartment rents rose by more than 20% nationally from 2020 through 2022. At the same time, though, developers were setting the stage for a reversal. At one point in 2022, more than a million new apartment units were under construction across the country. The rush of new builds came to fruition over the past two years: According to RealPage, developers opened a total of 440,000 units in 2023 and a record 588,900 last year, with another 500,000 expected to become available in 2025.

All those new buildings have kept prices in check; as the rental-housing economist Jay Parsons puts it, they "did what supply is supposed to do." With lots of new units on the market, renters have more choices and are less likely to tolerate steep rent hikes. Yardi Matrix's data indicates year-over-year rent growth has stayed under 1% over the past 16 months, well below the double-digit jumps of 2022. Landlord concessions — the months of free rent, free parking, and gift cards used to attract and retain tenants — are back in fashion. At the end of 2024, almost 13% of units nationwide were offering concessions, pretty close to the all-time highs from the early months of the pandemic, when hardly anyone wanted to move.

All kinds of renters — not just the high earners who can afford the latest and greatest in apartment construction — have benefited from this development boom. Landlords typically roll out concessions when they're trying to lease up new buildings, most of which are classified as "luxury" these days. But even long-standing buildings with cheaper apartments have been offering freebies to keep tenants from fleeing for greener pastures.

"It's just a simple supply-and-demand game," Carl Whitaker, the chief economist at RealPage, tells me. "As more supply delivers, you have to draw more traffic to your property, and that comes with these incentives."

The trouble for renters is that property managers may soon find those efforts unnecessary. Developers rely heavily on debt to finance new projects, and the Federal Reserve's interest-rate hikes have made those loans much more expensive, prompting a downturn in construction plans. Builders have been further deterred by the wave of new supply coming to market and the prospect of weaker rent growth at their properties. By doing so, they've laid the groundwork for another apartment shortage — and for rents to start climbing again.

"The pendulum is swinging dramatically," Parsons tells me. "Unfortunately, apartment construction has a tendency to be way too cyclical, and I don't think that's a great thing for renters or investors."

Predicting the economy's twists and turns may be hard, but forecasting new-apartment supply is pretty straightforward. If you know how many units are under construction today, you can reasonably estimate the new supply in a few years. These numbers point to a seismic shift in the rental landscape. Apartment construction starts dropped last year to the lowest level since 2013, per RealPage. This slowdown will soon start showing up in the number of new apartments coming to the market. Yardi Matrix expects 524,000 deliveries in 2025, but then only 414,000 in 2026 and 341,000 the year after. RealPage anticipates an even steeper drop-off, from 470,000 new units this year to 265,000 in 2026, with another decline the following year. Christopher Bruen, an economist at the National Multifamily Housing Council, wrote last year that this retreat was "likely to exacerbate our nation's housing shortage over the longer term."

US cities won't feel the effects of this pullback equally. Most of the apartments built during this construction renaissance are in the lower half of the country — Austin, Atlanta, Phoenix, and Houston, among others. Some metros in the mountain region, such as Denver and Salt Lake City, have also welcomed a lot of new apartments. Rents in these markets may be slower to rise again, but housing demand in these areas has also been higher than in other places around the country, so the relative relief may be short-lived. As for major coastal markets like New York, Boston, Seattle, and San Francisco, where land availability and permitting hurdles already make it harder to build apartments, it could be even tougher for renters. In a recent earnings call with investors, an executive at Equity Residential, one of the nation's largest apartment owners, described the reduction in supply as "even more dramatic" in these markets, where starts were down by 30% in 2023 and by nearly 60% in 2024.

"With 2025 starts projected to be down again, we anticipate one of the best supply-demand balances in our coastal markets that we have seen in a very long time," Alexander Brackenridge, the company's chief investment officer, said.

One complicating factor is construction delays. Doug Ressler, the manager of business intelligence at Yardi Matrix, says completions projected for 2025 may bleed into 2026 and even 2027 because of supply-chain snags or labor shortages, easing the pain for renters. The company expects rents to rise by a modest 1.5% this year, by 1.1% in 2026, and then by 3.3% in 2027. Parsons anticipates even bigger year-over-year growth, in the "mid-single digits," starting in 2026. That kind of increase is a far cry from the pandemic-era rent hikes, but it would still mean the end of this concession-laden era for renters.

If demand for apartments really picks up — if, say, people feel better about their economic prospects or decide that renting will get them more bang for their buck than buying — rent growth could climb even higher. Whitaker tells me it's still too early in the year to tell how many renters will seek out new units during the peak summer months, but there are already signs that this year could be hotter than last. In both November and December, leasing traffic — the number of prospective renters checking out new apartments — increased from a year prior. That may sound ho-hum, but it was the first time since early 2022 that leasing traffic notched two straight months of year-over-year growth.

"My interpretation is that we are going to see quite a bit of demand this summer," Whitaker tells me.

Are we doomed to repeat these cycles, waiting for any bit of housing relief to be revealed as a mirage? Parsons doesn't think so. He points to a national construction fund — which could provide cheaper debt for developers so they're less likely to pull back when interest rates rise — as a bipartisan solution that could smooth out this rental roller coaster. Absent that, though, renters are staring down yet another bumpy ride.

"It took a perfect storm of factors to drive this massive construction boom," Parsons tells me. "And now a lot of those factors have just gone away."

James Rodriguez is a senior reporter on Business Insider's Discourse team.

Clay Spence never really wanted to be a landlord. Lately, though, it's begun to feel like the only sensible option.

Spence, a 27-year-old financial analyst, lives east of Orlando in Florida's Brevard County. In September 2021, he paid $225,000 for a three-bedroom townhome in a subdivision lined with palm trees and tidy lawns. It seemed like an idyllic outpost for a remote worker like Spence. Even more attractive was the mortgage rate — at just over 3%, it's less than half the typical rate for a loan today.

"We probably won't see those rates again," Spence tells me.

That plum deal made it tough when, early this year, Spence and his fiancée set their sights on a newly built home in Winter Haven, Florida, about halfway between Tampa and Orlando. It's closer to friends, family, and, importantly, Spence's office, where he's recently been attending more meetings. The builder lavished on them sweeteners like a price cut and a mortgage rate buydown. But what to do with the old place?

Sure, they could sell — likely for a tidy if not spectacular gain — but the allure of holding on to the townhome has been impossible to ignore. Spence says he expects his old spot to keep appreciating in value, and he's in no rush to say goodbye to that mortgage rate. So he decided to list the home for rent. He figured that finding good tenants and handling the odd maintenance request would be worth the headache. Spence quickly secured tenants willing to pay $1,800 a month, enough for him to clear about $300 a month after paying expenses like the mortgage, taxes, and insurance.

Spence is what you might call an "accidental landlord": the kind of person who gets into the rental business through circumstance, not because they consider themself a budding real estate mogul. This breed of landlord is born out of trade-offs and clear-eyed calculations, a far cry from the caffeinated bootstrappers on HGTV or the investing gurus pitching their real estate hacks on TikTok. While there have always been accidental landlords, this Housing Ice Age — an era of middling home sales brought on by a steep rise in borrowing rates — is minting a new wave of reluctant rental owners.

