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Why home sales are about to get cheaper...
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March 16, 2024 View Online | Sign Up | Shop

Morning Brew

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Good morning. History will be made in Kansas City today, when the KC Current play the Portland Thorns in a National Women’s Soccer League match. They’ll inaugurate the new $120 million CPKC Stadium—which, according to its owners, is the only stadium in the world built solely for a women’s pro sports team. Those owners, by the way, include Chiefs QB Patrick Mahomes and his wife, former soccer pro Brittany Mahomes.

CPKC Stadium seats 11,500 people, but with season tickets sold out for months, it may be a question of when, not if, it gets expanded.

—Matty Merritt, Molly Liebergall, Sam Klebanov, Abby Rubenstein, Neal Freyman

MARKETS

Nasdaq

15,973.17

S&P

5,117.09

Dow

38,714.77

10-Year

4.304%

Bitcoin

$68,381.94

Adobe

$492.46

*Stock data as of market close, cryptocurrency data as of 4:00am ET. Here's what these numbers mean.

  • Markets: Stocks fell yesterday after this week’s inflation data made investors worried about high prices (and the interest rate cuts they don’t inspire). Tech companies took a hosing, especially Adobe, which dropped after releasing a weak sales forecast.
 

REAL ESTATE

Realtor fees are about to shrink

“Available: For Sale” sign in front of home. Jeff Greenberg/Getty Images

Not since the 1990s “man cave” boom has the real estate market been shaken so irremediably. Yesterday, the National Association of Realtors (NAR) agreed to pay $418 million over the next four years to settle several lawsuits alleging it artificially inflated realtor commissions. Included in the deal is a policy change that will likely obliterate agents’ 5%–6% commissions.

For decades…selling your house meant agreeing to pay that fee—the highest in the world compared to most countries’ 1% to 3%—if you wanted your home on almost any listing service. The fee was split between your agent and the buyer’s agent.

The lawsuits argued that the NAR and brokerages kept buyers and sellers out of the commission negotiation process, leading to higher overall housing costs. Under the settlement, the NAR would no longer require that brokers advertising homes for sale compensate the buyer’s agent, likely forcing agents to lower fees to stay competitive, a change that’s ultimately likely to lower home costs.

What happens next?

If a federal court approves the deal, the NAR would see a lot of legal drama go away—including a $1.8 billion jury verdict from a case in Missouri and other similar cases that could have pushed it toward bankruptcy, an outcome the deal should prevent.

The head of the NAR told news outlets the settlement “benefits our members and American consumers.” But the settlement also highlights the once-powerful association’s waning influence in the real estate industry.

  • Getting rid of the commission-sharing structure likely means a 30% drop in the $100 billion Americans pay every year in commission fees, according to investment banking firm KBW.
  • It also opens the door to home-buying startups that couldn’t operate under previous regulations (think Carvana for a 3-bedroom).

Some real estate agents will see a sharp cut in their paychecks while others, at least a million, will leave the industry, according to KBW.

Bottom line: The settlement represents a sea change for what it costs to buy and sell homes in the US, and some experts believe it could give the housing market a major boost.—MM

     

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WORLD

Tour de headlines

A McDonald's in London that was closed due to a tech outage Jonathan Brady - PA Images/Getty Images

Tech outage impacts McDonald’s across continents. The Golden Arches was not lovin’ it yesterday when an IT problem left some stores around the world unable to open, take app orders, or process credit cards. Issues cropped up at restaurants in the US, Japan, Australia, the UK, and Hong Kong. Though Mickey D’s hasn’t said what caused the trouble, the chain said it was “not related to a cybersecurity event.” It’s the latest high-profile tech snafu after recent outages for Meta, LinkedIn, and YouTube.

Uber and Lyft to leave Minneapolis over wage law. Minneapolitans may need to get used to hailing taxis because rivals Uber and Lyft have both vowed to put the city in their rearview mirrors after its city council overrode the mayor’s veto of a minimum wage law for ride-hailing drivers. They say they’ll stop operating there when the new law, which requires drivers to be paid the local minimum wage of $15.57 an hour, takes effect on May 1. It’s not the only place gig economy players are fighting against higher wages for drivers: Uber is among the delivery services suing New York City over its new wage requirements for delivery workers.

Judge said Georgia DA could stay on Trump case—if her ex got off it. After some defendants in a criminal case accusing former President Donald Trump and others of interfering in Georgia’s 2020 presidential election raised ethical concerns, a judge ruled yesterday that District Attorney Fani Willis could continue as the prosecutor as long as she took special prosecutor Nathan Wade, with whom she had a romantic relationship, off it. Though Willis was not disqualified as the defendants requested, the judge said the relationship created the “appearance of impropriety.” Wade quit the case soon after the ruling came out.

LABOR

Inside the 32-hour workweek bill Bernie’s trying to pass

Senator Bernie Sanders Chip Somodevilla/Getty Images

The Vermont senator who loves democratic socialism and mittens introduced new legislation this week that would make all your weekends three days long without reducing your paycheck, citing the time-saving powers of AI.

The Thirty-Two Hour Workweek Act brought forward by Sen. Bernie Sanders and Sen. Laphonza Butler would:

  • Lower the federally recognized standard workweek and overtime threshold from 40 hours to 32 hours over four years, while ensuring employers don’t cut full-time worker pay by eight hours’ worth of wages.
  • Require 1.5x overtime when workdays are longer than eight hours and 2x pay when they surpass 12 hours.

Sanders presented growing evidence that the four-day workweek can lead to less burnout and more productivity.

