News of the Day

Real Estate Compensation Lawsuits Far From Over

The National Association of REALTORS® says it will continue arguing its case against two class-action lawsuits challenging real estate compensation structures, even after one of NAR’s co-defendants reportedly agreed to a proposed settlement.

Anywhere Real Estate, formerly known as Realogy Holdings Corp., agreed to settle all claims against the company in the two cases, known as Sitzer/Burnett and Moehrl, according to news reports. Details of the settlement, which will need court approval, have not been released. No other parties named in the lawsuits, including NAR and several major real estate companies and MLSs, have agreed to settle.

The announcement of Anywhere’s settlement comes about a month before the Sitzer/Burnett lawsuit is set to go to trial.

“Settlement is always an option for any party in litigation. NAR’s commitment to defend ourselves in court remains unchanged, and we are confident we will prevail in proving the lawfulness of the rules under attack,” Mantill Williams, NAR’s vice president of public relations and communication strategy, said in a statement. “Pro-competitive, pro-consumer local MLS broker marketplaces ensure equity, efficiency, transparency and market-driven pricing options for home buyers and sellers. The practice of the listing broker paying the buyer broker’s compensation saves sellers time and money by having so many buyer brokers participating in that local marketplace and, thus, creating a larger pool of buyers for sellers. For buyers, these marketplaces save them the burden of extra costs at closing, enable them to receive professional representation and make homeownership possible for more people.”

The lawsuits claim that NAR rules violate antitrust laws and inflate the fees paid to buyer’s agents by requiring a listing agent to compensate a buyer’s agent for listing a property on the MLS. NAR argues that the lawsuits misrepresent association rules as anticompetitive. The rules direct listing brokers to determine, in consultation with their clients, the amount of compensation offered to a buyer’s agent in connection with their MLS listings. Further, NAR says buyer’s agents are free to negotiate compensation with the listing broker that is different from what appears in the MLS. Neither NAR nor the MLS has any say in setting broker commissions.

“The U.S. model of independent, local broker marketplaces is widely considered the best value and most efficient model in the world, with no hidden or extra costs and with more complete, verified information compared to other countries,” Williams said. “We look forward to arguing our case in court.”

Federal Reserve Holds Rates steady, Upgrades Assessment of Economic Growth

The Federal Reserve on Wednesday again held benchmark interest rates steady amid a backdrop of a growing economy and labor market and inflation that is still well above the central bank’s target.

In a widely expected move, the Fed’s rate-setting group unanimously agreed to hold the key federal funds rate in a target range between 5.25%-5.5%, where it has been since July. This was the second consecutive meeting that the Federal Open Market Committee chose to hold, following a string of 11 rate hikes, including four in 2023.

The decision included an upgrade to the committee’s general assessment of the economy.

“The process of getting inflation sustainably down to 2% has a long way to go,” Fed Chair Jerome Powell said in remarks at a news conference. He stressed that the central bank hasn’t made any decisions yet for its December meeting, saying that “The committee will always do what it thinks is appropriate at the time.”

Powell added that the FOMC is not considering or even discussing rate reductions at this time.

He also said the risks around the Fed doing too much or too little to fight inflation have become more balanced.

Governor Evers Files Lawsuit Alleging Republican-led Legislature Violated Wisconsin Constitution’s ‘Separation of Powers’

Governor Tony Evers filed a lawsuit against Republican state lawmakers Tuesday, claiming their decisions to block pay raises for employees of the Universities of Wisconsin, conservation projects and updates to the state’s commercial building standards are unconstitutional.

The lawsuit, filed by Democratic Attorney General Josh Kaul on behalf of Evers, along with a host of state agencies and boards, also focuses on GOP actions to block 27 conservation projects funded through the Knowles-Nelson Stewardship Program. Evers’ lawsuit also argues Republicans overstepped their authority on administrative rules related to commercial building standards and ethics standards for social workers and counselors.

The case claims GOP lawmakers are violating the Wisconsin Constitution’s “well-defined separation of powers” by creating more and more “legislative vetoes” made by committees made up of a handful of legislators.