Their ranks could grow with the uptick in return-to-office mandates. As employers like Amazon, AT&T, and the federal government herd workers back to their desks, some employees may have to ditch the far-flung homes they purchased during peak remote work. Property managers in places like Dallas and Atlanta, some of the prime destinations for pandemic-era movers, tell me they've recently seen a rise in inquiries from homeowners looking to get into the rental market. For those inclined to do it themselves, the internet is awash in recently published how-to guides for inadvertent investors. Selling a house is tough right now, as is finding a job that lets you work full time from the comfort of your couch. For those who can't — or won't — sell their old place, the landlord business may be a welcome alternative.

Spence tells me renting out his old home has been a cumbersome, multistep process. "But the pros outweighed the cons in this situation," he says, "especially right now."

Homeowners have two options when it comes time to move: sell the house or rent it out. During the high-flying days of 2021, the answer seemed like a no-brainer: Take the money! A flood of footloose buyers, buoyed by record-low mortgage rates, gave sellers the chance to fetch top dollar for their houses. That dynamic changed in the spring of 2022, when the Federal Reserve started jacking up interest rates to combat inflation. Mortgage rates followed, putting the brakes on the runaway market. These days, the average rate for a 30-year loan is roughly 7%, up from a low of about 2.6% in early 2021. Recent homebuyers are likely paying hundreds of dollars more each month toward interest than they would have a few years ago.

So the sell-versus-rent calculus has shifted: Giving up the cheap loan terms of yesteryear could be a mistake, especially when you can find tenants to help cover the mortgage. Prospective sellers, particularly in the southern half of the US, also face weaker demand for homes and more competition from others looking to offload their properties. According to the housing analytics firm Altos Research, there are roughly 630,000 single-family homes on the market, compared with just 270,000 at the same point in 2022. No wonder would-be sellers are turning to the rental market instead.

While all signs point to a rise in the number of accidental landlords, there's no definitive count of their ranks. There are, however, some ways to get an approximation. A 2024 survey by the National Association of Realtors found that 20% of repeat buyers kept their prior residence as an investment, rental, or vacation property. Parcl Labs, a real estate analytics firm, has also devised a useful proxy. The company identified some of the most popular markets for single-family rental homes — Tampa, Florida; Dallas; Charlotte, North Carolina; and Phoenix, among a few others — and then looked at how many owners had listed a home for sale, yanked it from the market, and then relisted it as a rental within 60 days. Parcl found that, depending on the metro, anywhere from 3% to 8% of people who listed their homes for sale in September had become accidental landlords by November. The percentages were even higher for sellers who listed from May through August.

In Atlanta, for instance, an average of roughly one in 10 stymied sellers swapped in a "for rent" sign over the past year. In Houston, the share of accidental landlords peaked in July at nearly 9% of all sellers. In June, Phoenix surpassed 15%. The metros in Parcl's analysis have something in common: They're all once hot Sun Belt markets that welcomed a wave of new residents as remote work took hold. As fewer people move into these areas and new home construction catches up to demand, sellers may not get their desired windfall.

"It's such a thin market on the sales side right now," Jason Lewris, a cofounder of Parcl Labs, tells me. "Folks want to move, and this is another outlet for them to try to do that."

Some accidental landlords may not even bother trying to sell their original home. In April 2022, Ryan, who works in healthcare, bought a house in southeast Austin for $615,000. His timing couldn't have been worse. (Ryan asked that I use only his first name to protect both his privacy and his pride; "I feel very foolish, and I don't like that," he said.) This was right around the peak of Austin home prices, which have since dropped precipitously — by almost 16%, according to Freddie Mac — thanks to a decline in new arrivals and a wave of construction. Ryan estimates the value of his house has fallen to about $450,000, based on other deals in the area. Homebuilders nearby have been offering generous incentives to buyers, which he says would only make it tougher to sell his property. He's also soured on Austin — too much traffic, too expensive, too hot. He recently got an in-person job in his hometown of Phoenix, where he'll be moving soon. And he says he's not ready to stomach a loss from a sale of his Austin home just yet.

"I'm going to rent it," Ryan tells me. "I'm going to see what happens over the next year and just kind of go from there."

Christopher Story, a co-owner of Story Real Estate, a property-management firm in the Dallas area, says that about half of the inquiries he gets from homeowners these days come from accidental landlords. "They've ended up in a situation where they can't sell," Story tells me. Todd Ortscheid, who runs Revolution Rental Management in the Atlanta area, similarly says his region is "just flooded with accidental landlords." Of the roughly 15 properties his company signs up to manage each month, Ortscheid tells me, about 12 or 13 belong to people who didn't intend to become a rental owner.

As emboldened executives order employees to return to their desks, accidental landlords may grow even more common. Remote work isn't going away, but it's gotten harder to find hybrid or fully remote jobs, which could still mean more movers down the line. Workers who bought homes in the boonies might have to backtrack if the bosses decide Zoom calls aren't cutting it. It's practically inevitable that some of these people will decide to hang on to their homes rather than sell.

"We think it's going to continue, and it's simply a matter of interest rates," Ortscheid tells me. "Until the interest rates drop down to under 5.5%, maybe 5%, you're not going to have many people selling their homes."

But the metros with some of the weakest for-sale markets — in other words, the places where someone might be tempted to rent out their old place instead — have shown signs of softening rental markets, too. Take Austin: According to John Burns Research and Consulting, asking rents for single-family homes were down by more than 2% year over year in November, while the number of resale listings, not including newly built houses, was up by more than 60% from 2019 levels, the last "normal" year before the pandemic. Dallas, Houston, Orlando, and Phoenix are some of the other metros with muted rent growth and a surprising glut of homes for sale.

Being a landlord isn't all it's cracked up to be, either. Property managers caution that homeowners may not be prepared for the unexpected costs and headaches of converting their homes to rentals. A vacant month or two can sink a year's worth of cash-flow projections, while surprise maintenance can eat up time and money. Enlisting a property manager doesn't come cheap; a typical firm will charge a month's worth of rent to find a tenant and a percentage of the rent each month after.

On the other hand, small-time rental owners have never had more tools at their fingertips. If they want to see what comparable homes are renting for, they can scroll through Zillow or visit the websites of big-money investment firms that rent out tens of thousands of properties. National firms like Buildium and Roofstock, mostly known for working with Wall Street investors, also offer management services and pricing advice to smaller landlords. Other startups allow rental owners to outsource annoying tasks like rent collection and bookkeeping.

"Not everyone in the world is cut out to be a landlord," Story tells me. However, he adds, "being an accidental landlord can be one of the biggest blessings."

The rental route has been a mixed bag for Casey Conner, a homeowner in Nashville who I talked to for a story a few years ago. In January 2022, he bought a single-story home in the suburbs and locked down a 3.2% interest rate. When I talked to him that fall, he had just gotten a job offer in Kentucky and was torn about whether to sell or rent out his property. Other homes listed for sale on his street were sitting on the market longer than expected, but he also figured he wouldn't make much by renting it out and hiring a property manager. Despite his hesitations, he eventually opted to be a landlord. The $2,300 he charged for rent was enough to cover the $2,100 mortgage and the $200 he paid the manager each month, but it left no room for the other maintenance costs that popped up, which ended up costing him well over $3,000.

