The Biggest Real Estate Rule Change in Decades & Presidential Candidates' Economic Plans

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0:29Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, the way you buy a house just got a big overhaul, but will it become less of a headache? Then there's a surprising company at the center of the latest Mpox outbreak that you need to know about. It's Monday, August 19th. Let's ride.

0:52This always blows my mind, but here we are on August 19th, and well over half of American kids are back in school. According to a Pew survey from last year, 55 % of public school districts are back in session as of today, with many beginning as early as the first week of August. If this seems normal to you, then you probably grew up in the South, where school comes back from summer break in the middle of the summer. But if heading back to school in August seems like the weirdest thing in the world, then you probably grew up in the North like me, where we'd rarely go back to school before Labor Day.

1:26Toby, why are we depriving Southern kids of their summer? Well, this got me thinking about my own high school career. And when did I go back to school? And I always remember basing it off of my best friend growing up. His birthday was August 1st. And it would always be right before school started. And so he wouldn't get the whole school birthday party. So I think we were mid-August. But I don't know. A lot of people say that it just comes down to network effects in certain regions. That it just becomes easier to adopt what your neighbor doing or nearby school. Because you can recruit teachers easier.

1:58but I don't know why the North waits so long. Yeah, in New England, it's like Labor Day happens, and then you go back to school the day after. And it's very strange to me to go back in the middle of August when ostensibly it's still the summer, and it's very hot, and you need to air condition all of these schools. So you have that added burden, so I just don't quite get it. Minnesota, you're required to start after Labor Day as well. So you're pro late start. I like that. I am pro late start. August is the summer. You shouldn't go back to school during August. Major changes have arrived to the complicated and expensive process of buying a home in the United States with the goal of making it slightly less complicated and expensive.

2:38On Saturday, a class action settlement with the National Association of Realtors went into effect, and it rips up the playbook on how real estate agents are compensated. Before Saturday, here's how it's worked in the U.S. When a house is sold, the seller pays a commission that's typically ranged between 5 % and 6%, which is split between the seller's agent and the buyer's agent. But those high broker fees, higher than the rest of the world, have come under attack, and the NAR was taken to court over accusations it was illegally inflating commissions. In March, it agreed to pay a$418 million settlement and overhaul the way brokers are paid.

3:16So what is the new model? Well, the most consequential change for anyone buying a home is you must sign a written contract with an agent before they show you a house. And how you pay that broker is up to you and them to negotiate. It could be a commission or a flat fee or an hourly rate. The big difference is it's in your court, not the seller's. Critics of the old system hope this new one will lead to lower commissions, shift power away from agents and add transparency to what's been a murky process. So obviously a lot of real estate agents have had this day circled on their calendar because it totally upends the industry.

3:53The biggest ripple effect from talking to a lot of industry insiders is that the middle of the pack agents are probably going to go goodbye. Maybe they don't know how to properly articulate the value that they're bringing to you as an agent. But a lot of longtime agents kind of took it in stride that they talked to Axios and said, honestly, the field is growing too big. Like, seasoned pros are still going to make more money because there will be fewer realtors out there who don't know what they're doing. So you're seeing these mixed reactions from realtors. But a lot of the more seasoned ones are saying the cream is going to rise to the top.

4:30And there's already been a slowdown in this industry, somewhat of an exodus, because home sales have kind of frozen over with mortgage rates so high already. I mean, last year, 72 ,000 people left the profession. Nearly half of the 2 ,000 agents surveyed in this survey by the Consumer Federation of America said they sold fewer than two homes in 2023. So there's just not a lot of work out there. And now the fact that this new model has emerged where it's very a la carte with a buyer. So you have to go pitch your services. You work with them to develop a contract. And then you go out and buy a home.

5:08It's much more the process has sort of shifted to is empowering the buyer, which is what this is intended to do. But it creates a little more legwork on behalf of the realtors. So what do you need to know if you are selling a home right now? You're probably actually going to see some immediate relief because hypothetically, this should push those commission rates down. It should cut that five to six percent number closer to the two and a half to three percent number. We're already seeing those rates fall. Also, though, we do have to just shout out real estate agents here for a second because they still are a very integral process because it's a very difficult process to navigate selling a home.

5:43It's very overwhelming. You can technically go and list your house for as for sale by owner. But between July 22, 2023, only 7 % of home sales were sold by owners without the help of an agent. So clearly there's still going to be a world where agents are important because it's just a confusing process in general. Yeah. So what's going to happen now is if you go look for a house, you have to go contact a realtor, get this agreement signed. And if you're a buyer, like I don't know what kind of agreement I have to sign this contract that's binding me to a particular broker. This is very confusing and new to me.