Don’t get your hopes up. This is at least the third attempt in three years to enshrine the four-day workweek in federal law, and since the idea still doesn’t have bipartisan support, the bill will probably stall out. Republicans have voiced concerns that the proposal could hurt retail and small businesses—and one Louisiana senator even likened it to “napalm upon the fire of inflation.”

Still…JPMorgan’s Jamie Dimon, OpenAI’s Sam Altman, and other business leaders have predicted in recent months that advancements in AI and other emerging technologies will automate so many tasks that people could eventually work three days a week…or not at all.—ML

     

PRESENTED BY UNICEF USA

UNICEF USA

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ECONOMY

Plumber shortage is gumming up the US economy

Money pipes bursting Francis Scialabba

Americans need more professionals to desperately dial when their pipe problems can’t be solved with a plunger. Bloomberg highlighted this week how a plumber shortage means more than just increased wait times for a working toilet.

The lack of licensed tradespeople who install and fix bathroom fixtures and piping systems drained $33 billion from the economy in 2022, according to an analysis sponsored by bathroom-fittings maker Lixil. The report says the US will be short 550,000 plumbers by 2027, which is bad news for just about everyone except plumbers.

  • Plumber shortages can drive up costs for families and hamper businesses’ ability to expand to new buildings.
  • They can also delay flood recovery efforts and building upgrades to make water systems more efficient.
  • Plumbing pros also play a vital role in the industrial boom that recent government infrastructure spending has spurred.

Where’d all the plumbers go? Many of them are retiring, and employers are struggling to recruit a new generation of trained professionals, given the well-paid but not-so-glamorous vocation’s reputation for involving dirty and physically strenuous work, according to Bloomberg.

Zoom out: The US also needs more carpenters, electricians, and other technical tradespeople. Enrollment at trade schools has fallen as more young people opt for the promise of a white-collar career path with a four-year college degree.—SK

     

GRAB BAG

Key performance indicators

An image of Texas with a computer mouse hovering over it clicking on red X's Francis Scialabba

Stat: While everyone’s been watching Washington, concerned about the fate of TikTok, there’s another popular video-sharing spot that’s disappearing from certain states: Pornhub. The site pulled out of Texas this week after an appeals court upheld the state’s requirement that porn sites verify user ages. Never ones to accept being messed with, Texans sought a solution: Google searches for VPNs quadrupled in the state in the hours following Pornhub’s announcement, per CNN. The site has ditched a handful of other states over similar laws and, according to The Electronic Frontier Foundation, VPN searches have also spiked elsewhere in response.

Quote: “His life in recent years has been one of unmatched greed and hubris; of ambition and rationalization; and courting risk and gambling repeatedly with other people’s money.”

Prosecutors did not mince words yesterday in trying to convince a judge to give former FTX CEO and Bermuda shorts devotee Sam Bankman-Fried a lengthy sentence. They argued SBF deserves to be behind bars for 40–50 years and should be forced to pay $11+ billion. Lawyers for the erstwhile crypto entrepreneur, who plans to appeal his fraud conviction, have suggested that just five or six years would suffice. Sentencing is scheduled for March 28.

Read: Loro Piana’s $9,000 sweaters rely on unpaid farmers in Peru. (Businessweek)

NEWS

What else is brewing

  • The FTC is investigating Reddit’s policies of licensing data for training AI, the company said yesterday as it gears up for an IPO.
  • Apple agreed to shell out $490 million to settle a class-action lawsuit brought by investors who felt duped by CEO Tim Cook’s comments about demand in China (which has been falling).
  • President Biden supported Senate Majority Leader Chuck Schumer’s call for new elections in Israel.
  • A United flight from San Francisco landed in Medford, Oregon, with an external panel missing from the Boeing 737-800. It’s the latest in a recent spate of airplane mishaps (which we’ll dive into in more detail in tomorrow’s newsletter).
  • The Supreme Court ruled that public officials can sometimes block people on social media, setting a new standard for when they’re acting in their official capacity and when they’re just being people online. Separately, the court rejected a bid by LGBTQ student groups at West Texas A&M University for permission to host a drag show on campus.
  • Russians are voting in an election this weekend that is all but guaranteed to keep Vladimir Putin in power for another six years.

RECS

Saturday To-Do List graphic

Feed your craving: Get ideas to curb the munchies from these comprehensive snack food reviews.

Go global: The Read Around the World Challenge has you pick one book from every country. For inspiration, here’s someone who made it through the A’s.

Look: The winners of this photography contest will convince you to go beyond portrait mode.

Take five: The five hardest Wordle answers so far, per the NYT.

Career investment: Boost your career opportunities in finance roles with the Hedge Fund & Buy-Side Investing Certificate Program from Wharton Online and Wall Street Prep. Get $300 off with code MORNINGBREW.*

*A message from our sponsor.

GAMES

The puzzle section

Brew crossword: Tomorrow’s a big deal in the world of college basketball. If you know what’s going on, you’ll have a leg up in solving today’s crossword. Play it here.

Open House

Welcome to Open House, the only newsletter section that knows St. Patrick’s Day celebrations also happen in the South. We’ll give you a few facts about a listing and you try to guess the price.

Savannah, GA home.Zillow

Today’s home is in Savannah, Georgia, only a mile from the start of today’s parade route. The 2,767-square-foot home is newly renovated but not overly updated with too many subway tile backsplashes. Amenities include:

  • 4 beds, 4 baths
  • Vaulted turrets to look a little haunted
  • Outdoor shower

How much for the 2018 Historic Savannah Foundation Preservation Award winner?

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ANSWER

$1.3 million

Word of the Day

Today’s Word of the Day is: irremediably, meaning “incurably.” Thanks to Aamir from Isla Vista, CA, for the hopelessly apt suggestion. Submit another Word of the Day here.

         
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