Then Conner got laid off, and he and his wife decided to move back into the home in Nashville, where he figured he'd have an easier time finding another job. When I called him to catch up, he was settling into the old home and had just accepted an offer as a sales coordinator at a construction company. The cash-flow losses from his brief stint as a landlord were "painful," he tells me, but it was a financial win in other ways: At least he never had to give up that mortgage rate. And he's been grateful to have a home to return to in Nashville.

"Not that I am rich," Conner emails me later, "but I do understand when they say: 'The rich don't earn. They own.'"

James Rodriguez is a senior reporter on Business Insider's Discourse team.

Most single-family houses are built around a few main ingredients: wooden framing, a sloping roof that hangs over the sides, vents that keep air circulating through the attic. These features are key to churning out new builds quickly and relatively cheaply, and they've remained more or less the same for decades. They also make it easier for homes to burn.

The fires that swept through the Los Angeles area were the result of an extreme scenario: The confluence of hurricane-force winds, dry brush after months of drought, and the construction of old homes near combustible wildlands set the stage for the blazes to spread rapidly. The devastation in Altadena, the Pacific Palisades, and Malibu, where the Eaton and Palisades fires have destroyed more than 16,000 structures and killed at least 28 people, is especially stark given that California's building standards are some of the strictest in the world. In much of the rest of the country, the housing stock is even less equipped to face the rising threat of fire.

The ongoing fires bear a warning for other cities that have pushed residents farther and farther from the urban core in search of space to build. The risk of fire damage is greatest in areas known as the wildland-urban interface, or WUI — pronounced, charmingly, as "woo-ey" — where human-made sprawl meets undeveloped land. Data from the US Forest Service indicates the number of homes in WUIs grew by almost 50% from 1990 to 2020; about 48 million homes, or almost a third of residential units nationwide, are in counties that face a high risk of fire. Homeowners in California and beyond, architects and researchers tell me, must begin wrestling with how to fortify their own houses.

"As we've seen with LA and some of the other fires in California and Maui, it's not just a WUI issue anymore," Michael Eliason, the founder and principal of the Seattle architecture firm Larch Lab, tells me. "These are quickly becoming urban fires."

Perhaps the most confounding images from the LA fires show the outliers: homes miraculously left standing in the middle of flattened neighborhoods. Architects I've talked to generally agree that chance played a big role in deciding which structures survived. But as Sean Jursnick, a Denver-area architect, puts it, the owners of the spared houses may have "created some of their own luck."

Measures to reduce the risk of fire damage include straightforward design tweaks such as streamlining exteriors to eliminate the nooks and crannies where stray embers can settle, or getting rid of vegetation that could shuttle flames to the main structure. Then there are the cutting-edge materials — wrapped in jargon like "cementitious fiber-reinforced composite building system" — that offer alternatives to the flammable lumber that dominates home construction.

Interventions by both homeowners and builders are growing more necessary as the risk of fires increases — and as insurers get pickier about which properties they'll cover. Soon, many people across the US may have no choice but to build smarter.

Scott Long has spent decades in pursuit of a material capable of unseating lumber as the go-to option for home frames. The basics of home construction haven't substantially evolved since the 1800s, when building the skeletal structure out of dimensional lumber — your classic two-by-fours, etc. — came into fashion. Wood components, Long says, are "literally the worst possible product you could use" in the event of high winds, flooding, or fire since they burn (unlike concrete) and aren't as sturdy as, say, steel. Masking wood with something like magnesium oxide board or stucco siding, both of which are more resistant to fire, is fine, Long says, but "not a solution."

"It's time for change here," Long tells me. "We can't keep building the way we've been building up against these types of historic events."

Given these problems, Long founded NileBuilt in 2019, building homes primarily out of fiber-reinforced concrete panels with foam insulation in the middle. The company's model homes look simple and modern, all flat roofs and sharp edges, and it says the materials can withstand temperatures of more than 2,000 degrees Fahrenheit — the panels, unlike the walls of traditional homes, won't combust from the extreme heat of a neighboring fire. Long says the cost of building his homes roughly matches that of wood-frame houses. A quiet start to 2025 for his company has turned into a frenzy; he says that even before the fires, the waitlist for one of the homes was just under 3,000 people.

Eliason isn't calling for the kind of paradigm shift in building materials that Long suggests. He pointed to a widely seen X post showing a Pacific Palisades home that survived with little apparent damage, saying it was "not a concrete house or brick house or anything" — other measures its owner took may have mattered a lot more. And wood has its own advantages: It's cheap, and lumber production doesn't release nearly as much carbon as concrete or steel. In the event of an earthquake, its pliability is a huge plus. For all these reasons, Eliason says, "going away from wood-frame construction seems really shortsighted."

Instead, he advocates more-modest tweaks that can add up to real risk mitigation. A streamlined, boxy structure offers fewer places for stray embers to linger. These embers are often good fuel for a wildfire's spread — they can travel several miles by air, then enter through vents or settle on a combustible part of the home, igniting another conflagration. By getting rid of nooks and crannies like roof overhangs (also known as eaves) or little windows that jut out of the roof, builders can reduce fire risk. Materials also matter: Builders can wrap a home in noncombustible mineral wool and install drywall capable of withstanding an hour of direct contact with flames. Metal roofs are preferable to classic shingles.

The house Eliason referred to has many of these features: stucco finishes, a metal roof, tempered windows, no roof vents or eaves on its sides. But there's an even smaller adjustment that may have helped keep the flames away: a buffer around the house devoid of vegetation. Jursnick recalls a conversation with another architect who likened nearby plants and bushes to the tinder you'd use to light a campfire. Removing those is an example of a little thing even weekend-warrior home-improvement types can do to better protect their homes. Another is replacing old vents with newer models designed to deny entry to embers. Costlier measures include swapping in a metal fence for the wooden version or opting for a new metal roof.

Decades-old homes, like many in the Pacific Palisades and Altadena, are much more susceptible to fires than newer builds. But retrofitting them to meet modern codes is more expensive than adding fire-resistant features to new construction from the get-go. Research from the environmental economists Patrick Baylis and Judson Boomhower suggests that California homes built after the state tightened its building codes in 2008 are about 40% less likely to be destroyed in a fire than a 1990 home exposed to an identical blaze. Another study of the 2018 Camp Fire, which destroyed most of the town of Paradise in northern California, found that only 11.5% of single-family homes built within city limits before 1997 survived, compared with a 38.5% survival rate for those built that year or later.

Boomhower walked away from his study convinced that more local governments should mandate fire-resistant building codes rather than wait for builders and homeowners to wise up to their benefits. Normally, an economist like him might be skeptical of government rules for something that is so obviously a good investment — buyers of new homes should be motivated to protect what is likely their biggest asset, codes be damned. But Boomhower's study found limited adoption of these best practices in areas that didn't require them.