Evers’ administration is petitioning the Wisconsin Supreme Court to take the case as an original action, effectively asking the court’s new liberal majority to bypass lower courts.

In a statement responding to the lawsuit, Assembly Speaker Robin Vos, R-Rochester accused Evers and Kaul of “an attempt to eliminate” raises given to all state employees by the Legislature.  “In a time of unprecedented inflation brought on by reckless Democrat spending, we think it is abhorrent that the Governor would try and take away lawfully approved money for hardworking state employees,” Vos said.

State Senate Majority Leader Devin LeMahieu, R-Oostburg, said the Senate would defend the duties of the Legislature and called Evers’ lawsuit “frivolous.”

“The Governor is working to diminish the the voice of Wisconsinites by limiting the authority of the legislature and unduly strengthening his own administration,” LeMahieu said.

Wages Boost U.S. Labor Costs in Third Quarter

The rise in compensation reported on Tuesday by the Labor Department was slightly stronger than expected and helps to explain the surge in consumer spending last quarter, which contributed to the fastest economic growth pace in nearly two years.

Wages increased 1.2% in the third quarter after climbing 1.0% in the prior three months. They were up 4.6% on a year-on-year basis after advancing by the same margin in the second quarter. Wage growth continues to exceed pre-pandemic rates.

Private-sector wages gained 1.1% after rising 1.0% in the April-June quarter. They advanced 4.5% on a year-on-year basis.

State and local government wages shot up 1.8% after increasing 0.8% in the prior quarter. They were driven by rises in education and health services as well as public administration. State and local government wages increased 4.8% on a year-on-year basis.

Inflation-adjusted wages for all workers rose 0.9% on a year-on-year basis after jumping 1.7% in the second quarter. Benefits rose 0.9% last quarter after climbing by the same margin in the April-June period. They increased 4.1% on a year-on-year basis.

Mortgage Rates Continue to Climb Toward 8%

Freddie Mac reported Thursday that the average rate for the benchmark 30-year fixed mortgage has now hit 7.79%, up from 7.63% last week and from 7.08% a year ago.

The rate for a 15-year mortgage also climbed, averaging 7.03% after coming in last week at 6.92%. One year ago, the rate on a 15-year fixed note averaged 6.36%.

This is the seventh week in a row that rates have risen, marking the longest stretch of consecutive increases since spring 2022, Freddie Mac said.

Redfin estimates there will only be roughly 4.1 million sales of existing homes across the nation by year’s end due to persistently high mortgage rates and elevated home prices amid low inventory, which are causing prospective buyers to reconsider their plans.

The real estate brokerage also reported that 16.3% of home purchase agreements in the U.S. were canceled last month, the highest rate in nearly a year.

Governor Announces Next Steps for Task Force on Workforce and Artificial Intelligence

Yesterday, Governor Tony Evers announced the appointment of 30 members to the Governor’s Task Force on Workforce and Artificial Intelligence (AI) and set the first public task force meeting for Monday, October 30, 2023.

Administered by the Wisconsin Department of Workforce Development (DWD) in coordination with the Wisconsin Department of Administration (DOA) and Wisconsin Economic Development Corporation (WEDC), the task force is bringing together private and public sector leaders to identify policies and investments that will continue to advance Wisconsin workers, employers, and job seekers through this technological transformation.

Appointees to the Governor’s Task Force on Workforce and Artificial Intelligence are:

  • Amy Pechacek, Secretary, DWD;
  • Kathy Blumenfeld, Secretary, DOA;
  • Missy Hughes, Secretary and CEO, WEDC;
  • Dr. Jill Underly, State Superintendent, Wisconsin Department of Public Instruction;
  • Jay Rothman, President, UW System;
  • Dr. Morna Foy, President, Wisconsin Technical College System;
  • Troy Streckenbach, County Executive of Brown County;
  • Trina Zanow, Chief IT Officer, DOA;
  • Dr. Charles Lee Isbell Jr., Provost, UW-Madison;
  • Greg Cisewski, Dean, School of Agricultural Sciences, Utilities & Transportation, Northcentral Technical College;
  • Dr. Gholamreza Dehnavi, Department Chair, Department of Electrical and Computer Engineering, UW-Platteville;
  • Dr. Kaushal Chari, Dean of Sheldon B. Lubar College of Business, UW-Milwaukee;
  • Dr. Xuedong (David) Ding, Associate Dean for the College of Science, Technology, Engineering, Mathematics and Management, Director for School of Engineering, UW-Stout;
  • Jeffrey Morin, President, Milwaukee Institute of Art & Design;
  • Stephanie Bloomingdale, President, Wisconsin State AFL-CIO;
  • Jack Salzwedel, Board Chair, American Family Mutual Insurance Company;
  • Jeff Yabuki, Chairman, Motive Partners;
  • Nadiyah Johnson, CEO, Milky Way Tech Hub;
  • Karl Reichenberger, Chief Intellectual Property and Information Technology Counsel, Johnson Controls;
  • Mark Tyler, Chairman, OEM Fabricators Inc.;
  • Ann Franz, Executive Director, NEW Manufacturing Alliance;
  • Levi Felling, Chief Technology Officer, Elite EXTRA;
  • Jeri Koester, Chief Information and Digital Officer, Marshfield Clinic Health System;
  • Israel Squires, Managing Partner, Midpoint Ventures;
  • Chris Hein, Director of Customer Engineering, Google Public Sector;
  • Dr. Keyanna Conner, Managing Director, Deloitte Consulting;
  • Tim Fiocchi, Senior Director of Governmental Affairs, Wisconsin Farm Bureau Federation;
  • Dave Mickelson, Member of Wisconsin Farmers Union;
  • Brian Foster, Chief Operating Officer, Jeff Foster Trucking Inc.;
  • Tyler Clark, U.S. Government Affairs Industry Director, Microsoft;

The first meeting of the Governor’s Task Force on Workforce and Artificial Intelligence is set for Mon., Oct. 30, 2023, from 1 to 4:30 p.m. with virtual and in-person meeting options. The in-person event will be held at the Concourse Hotel and Governor’s Club, 1 W. Dayton St., Madison, WI 53703. Register for attendance and choose attendance for one of three subcommittees via Eventbrite.

The three subcommittees are:

  • Industries, Occupations, and Skills: This subcommittee will delve into the industries, occupations, and functional skillsets most likely to benefit or experience disruption from AI. Both employee and employer needs will be addressed.
  • Equity and Economic Opportunity: This subcommittee will focus on advancing equity and economic opportunity as part of the AI transformation.
  • Workforce Development and Educational Solutions: Based on the work of the previous two groups, this subcommittee will identify policy, educational, and budget solutions to prepare Wisconsin’s workforce, drive economic development, and sustain thriving communities.

Featured speakers at the October 30th meeting include: DWD Chief Economist Dennis Winters; Caroline Yap, Managing Director, Google Global AI Business; Emily Rose McRae, Senior Director Analyst, Gartner; and Tyler Clark, U.S. Government Affairs Industry Director, Microsoft.

Learn more about the task force, sign up for future notifications, and track ongoing work at DWD’s web page here.

Congressman Mike Johnson Elected Speaker of the House

Yesterday, Congressman Mike Johnson (LA-04) was elected as the Speaker of the House. As a Congressman, Speaker Johnson represents the northwest and western regions of Louisiana. Prior to his election to Congress in 2016, Speaker Johnson was an attorney and served in the Louisiana State Legislature from 2015 to 2017.

Elected by the whole of the House of Representatives, the Speaker acts as leader of the House and combines several roles: the institutional role of presiding officer and administrative head of the House, the role of leader of the majority party in the House, and the representative role of an elected member of the House. The Speaker of the House is second in line to succeed the President, after the Vice President.

State Officials Say Wisconsin’s Economy is Strong

Despite global pressures in the last few years, Wisconsin’s economy remains strong — thanks in large part to the work ethic of its labor force.