6:19A bunch of consumer groups have created draft templates that they put online. You can see I linked to them in the Morning Brew newsletter this morning. So you can go click on those. And if you're buying a house, you can just use one of those templates with which, you know, keep a buyer's interest in mind. Meanwhile, if you sold a home in the last five years, you could be entitled to a slice of this settlement. I also put that link in the newsletter or you can Google, am I entitled to this settlement? And you should see whether you are because I don't know, you might not get a ton of money because it depends on how many people are claiming this class action.

6:51But$418 million is going to get split up. The final point here is what is this going to do for housing affordability? We know housing is super expensive and the accusations against the NAR say that these high real estate commissions for brokers are inflating housing prices because they're baked into the sale price of the house. So the hope is that lower commissions will lead to lower home prices. Experts say, yeah, that's great in a hypothetical world, but really the most important thing for lower housing prices is that those mortgage rates, which recently have come down, but they're still sitting at 6.5 % for a 30-year fixed rate mortgage.

7:29So anything that happens within this commission world is kind of paled in comparison by what happens in the mortgage world. The presidential race has been a little light on economic policies so far, but just before the weekend, both candidates gave voters a much clearer look at their economic plans should they win the nomination. Kamala Harris focused much of her pitch around helping you out with your basic needs. She promised the first ever federal ban on grocery price douging, which sounds good on paper, but left some economists scratching their heads on how exactly that would work in an industry where margins are razor thin.

8:02She also took aim at housing affordability by promoting the construction of 3 million new units, promising a tax break to developers of starter homes. Probably the best word to some of these proposals is populist. And many actually echo promises laid out by Trump and Vance, who also want to boost housing supply and expand the maximum child tax credit. Trump also took shots at Harris for copying his plan to end federal taxes on tips, which he unveiled first. But Neil, obviously, these are just proposals right now that will need to make it through Congress should either be elected. But first, take us through some of the reactions to Kamalanomics.

8:38OK, so let's start with this price gouging. Obviously, one of the most important thing for voters in this election by far, and it has been for the last two years, is inflation. What what Harris is saying is she's blaming corporations for what has been called greedflation. When inflation went up in the early days, she's accusing corporations of jacking up their prices and using that to their advantage to to improve their margins. Economists say this is not necessarily what happened. There's not a particular robust body of evidence that there was greedflation happening, but that is central to her ban on price gouging.

9:19The details are sparse of what this would mean, but she seems to want to authorize the FTC to impose large fines on grocery stores that impose, quote, excessive price hikes on customers. Economists generally in favor of free markets do not think that price caps or attacks on price gouging will work at all. And this was completely bashed by conservatives and Republicans saying that price caps would bring us back to a Soviet era type of an economy. Because when you impose a cap on prices, if you are a company in that industry, you say, okay, well, I can't make as much money as I want on this. So I'm going to reduce my supply.

9:54I'm just not going to make as much stuff. And especially when it comes to groceries, that leads to shortages and bad news. So economists generally are opposed to price caps of any kind. And then if we go to the home building front, it kind of pairs nicely with our top story. But a lot of economists welcome the idea of trying to spur this home building surge. They cheered this expanded support for families with children. But also, you have to think about the downstream effects of this. And some say that if you are supporting these down payments, you could actually undermine affordability by just ratcheting up demand to an all-time high.

10:29So there again on paper, yes, everyone wants to expand housing supply. Everyone wants to make it so starter homes are more affordable. But there is just some of these effects that happen whenever you introduce a benefit to someone looking for that starter home that affects the entire market as a whole as well. Yeah, generally the Yimby community, which is the yes in my backyard, they applauded Harris's move to build three million more homes because estimates show that the U.S. is short seven million homes. And that has led to housing inflation. Why prices are so high is because there's a supply shortages.

11:07So alleviating that supply shortage is definitely a top of mind for economists and people who think we need to build more cut red tape. Meanwhile, neither Trump nor Harris has really explained how they're going to pay for their very expensive proposals. A lot of these involve a lot of government spending and, in Trump's case, widespread tax cuts and extension of his tax cuts. Estimates say that Harris's plan would cost$1.7 trillion to the deficit for over a decade, and then Trump's would also cost$1.6 trillion over a decade. Trump's big economic plan besides deregulation is any. He also made a big speech last week and he said that he wants to potentially add tariffs of up to 20 percent.

11:51He had floated at 10 percent before on literally all imports. Economists say that also will lead to inflation because it is essentially a tax paid by consumers. Last week, the stock of a little known Danish vaccine maker called Bavarian Nordic jumped as high as 17 percent. But it's not another covid wave that has investors looking into the company. It's an outbreak of MPOX. The World Health Organization declared a public health emergency over a large MPOX outbreak originating in the DRC last week, the second time in about two years that MPOX's spread has spurred the WHO to raise its highest level of alarm.