"Homebuilders and home buyers are just not always aware of the risks and aware of the low-hanging-fruit options for mitigation," Boomhower tells me. The data also suggests there are spillover effects that could protect non-improved homes: Investments made by just one homeowner can help stunt the spread of a blaze, making it less likely that their neighbors' homes burn down. And insurers may be more willing to extend policies to homeowners in areas where they know many builds meet these criteria.

This is far from just a California issue. A handful of states, including Montana, Nevada, and Pennsylvania, and 200 local jurisdictions have adopted the International Code Council's standards for building fire-resistant homes in WUIs. Austin, for example, adopted the code in 2015 and is considering an update that would expand the WUI's borders in hopes of protecting more homes. Homeowners that go beyond even the strictest codes, either during the initial construction or as part of a retrofit, may score discounts from insurers or state-level tax breaks.

But even with city-level and homeowner-level interventions, Eliason tells me, "there's no guarantee of protection." The logical thing, he says, would be to build more densely in areas far from the WUI to limit the number of homes at risk in the first place. In the absence of that kind of fix — which would involve sweeping changes to the zoning laws that say what you can build and where — better materials and design can make a difference.

Jursnick, the Denver-area architect, has been thinking about this stuff a lot recently. He's working on plans for an apartment building in an area just outside Boulder that was burned in 2021 by the Marshall Fire, which destroyed more than 1,000 homes. Much of the community input, he says, has revolved around how to prevent that kind of tragedy from happening again.

"If we're going to keep building more homes in those areas," Jursnick tells me, "I think we need to be more thoughtful of how we build, and adapt our building strategies in those areas to acknowledge that risk."

James Rodriguez is a senior reporter on Business Insider's Discourse team.

The path to homeownership is lined with middlemen. Real-estate agents, mortgage brokers, attorneys — all help push a deal through and then claim a fee when the ink dries. Most buyers are aware of these parties, but one group mostly flies under the radar. Their fees are often hidden, lumped in with other charges or buried in paperwork. If you bought a home in the past decade or so, there's a decent chance you unknowingly paid hundreds of dollars for their services.

These are appraisal management companies, little-known players that have flourished in the aftermath of the 2008 housing crash. The job of an AMC is fairly straightforward: When someone wants to get a mortgage for a house, the lender will order an appraisal of the property to determine how much it's worth (and, by extension, how much they're willing to lend). But the bank or credit union typically won't hire an appraiser directly; they'll enlist an AMC to manage the process. The lender pays an agreed-upon sum to the AMC, which uses a chunk of that money to pay the appraiser and keeps the rest.

The AMC is basically a transaction coordinator that matches the bank with an appraiser, ensuring independence so that lenders don't pressure appraisers to contort their valuations. In many instances, however, the AMC's haul from an appraisal can match or exceed the amount paid to the person actually determining the value of the home. Most buyers will never realize this, since the AMC and appraisers' costs are often lumped together under an innocuous title like "appraisal fee" on closing paperwork. Appraiser groups complain that AMCs don't even solve the problem they're supposed to address — the middlemen, they say, are incentivized to find the cheapest appraiser so they can pocket more money, resulting in shoddy appraisals and a bad look for the industry. All those fees from millions of home transactions each year add up: Data on the industry is scarce, but an analysis of public filings from one of the country's largest AMCs suggests these companies charged consumers about $12 billion in a recent five-year span.

Some consumer advocates consider opaque appraisal fees to be one of the most egregious examples of hidden costs in homebuying. As buyers face a rise in closing costs — the pesky fees, like title insurance, that pile up at the end of a transaction and usually total thousands of dollars — AMCs are attracting more scrutiny. The Consumer Financial Protection Bureau, as part of its crusade against junk fees, announced over the summer that it would look into various mortgage costs as well as "the growing power that appraisal management companies can wield over individual appraisal professionals."

The appraisal is a notorious pain point in the home-sale process: A low valuation can sink a deal, since the buyer may have to pick up the difference between their mortgage amount and the sum they've offered to the seller. Both buyers and homeowners are known to gripe about appraisals they see as faulty, delayed, or needlessly expensive, but few are aware of appraisal management companies' hand in the process. AMCs are unlikely to go away anytime soon, but people familiar with appraisals tell me consumers should at least know exactly what they're paying for — and have the chance to push back.

An appraisal is a critical part of any home purchase or refinancing. Sound appraisals don't just protect lenders from risky loans; they may also prevent consumers from overpaying and ending up underwater on their home, with more left on the loan than the house is worth. A typical valuation, which a 2023 survey by the National Association of Realtors found tends to cost a lender about $500, is based on a physical inspection of the property and research on comparable sales in the area. Those fees are typically passed directly to the borrower.

AMCs have been around for decades, but it wasn't until 2009 that they gained prominence. Before the financial crisis, lenders mostly worked with in-house appraisers or contracted directly with independent professionals to carry out the job. These cozy relationships offered ample room for fraud. Low appraisals were undesirable to a lender, because a borrower might not have the money to cover the gap between their offer and the mortgage amount. To avoid losing out on a deal, lenders pressured appraisers to deliver the goods (and blackballed the ones who refused). Both sides worked to pump up home values and keep the good times rolling — until the entire facade collapsed.

A web of new regulations — first through the Home Valuation Code of Conduct, then the Dodd-Frank Act — aimed to create some distance between lenders and appraisers. A lender could still technically manage appraisals in-house under the new rules, provided they separated the two sides of the business. Most decided it would be easier and cheaper to outsource the whole process to an AMC. Mark Schiffman, the executive director of the Real Estate Valuation Advocacy Association, the leading trade association for AMCs, estimates that 200 to 300 AMCs handle 70% to 75% of appraisals ordered by lenders in the US.

AMCs start by billing the lender a lump sum, which includes the amount they'll eventually pay the appraiser. The total fee for a simple single-family home could be about $500, while a more complicated job could run more than $1,000. The lender gets to select the services it wants the AMC to provide. The AMC will then send the requirements to its network of qualified appraisers, who submit bids for the work. The AMC chooses an appraiser, checks the quality of the appraisal, and then submits the report to the lender. The burden of paying for all of this, though, ultimately falls on the buyer, who foots the bill alongside their other closing costs, detailed in paperwork before a sale or refinancing wraps up. In some states the lender is required to separate the appraiser's fee from the total amount billed by the AMC, but it often appears as a single "appraisal fee."

There are other ways for a buyer to deduce the AMC's cut — the appraisal report, for instance, might include an invoice that shows exactly how much the appraiser made from the job, which could then be subtracted from the total appraisal fee. But appraisers tell me AMCs often discourage them from including an invoice for fear of confusing the buyer with two numbers — I saw one order from an AMC that specifically told the appraiser not to include an invoice in their report. The typical consumer probably wouldn't know to look for a difference anyway. Pretty much everyone I talked to for this story agreed that hardly anyone outside the appraisal world knows of AMCs. A buyer sees a bill for $600 or $700 and assumes all that money goes to the guy who crunched some numbers and nosed around their house for a few minutes.

Josh Tucker, an appraisal manager at a bank in Texas, has spent the past two years gathering evidence of the fee imbalance through a nonprofit he cofounded known as the Appraisal Regulation Compliance Council, which aims to root out fraud in appraisals. His organization has collected hundreds of examples of appraisal orders from some of the largest AMCs — Class Valuation, Clear Capital, Solidifi, and Nations Valuation Services, among others — and compared them with the standard fee schedules the AMCs provide to lenders. Other internal documents show the appraiser's fee alongside the AMC's fee. In many instances the AMC's cut roughly matches or exceeds the amount paid to the appraiser. Take, for example, a single-family home in California that was up for refinancing. The appraisal was managed by Solidifi, a nationwide AMC based in Buffalo, New York, that says it handles about one in nine appraisals in the US. The appraiser's fee was listed as $375, but the AMC fee was a whopping $725, for a total cost of $1,100 to the client. In another case, a townhome in Georgia, both Solidifi's and the appraiser's fees were about $300. A Solidifi spokesperson tells me that appraisers generally receive the majority of appraisal fees, adding that the company provides fee transparency to the lender and the appraiser by disclosing the breakdown for every transaction. The spokesperson also says that the company follows all applicable state and federal regulations, including paying customary and reasonable fees to appraisers.

Tucker calls AMCs' charges "one of the fees that is absolutely price gouging the consumer." It's unclear how much AMCs rake in in total, but securities filings from Real Matters, the publicly traded parent company of Solidifi, offer an approximation. Each year the company estimates the "total addressable market" for AMC services in the US. In the five years from 2019 through 2023, lenders ordered about 28 million appraisals for purchase and refinance mortgage originations. Real Matters multiplies that volume by Solidifi's average revenue per transaction to arrive at a dollar figure estimating how much Solidifi could bring in if it captured every single one of those transactions: $16.4 billion over those five years. Take into account the estimate that AMCs manage about 75% of appraisals and assume that Solidifi's fees are in line with the rest of the industry, and it appears AMCs could have charged consumers about $12.3 billion in that period, or about $2.5 billion a year.

This is a ballpark figure, since AMC fees vary by company and their revenue depends on the number of loans in a given year. But it may also be a conservative estimate; Real Matters says its estimate of appraisal volume is low because it doesn't include certain types of loans for which there isn't good data. Solidifi reports healthy margins on the appraisals it manages: After subtracting the payment to the appraiser and other "transaction costs," Solidifi keeps anywhere from 22% to almost 28% of the fees it charges lenders, depending on the year. And again, that fee is passed along to the borrower as part of closing costs.

Schiffman, of the AMC industry group REVAA, says that cases in which the AMC's fee outweighs the appraiser's are rare and that AMCs have their own costs to bear.

"It's more of an anomaly than anything else," Schiffman tells me. "Usually it's about the same. Sometimes it's higher, sometimes it's way lower." Chris Likens, the CEO of Nations Valuation Services, tells me his company's fees on a transaction never exceed the amount paid to the appraiser.

In some instances, both Schiffman and Likens say, an AMC may actually end up losing money on an appraisal if it turns out to be more complicated than expected. Both also note that finding an appraiser isn't the only thing AMCs do — they provide quality control after the appraisal to protect both lenders and consumers from faulty valuations. However, a 2018 working paper from the Federal Housing Finance Agency found that AMC and non-AMC appraisals "share a similar propensity for mistakes" and concluded there was "no clear evidence of any systematic quality differences between appraisals associated and unassociated with AMCs."

One solution, at least, seems pretty simple: Require lenders to make AMCs' fees clear to consumers. Have a line in the closing paperwork that shows what the AMC is making and another that shows what the appraiser billed. The website of one nationwide AMC advises mortgage lenders to check how their AMC's fees compare to the average, suggesting that "your AMC should retain about $100 to $125 per appraisal" with the remainder going to the appraiser. Yet the Appraisal Regulation Compliance Council has collected hundreds of examples in which the AMC's cut well surpassed that figure. And if lenders benefit from knowing the exact split, it seems reasonable for the consumer — the person actually paying for all this — to also have the chance to decide whether they're getting a fair shake.

Some states already require the fees to be disclosed separately in closing documents, but there's no federal mandate in place. In a letter to the Consumer Financial Protection Bureau over the summer, leaders of various appraisal industry associations argued that the agency has the ability to require this kind of disclosure under the Dodd-Frank Act. During a rulemaking session in 2013, the CFPB actually considered such a provision but ultimately decided against it. The CFPB concluded that requiring breakouts of the charges could "produce information overload" for consumers. The appraiser groups say that the decision was a mistake.

"This unused authority has allowed AMCs to abuse the conflation of where the singularly paid 'appraisal fee' flows after the consumer provides payment," the executives wrote, "reaping significant financial benefits while harming consumers and lenders along the way."

Schiffman tells me REVAA isn't opposed to a disclosure requirement, though he argues it would be an additional administrative burden and could confuse the consumer. Tucker, though, says it shouldn't be prohibitively difficult. And consumers, he tells me, have a right to know where their money is going.

"We have a captured industry," Tucker says, "where these middlemen get to kind of do whatever they want."

James Rodriguez is a senior reporter on Business Insider's Discourse team.

When Zillow debuted in 2006, the fledgling site bore little resemblance to the real-estate behemoth it is now. There were no options to find an agent, get a mortgage, or request a tour — the search portal couldn't even tell you which homes were actually for sale. There was, however, the Zestimate: a "free, unbiased valuation" for 40 million houses around the US, based on a proprietary algorithm. Half the single-family homes in America suddenly had a dollar figure attached to them, and anyone could take a peek. Zillow's site crashed within hours as a million people raced to ogle at the results.

The initial rush was a sign of things to come. Nowadays, the Zestimate is arguably the most popular — and polarizing — number in real estate. An entire generation of homeowners doesn't know life without the algorithm; some obsessively track its output as they would a stock portfolio or the price of bitcoin. By the time a seller hires a real-estate agent, there's a good chance they've already consulted the digital oracle. For anyone with even a passing interest in the housing market, the Zestimate is a breezy way to take the temperature. Keep tabs on mortgage rates all you want, but they can't tell you that your house has appreciated 20% over the past year, or that your annoying coworker's property is worth more than yours.

Many industry insiders, however, regard the number as a starting point at best and dangerously misguided at worst. Real-estate agents recount arguments with sellers who reject their pricing advice, choosing instead to take the Zestimate as the word of God. One meme likens its disciples to adults who still believe in Santa. Zillow itself lost hundreds of millions of dollars during the pandemic when it relied on its algorithm to buy homes at what turned out to be inflated prices, part of an ill-fated attempt to flip homes at scale.

The Zestimate is just one of a slew of automated valuation models that are increasingly used by banks, investors, and laypeople to estimate the value of homes. No other model, however, has wormed its way into our culture like the Zestimate. The model, like other consumer-facing AVMs, is prone to errors that render it more of an amusement than a serious pricing tool. But while the algo's price-guessing skills may be suspect, it's undeniably elite at one thing: luring people to Zillow-dot-com.