12:28So far this year, more than 17 ,000 cases have been reported, with about 70 % affecting people younger than 18. So it's put an unexpected spotlight on Bavaria Nordic, which is now scrambling to get the EU's approval to extend the use of its vaccine to teenagers. You may have heard of Mpox, previously known as monkeypox, after a global outbreak back in 2022. But data from this recent outbreak suggests the virus has mutated and is now much better at spreading between humans, which has the global health community on edge. Neil, there are not a ton of specific treatments approved for Mpox due to just a lack of cases over time.

13:05So Bavarian Nordic is kind of the name to watch here. It really is. And they just applied for approval from the EU regulator to get their vaccine approved for 12 for kids aged 12 to 17, because that's what this new strain, it seems to be affecting the most. So there are 20 ,000 suspected cases in the DRC. Two-thirds of those are children. And of the 975 suspected deaths, three-quarters are children. So getting the vaccine approved and sent over to the DRC for this age group is critical. And that approval also spurred another major stock gain. I mean, this company is doing what Moderna and Pfizer did back in 2020.

13:46It was up 19 % on Friday. It has gained for nine straight sessions. So the key is right now is, you know, getting people vaccinated before it escapes to the rest of the world. I mean, it already has last week also, in addition to that public health emergency by the WHO or the WHO, as you like to say, the first case was found in Sweden. And officials say it is likely that we'll start seeing cases pop up in Europe and North America, though the risk to public health is generally low because of those robust public health systems in Western Europe and in the United States. It's also no accident that Bavarian Nordic is poised to meet demand for this vaccine because it actually, they developed their shot for Mpox back after the 9-11 attacks because the U.S.

14:33decided to stock up on all these vaccines, specifically against smallpox as part of this anti-terrorism push. Then it's also just the Denmark pharma industry is just absolutely booming right now. Clearly, you have Novo Nordisk, who is the$600 billion behemoth who makes the GLP-1 drug, Ozempic. It's bigger than the entire Danish economy, but that just has these trickle-down effects. It's got a deeper bench than just Novo Nordisk. It has these other pharma companies that are doing very well, are poised to do very well, and are poised to meet the latest threat that the WHO has their eye on. Up next, one company is trying to take on the App Store in an epic battle.

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16:04Before starting EBCLIS, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about Epglis and visit epglis.lily.com or call 1-800-LILY-RX or 1-800-545-5979. Tuesday on NBC, Jimmy Fallon and Bozema St. John host a highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not Play Play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you.

16:40Make the best idea win! On brand with Jimmy Fallon. Series premiere Tuesday on NBC. The messy years-long battle between Epic Games and Apple has reached Blake, Lively, Justin, Baldoni levels of dramatic after Epic decided to take on Apple's hegemonic app store rule by launching an app store of their own. It comes nearly four years after Apple kicked Fortnite out of its walled garden over a dispute relating to its 30 % in-app purchase fees. An ugly legal battle ensued spanning multiple countries, but in the U.S., a judge's decision mostly maintained the status quo in favor of Apple. Now, though, Fortnite lovers can once again use their iPhone to download the game, but only if they don't like ice in their drinks.

17:26Under the EU's Digital Markets Act, Apple has to allow iPhone users to download other app stores like Epic's, but that right is restricted to users in the European Union. Neil, is this just Epic being annoying and taking another shot at its rival, or are their aspirations bigger than just being petty? Oh, I don't think they're being annoying by this. I mean, CEO, the CEO of Epic Games, Tim Sweeney, is on this quasi religious quest to break up Apple's app store monopoly. And he did this massive gambit four years ago when he intentionally provoked Apple to kick him off his app store. And then he sued Apple and Google to bring this to the fore in the courts.

18:10Four years later, I think this is a small win because there's finally a third-party app store on an iPhone, which is absolutely crazy to think about. We never would have expected that four to five years ago. But is it a win? I mean, he lost a lot of revenue from Fortnite not being on iPhones for the last four years. This is only in the EU. He had to pay hundreds of millions of dollars in legal fees. So you're looking at this four years later and you're thinking, did Tim Sweeney and Epic Games' big gamble, big gambit pay off? And I think the question is maybe a little bit. Maybe not monetarily, but you're right.

18:49I mean, because you said quasi-religious. It really has become this quest for Tim Sweeney to rail against what he sees as an unfair monopoly over the market. Their app store is a little bare bones right now, the one that Epic launched. It only has three games in it right now, Fortnite, Rocket League, Sideswipe, and Fall Guys. But apparently it's trying to hire developers. They are taking this seriously. It does have a relatively robust PC games marketplace as well, so it shows you maybe where they could get to. They are trying to undercut Apple on fees as well. Epic says its app store will take a maximum 12 % commission on sales.