The Zestimate is both everywhere and an enigma. About 104 million homes, or 71% of the US housing stock, have a little dollar figure hovering above them on Zillow's website. One of them is the house in Austin where I was raised until the age of 10. It's not for sale, but right underneath the address, in bold, is the Zestimate. Next to it is a "Rent Zestimate," or the amount the owner could probably charge a tenant each month. You can click to see a graph of its Zestimate over the past decade — the Zillow-fied value of my childhood home rose a staggering 72% from May 2020 to its peak in May 2022 but has since dropped 24% from that top tick thanks to the chill running through the Austin market. In just the past 30 days, the Zestimate has dropped by $4,455. Ouch.

Just how accurate are those numbers, though? Until the house actually trades hands, it's impossible to say. Zillow's own explanation of the methodology, and its outcomes, can be misleading. The model, the company says, is based on thousands of data points from public sources like county records, tax documents, and multiple listing services — local databases used by real-estate agents where most homes are advertised for sale. Zillow's formula also incorporates user-submitted info: If you get a fancy new kitchen, for example, your Zestimate might see a nice bump if you let the company know. Zillow makes sure to note that the Zestimate can't replace an actual appraisal, but articles on its website also hail the tool as a "powerful starting point in determining a home's value" and "generally quite accurate." The median error rate for on-market homes is just 2.4%, per the company's website, while the median error rate for off-market homes is 7.49%. Not bad, you might think.

But that's where things get sticky. By definition, half of homes sell within the median error rate, e.g., within 2.4% of the Zestimate in either direction for on-market homes. But the other half don't, and Zillow doesn't offer many details on how bad those misses are. And while the Zestimate is appealing because it attempts to measure what a house is worth even when it's not for sale, it becomes much more accurate when a house actually hits the market. That's because it's leaning on actual humans, not computers, to do a lot of the grunt work. When somebody lists their house for sale, the Zestimate will adjust to include all the new seller-provided info: new photos, details on recent renovations, and, most importantly, the list price. The Zestimate keeps adjusting until the house actually sells. At that point, the difference between the sale price and the latest Zestimate is used to calculate the on-market error rate, which, again, is pretty good: In Austin, for instance, a little more than 94% of on-market homes end up selling for within 10% of the last Zestimate before the deal goes through. But Zillow also keeps a second Zestimate humming in the background, one that never sees the light of day. This version doesn't factor in the list price — it's carrying on as if the house never went up for sale at all. Instead, it's used to calculate the "off-market" error rate. When the house sells, the difference between the final price and this shadow algorithm reveals an error rate that's much less satisfactory: In Austin, only about 66% of these "off-market Zestimates" come within 10% of the actual sale price. In Atlanta, it's 65%; Chicago, 58%; Nashville, 63%; Seattle, 69%. At today's median home price of $420,000, a 10% error would mean a difference of more than $40,000.

Without sellers spoonfeeding Zillow the most crucial piece of information — the list price — the Zestimate is hamstrung. It's a lot easier to estimate what a home will sell for once the sellers broadcast, "Hey, this is the price we're trying to sell for." Because the vast majority of sellers work with an agent, the list price is also usually based on that agent's knowledge of the local market, the finer details of the house, and comparable sales in the area. This September, per Zillow's own data, the typical home sold for 99.8% of the list price — almost exactly spot on. That may not always be the case, but the list price is generally a good indicator of the sale figure down the line. For a computer model of home prices, it's basically the prized data point. In the world of AVMs, models that achieve success by fitting their results to list prices are deemed "springy" or "bouncy" — like a ball tethered to a string, they won't stray too far. Several people I talked to for this story say they've seen this in action with Zillow's model: A seller lists a home and asks for a number significantly different from the Zestimate, and then watches as the Zestimate moves within a respectable distance of that list price anyway. Zillow itself makes no secret of the fact that it leans on the list price to arrive at its own estimate.

Other sites have their versions of the Zestimate, too — there are actually about 25 different AVMs in the market, says Lee Kennedy, the founder and managing director of AVMetrics, a company known for independently testing these models. Realtor.com will show you three estimates, each from a different AVM provider. Redfin, a Zillow competitor, also has its own model. Kennedy has been studying AVMs for more than three decades, but it wasn't until the advent of Zillow that the masses became aware of them. Consumer-facing AVMs, like the Zestimate or the Redfin Estimate (Restimate?) are meant to be used informally, he says, as casual starting points before consulting real experts. They're not supposed to be used for real pricing, which should be left to the big guys — the "business-to-business" AVMs used by banks, investors, and the government-sponsored enterprises Fannie Mae and Freddie Mac. Lauryn Dempsey, a real-estate agent in the Denver area, gives similar advice to her clients.

"They're tools that provide information," Dempsey says, "but they should not be used in a vacuum to make decisions."

The business-to-business models are so costly to develop, Kennedy tells me, that they'll probably never be offered to regular people for free. But his testing indicates they're much more reliable. His firm has unveiled blind testing that looks at how models perform before taking into account the list price, a method that penalizes those aforementioned bouncy algorithms. The standard measurement breaks down how often the model can get within 10%, in either direction, of the actual selling price. In a highly urbanized area with lots of housing transactions, some of the models can correctly get close to the final selling price about 80% to 90% of the time — "not bad," Kennedy says. AVMs of all kinds work best in areas with a lot of homes that look and feel roughly the same. Cookie-cutter suburbs are heaven; areas with a wide range of home styles and ages, like Boston, pose a greater challenge. The value of a ranch home in the middle of nowhere is even tougher to peg.

So the Zestimate isn't exactly unique, and it's far from the best. But to the average internet surfer, no AVM carries the weight, or swagger, of the original. To someone like Jonathan Miller, the president and CEO of the appraisal and consulting company Miller Samuel, the enduring appeal of the Zestimate is maddening. "When you think of the Zestimate, for many, it gives a false anchor for what the value actually is," Miller says.

Miller is no unbiased observer. Given that he's an appraiser who estimates the value of homes for a living, it should come as no surprise that he's siding with the humans over the robots. But he raises real issues, highlighting the disconnect between the public's continued use of the Zestimate and its actual track record.

I could say that I virtually stalked my childhood home for "research," but let's be real: By the time I scrolled to the bottom of the page, I had fully surrendered to the voyeuristic urges that draw millions of visitors to the Zillow website each month. It's been almost two decades since I've stepped inside the house, and I can only imagine the changes its new owners have made to my old room (sadly, no pics of the interior). But with the aid of Zillow, my trip down memory lane was lined with data: I walked away with intimate knowledge of the home and its occupants. Prior to 2006, no regular person had this kind of power.

The launch of Zillow spawned a whole genre of internet snooping that, if anything, has only intensified in the years since. When I call up John Wake, a former economist and real-estate agent who now writes the newsletter Real Estate Decoded, he reveals that he, too, looked up his childhood home only a few months ago. "That part is really fun," he tells me. Keeping tabs on your own Zestimate, though, can provide less of a thrill. In December 2022, after interest-rate hikes tamped down home prices, Wake shared with his followers on X that his Zestimate was down 18% from May: "YIKES!" In a 2020 column, the Wall Street Journal editor Kris Frieswick opened up about the difficulty of quitting the algorithm: "My self-worth is defined by my Zestimate. Each day I approach Zillow.com filled with hope, and fear." The column reads mostly as tongue-in-cheek, but plenty of people take their number very seriously. As Frieswick pointed out, at least several disgruntled homeowners have actually sued Zillow over Zestimates they said were inaccurate.