19:25Meanwhile, Apple's App Store fees, those can reach up to that 30 % number that Tim Sweeney has railed against. There's also just far too money at stake for Apple to just roll over to. This is why they've been fighting it tooth and nail. I mean, Apple's App Store generated$1.1 trillion in sales in 2022. So it's now one of the company's main drivers of revenue. So clearly it's not going to take it lightly when other App Stores try to horn in on their territory. They've cited safety and privacy concerns, and they've also made it very, very difficult, even though they now allow it in the European Union.

20:01It says it takes a 15-step process to install Epic's new app store on their devices. They have all these things that they call scare screens that say don't proceed forward with what you're doing. So it's not going gently into the good night. It doesn't like when someone horns in on its moneymaker, which is the App Store, but Epic has clearly picked this battle and wants to see it through to the end. Welcome to the winners of the weekend, the segment where Toby and I pick two things that are just simply crushing the game of life right now. I won the pre-show Hot Wheels race, so I get to go first.

20:34And my winner is a school in Boston with a pretty good hockey team and an admissions rate of 5.6%. It's probably not the one you're thinking of. It is Northeastern University. Go Huskies. Northeastern, which hasn't been known to be an exclusive school, has lowered its admissions rate from 32 percent a decade ago to sub six percent last year on par with some Ivies. And that it's now one of the hottest schools in America is no accident, according to The Wall Street Journal. It's because of Northeastern's co-op programs. These programs allow students to alternate their coursework with up to 18 months of full-time paid work so that when you graduate, you don't have to fake having one to two years experience on your resume.

21:17This model of college, which is laser-focused on prepping schools for their career after school, has become increasingly popular as Americans wonder whether they're getting their bang for their tuition buck. A recent study found that five years after graduation, nearly half of workers with bachelor's degrees are in jobs that don't make use of their college credentials. That doesn't seem to be a problem at Northeastern where applications have doubled in the last 10 years, bringing that admissions rate dramatically down. This is a sweet gig for the students. I mean, come on. The Wall Street Journal talked to one student who got paid over$30 an hour to work at a tech company.

21:52Plus, he was receiving academic credit. Plus, he didn't have to pay tuition during those periods that he was working. So in all, he worked 12 months full time, got paid for it, took classes over six semesters and graduated after four years. It just makes a lot of sense on paper because the market employers are demanding that these employees come in with work ready skills. They want them to be able to meet the demands of the workplace. But a lot of students are coming out unprepared. They're taking classes and majors that don't actually help them in their eventual job roles. that 50 % stat is pretty eye-opening there.

22:30So I think this is a win-win and Northeastern, all the power to you. Yeah, well, Northeastern is not the only one doing this, obviously. And another one that's big into co-op programs and getting their students actual work experience besides a 10-week internship during the summer. Drexel in Philadelphia is huge into this and also Georgia Tech. So many of their graduates go on to have work experience with or go on to work in the particular company that they had their co-op with. So you can imagine that so many college administrators are looking at the model that these three colleges are employing and they're like, well, we should bring it.

23:09The one knock on what's happening at Northwestern is tuition rates have just skyrocketed. Northeastern. Oh, Northeastern. Sorry, I was like, what are you stopping? That's going to make some. I know, I know. I don't want to confuse the two. Northeastern now costs$90 ,000 before financial aid up from 20 ,000 just a few decades ago. So as it's become more exclusive, it's lowered admissions rate, it's become less accessible to maybe people in the middle class who this would benefit the most. My winner of the weekend is NSYNC. Now it might sound crazy, but it ain't no lie. Buy, Buy, Buy is back in the top 10 of the Billboard charts thanks to the latest Deadpool movie.

23:49Turns out that it helps to be a song prominently featured in a blockbuster that has made over$1 billion at the global box office. Buy, buy, buy is actually the second oldest song to reach the U S top 10 after Kate Bush's running up that hill. What got a similar pop culture bump from its role in Netflix's stranger things. It's pretty much a Toby's trends at this point to see old songs, get new life. Thanks to the small and big screens. Sophie Ellis Baxter's murder on the dance floor from 2001 charted again. Thanks to salt pern. That's another example, but to everyone listening to this right now, I do just want to apologize if I reminded you that Bye Bye Bye is considered an old song that came out 24 years ago now.

24:31I don't think it's an old song, but I've been listening to the radio a lot this weekend, actually, because I was in a car. And they play so much NSYNC and Backstreet Boys just on like 100.3 KISS FM. So it seems to be still very relevant. And this song is actually becoming extremely popular over the past few weeks because of this movie. And it wasn't just like a bit role in this movie. This movie, it was featured in the opening credits and actually kind of played a big role. But NSYNC is just getting so much more streams. And they're making probably millions of dollars because of this. So they were like, this is amazing.