Looking up other people's houses, by comparison, is a mostly harmless pastime. Bosses, neighbors, lovers, and exes — all are fair game in the all-seeing eyes of the tool. During the heat of the 2021 homebuying frenzy, a "Saturday Night Live" sendup of a Zillow ad declared: "The pleasure you once got from sex now comes from looking at other people's houses." The skit, which featured a lot of moaning and sultry mood lighting, was mostly about the fantasies of browsing homes for sale on Zillow — as one YouTube commenter observed, "They didn't even get into the naughty pleasure of looking up all your friends' Zestimate values." This kicked off a thread of others chiming in with "guilty!" and lots of cry-laughing emojis. "OMG I thought this was just my kink," another person replied. I imagine all of these people at a raucous dinner party, bonding over their exploits on zillow.com. And here I am, the buzzkill in the corner talking about median error rates.

Virtual spelunking aside, the hazards of the Zestimate are most obvious when a seller actually decides to list their home. Francine Carstensen, a real-estate agent in Alabama, says those in her line of work have a complicated relationship with the Zestimate: "We love it, and we hate it." A lofty estimate might jolt a homeowner into action — "I could sell my house for what?!" — and drive more business her way. But the number can also make it hard to do her job. A few times, she tells me, she's lost clients over a pricing disagreement involving the Zestimate. It can be difficult enough to pry a seller away from their unrealistic expectations without a number on a screen confirming their hopes for a bigger payday.

"I hate it when they tell me, 'Well, this is what Zillow tells me my house is worth,'" Carstensen says. "Because it's very rarely accurate."

Accuracy may not even be the point. It didn't appear to be in 2006, when the beta version of the Zestimate launched. "The Zestimate started out fairly inaccurate, but it didn't matter," Rich Barton, a Zillow cofounder who was then its CEO, recalled in a 2021 podcast episode. "It was provocative." Spencer Rascoff, another cofounder and former CEO, sold his own home in 2016 for 40% less than its Zestimate. The next year, the company offered $1 million to whoever could improve the Zestimate algorithm the most. The winning team, a group of three data scientists working remotely from the US, Canada, and Morocco, beat the Zillow benchmark by 13%.

No misstep appeared more damning, however, than the implosion of Zillow's homebuying business. In 2018, the company launched Zillow Offers, making all-cash offers to sellers looking to move quickly and seamlessly. In theory, Zillow could then turn around and offload the home in short order for a modest fee, plus however much the home had appreciated. The company used a combination of internal algorithms and human analysts to value the home and predict what it could sell for in a few months — in some cases, homeowners could get an immediate cash offer based on their Zestimate with just a few clicks. But the company's forecasts turned out to be way off base. Zillow Offers squandered $422 million in the third quarter of 2021 alone — a Business Insider investigation found that almost two-thirds of the homes listed by Zillow in Atlanta, Phoenix, Dallas, Houston, and Minneapolis were being marketed at a loss. Amanda Pendleton, a Zillow spokesperson, tells me it was the volatility of the market, not the Zestimate, that really led to the program's downfall. Once the losses came to light, the company swiftly shuttered the division and laid off a quarter of its staff.

I remember wondering whether this would be the death knell for the Zestimate, a kind of algorithm-has-no-clothes moment. I was wrong. Zillow and its best-known creation haven't gone anywhere — the company continues to highlight its progress, providing periodic updates as its data scientists tinker away at the formulas. As search portals like Homes.com and Redfin jockey with Zillow for dominance, the Zestimate is too valuable of an asset to give up. People still flock to Zillow for those little numbers next to each home, for the thrill of feasting their eyes upon something that, like salaries, is considered taboo to talk about in person. For Zillow, that's an unequivocal win.

"It's 100% a marketing tool," says Mike DelPrete, a scholar-in-residence at the University of Colorado Boulder who studies the intersection of tech and real estate. "Like, not even 99%. It's a marketing tool."

James Rodriguez is a senior reporter on Business Insider's Discourse team.

Evan Duby had been a real-estate broker for just a few years when he decided to try an unusual method of selling a home. Five buyers were offering to pay similar amounts for one of his listings, a one-bedroom co-op unit in a leafy Brooklyn neighborhood with an asking price of $485,000. Rather than instructing the house hunters to submit their best offers and cross their fingers — as is customary in the US — Duby, with his client's permission, convened an auction. The buyers gathered on a conference call, where they signaled their willingness to pay as Duby raised the price in $5,000 increments. The home sold for $505,000. The sellers walked away satisfied, as did the winning buyers; the losing bidders were disappointed, but at least they knew where they stood. For Duby, it was a revelation.

"I don't know what possessed me," Duby tells me. "I was just sort of trying to see, is there a better way to do this?"

Trying to buy a house can feel like playing a game of poker in which one player holds all the cards. When the seller's agent tells you they're weighing another bid, or even 30 other bids, there's no way to tell if their claim is bluster or fact. When you lose, you may not know whether another $10,000 would have sealed the deal or if your insistence on an inspection tanked your chance. The nagging uncertainty isn't limited to buyers. Even in a hot market, a seller may leave the closing table unfulfilled. Did their request for "highest and best" offers actually yield the highest and best? It's hard to say.

It doesn't have to be this way. In Australia, about a third of homes sell via auctions that wrap up in a matter of minutes. Sellers get to see exactly how far buyers are willing to go to nab their dream home; buyers gain a clear picture of what it takes to win in the market. The openness and simplicity stand in sharp contrast to America's system, in which buyers write blind offers and then pray theirs meets the mark.

In the US, open auctions are usually reserved for swanky mansions or, more often, distressed properties facing foreclosure or extensive repairs. Mention an auction and people are likely to ask what's wrong with the house, or how lavishly expensive it is — or, simply, why? Real-estate agents haven't been too keen on making the process more transparent: Conventional wisdom says that asking buyers to submit their best and final offers will elicit the highest price. A FOMO-filled buyer, the thinking goes, may unknowingly blow the competition out of the water and deliver a windfall for the seller.

Despite all that, the idea of open auctions is more tantalizing than ever. Buyers and sellers are exhausted from years of opaque bidding wars — even these days, with the market substantially cooler than it was a couple of years ago, a lack of inventory means homes may still draw multiple offers. The real-estate industry is notoriously resistant to change, but recent class-action lawsuits have rewritten the rules about how buyers pay their agents and opened the door for more overhauls down the line.

Capitalizing on this feeling, a small cadre of companies are trying to bring versions of the Australian model to the States. They face an uphill battle. Duby, who recently started GoEx, a venture-capital firm focused on real-estate tech, is squarely in the ripe-for-change camp, but even he'll admit it's hard to shift the status quo. For roughly a decade after that first auction, he continued to broker deals the conventional way — for American sellers, Aussie-style auctions were a tough sell. But just because they haven't caught on in the States doesn't mean they're destined to remain a pipe dream. Duby imagines a not-so-distant future in which prequalified buyers bid for homes online as if they were picking up a rare watch on eBay.

"I don't see why we don't do that," Duby tells me. "I don't see how that doesn't help."

The man could be mistaken for a pastor: crisp gray suit, arms stretched toward the heavens, a crowd gathered before him. But he's here to sell real estate, not religion.

"Reflect on this absolutely fantastic opportunity in front of you," he booms in a distinctly Aussie drawl. "Not me — the house!"

With that, the auction begins. The property at stake is a quaint one-story home surrounded by a white picket fence in a suburb of Melbourne. The bidding starts at 1.26 million Australian dollars, but the price climbs as the auctioneer needles buyers to dig deeper: "You know you want to!" In the end, it sells for more than 1.5 million Australian dollars, or about $980,000. The whole thing takes less than half an hour.

I watched all this unfold on TikTok, where the account @AuctionReporters maintains a steady stream of these strangely addictive dispatches from Australia's real-estate market. Every now and then a video like this will go viral among Americans who balk at the ritual. An open auction is so vastly different from the secretive practice here in the States that it can break our brains — in a reply to a similar video on X, someone posted, "this is real???"

Real-estate auctions are a time-honored tradition in Australia, dating back more than 200 years to its days as a British colony. Their popularity varies based on location and the strength of the market: In boom times for home sales, more sellers turn to the gavel — a study by Kenneth Lusht, a professor at Pennsylvania State University, found that in some pockets of Melbourne, auctions accounted for as much as 80% of home sales during periods of particularly strong demand. A later study of sales from 2011 to 2019 in the states of New South Wales and Victoria, home to more than half of the country's population, found that 30% to 40% of listings went to auction during that period.

Auctions are risky, to be sure. Homeowners publicly disclose the terms and privately set a reserve price, or the minimum amount they'd accept — if the bidding doesn't reach that figure, the house doesn't sell. A study published in 2022 described such a house as carrying a "stench of failure" and found that it was more likely to sell at a discount later. An auction is basically impossible to stop once it's in motion, and sellers may not always be pleased with the results. But in times of healthy demand for homes, auctions can deliver benefits for sellers looking to ride out the frenzy. The study on the risks of auctions also found significant upsides: Successful sales tended to achieve prices that were 1.2% higher than comparable "private treaty" sales, in which sellers set an asking price and then wait for bids to roll in. A separate 2010 study of a broad swath of Australian home sales also found that auctions tended to yield higher selling prices than the alternative.

It's hard to imagine regular homes in the US trading hands this way. But a handful of companies have proposed a middle ground between the public spectacle of Australia's auctions and America's behind-closed-doors strategy. Final Offer, in Massachusetts, is one online marketplace that mediates auction-ish sales. A real-estate agent can list their seller's property on the platform, specify their asking price and their terms, and input a "final offer price" and specific terms of sale, or the amount a buyer can agree to pay in order to stop the bidding and win outright (similar to eBay's "Buy It Now" feature for auctioned items). When a buyer makes a qualifying offer, the clock starts ticking: The seller can choose to reveal the price and terms of any offer in contention, and interested buyers can try to exceed the bids before the window closes.

Here's a real example: Late this summer, the owner of 5818 Ipswich Road, a two-bedroom home built in 1951 in Bethesda, Maryland, listed it on Final Offer for $650,000. Buyer 1 submitted an offer of $658,125, and the seller agreed to take it if no better offers came in over the next three days. Other buyers soon entered the picture: Buyer 2 bid $661,500. Buyer 1 responded by going $3,000 higher. Over the next two days, Buyers 3, 4, and 5 threw their hats in the ring, and the price climbed above $800,000. At the eleventh hour, Buyer 6 emerged with a bid of $810,573. Then came the kicker: Buyer 1 made the "final offer" of $850,000, ending the bidding process. The entire saga is available for anyone to see on Final Offer's website.

In real estate, it turns out, a little transparency goes a long way. "You're giving buyers information they've never had before about what the seller really wants," says Tim Quirk, who cofounded Final Offer and serves as its chief strategy officer. In a typical sale, spurned buyers rarely walk away knowing what would have won — maybe with that knowledge they would have been willing to up their price or adjust their terms, perhaps waiving an inspection and agreeing to buy the home as is. And sellers, even when they take a deal, never quite know if someone might have gone even higher if they knew what they were up against. "What ultimately ends up happening is you get remorse on both sides of the table," Quirk tells me.

Final Offer is still small — Quirk said that a little more than 1,000 homes had sold on the platform in the two years since it started. Sellers on the site don't have to disclose the prices and terms of offers that come in and can opt to let buyers see only that other offers have been made. But Quirk tells me more than 80% of sellers choose to make the bids public.

SparkOffer, which last year was acquired by Auction.com, is another platform that aims to give buyers a sense of their competition. The site shows buyers how many offers they're competing with and is beta testing a new feature that assigns each bid a score based on its price and proposed terms; when other bids come in, buyers get to see how their score stacks up. They don't know the exact details, but they'll at least have a sense of where they stand and what it might take to climb the ranks. Sellers get to outsource the messy back-and-forth of negotiations to a platform that prods buyers to sweeten their offers — while preserving the possibility that a buyer may unwittingly overbid.

Neither Quirk nor Mike Russo, the founder of SparkOffer, thinks of his platform as an auction exactly. For one, home sales aren't just about price. When a buyer makes an offer, they can propose contingencies, or conditions that need to be met in order for the sale to close. They might request an inspection and ask the seller to make repairs if something comes up. They could retain the right to back out of the deal if an appraiser values the home lower than expected. The buyer could also ask for concessions, or some money back from the seller to cover stuff like closing costs. At the height of the pandemic-era homebuying frenzy, some desperate buyers threw caution to the wind and waived these contingencies — they were simply tired of losing. Bottom line, not all buyers are equal in the eyes of a seller.

To reach widespread acceptance in the US, an auction-esque model would have to let sellers choose the terms that work best for them. Most important, new marketplaces would have to convince American sellers — and their agents — to turn away from tradition. That kind of cultural shift is a tall order. "I don't think the American consumer is ready for auctions yet," says Rob Hahn, the CEO of Decentre Labs, a company he started in 2022 to bring online real-estate auctions to the masses.

But it's unclear who really benefits from the system we have. Buyers rarely get feedback that could help them make stronger offers in the future. Maybe as a seller you'll get lucky and a buyer with blinders will overpay for your house — but that approach is shortsighted, since most sellers have to turn around and purchase another home. The biggest beneficiaries, Duby tells me, may just be real-estate agents: When buyers and sellers are shuffled through this murky process, they'll look for a professional guide.

Australia isn't a perfect analog for the US. The country doesn't have a system of local databases where most homes are listed — as we do in the States with the multiple listing services — which makes it tougher for buyers to find homes. And while most sellers are represented by agents, most buyers are not. But still, hardly anyone is proposing we copy and paste this Australian tradition. The country's real-estate market does tell us, however, that another way is possible.

American consumers may not be ready for auctions yet, Hahn told me. "But it doesn't mean that it's not going to happen at some point."

James Rodriguez is a senior reporter on Business Insider's Discourse team.