That was the message from state officials at the 2023 Wisconsin Economic Summit Monday in Appleton, hosted by the Wisconsin Economic Development Corporation. While officials said the state economy is healthy overall, it does face long-term threats that could hamper future growth.

John Koskinen, chief economist for the Wisconsin Department of Revenue, said the strength of Wisconsin’s economy comes from its workforce. He said 85 percent of Wisconsin’s prime working age population — defined by economists as people between the ages of 25 to 54 — is engaged in the workforce.

And, Koskinen said, he believes Wisconsin’s working women give the state an edge. In 2022, Wisconsin women had a labor force participation rate of 59.3 percent, while women nationally had a 56.8 percent rate, according to the U.S. Bureau of Labor Statistics.

But even though Koskinen and other officials are optimistic about Wisconsin’s economy, they acknowledged there are issues that could hamper its ability to grow long-term.

He said more people have died in Wisconsin than were born over the last few years. In fact, between 2020 and 2022, over 2,000 more people died than were born in Wisconsin, according to a 2023 report from Wisconsin Manufacturers and Commerce.

Wisconsin also has an aging population, and is one of only 14 states with a median age over 40, the report said.

Those demographic challenges have caused headaches for employers, who are struggling to find enough qualified workers, as there are 2.4 open jobs for every one jobseeker, Pechacek said.

“We have more jobs than we have physical bodies to fill those jobs right now,” she said. “In Wisconsin, we’re not alone in this. This is a problem felt throughout the Midwest, throughout the entire nation, even a global issue.”

Another pain point for Wisconsin’s economy, Koskinen said, is child care availability. He said child care services have not recovered from pandemic losses, making it a continuous challenge.

“While I alluded to the gains that we had on the strength of Wisconsin women and the difference that that makes, surprisingly, in 2021 — compared to the pre-pandemic levels — married women’s labor force participation dropped, largely because more people had to be home to make sure they were taking care of the kids,” Koskinen said.

Wisconsin Lands One of 31 Regional Technology Hubs

State officials are touting Wisconsin’s precision medicine “Tech Hub” designation as a win for the state’s biohealth industries.

The U.S. Department of Commerce announced Monday the Wisconsin Biohealth Tech Hub effort, led by Madison-based BioForward Wisconsin, is one of 31 such initiatives selected for Regional Technology Hub designation by the U.S. Economic Development Administration.

Wisconsin is getting $350,000 in planning funds, and has the opportunity to apply for up to $70 million in implementation funding, according to the federal agency.

The Tech Hubs program was established through the federal CHIPS and Science Act. Designees include groups focused on advanced manufacturing, autonomous systems, biotechnology and more. Wisconsin’s effort is focused on personalized medicine, which incorporates the fields of genetics, AI, advanced imaging and data analysis to match medical treatment to specific patients.

BioForward Wisconsin CEO Lisa Johnson notes Wisconsin is already a leader in biohealth technology and precision manufacturing. The state biohealth sector last year had a $32 billion economic impact, employing more than 129,000 people, according to BioForward.

Consortium members include: BioForward Wisconsin, WEDC, UW System Administration, UW-Madison, GE HealthCare, Rockwell Automation, Exact Sciences, Employ Milwaukee, Accuray, Plexus, WRTP Big Step, Milwaukee Area Technical College, Madison Area Technical College, MadREP and Milwaukee7.

Federal Government Deficit Effectively Doubled in Fiscal Year 2023

The U.S. budget deficit soared in fiscal year 2023, which will likely complicate Congress’ efforts to come to a federal spending deal before government funding runs out next month.

The deficit was $1.7 trillion for the most recent fiscal year, which ended September 30, according to Treasury Department data released Friday. That marks a $320 billion, or 23%, increase from the prior fiscal year.

“We are a nation addicted to debt,” said Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget. “With the economy growing and unemployment near record lows, this was the time to instill fiscal responsibility and reduce our deficits.”

The nation’s hefty debt load will become even costlier in coming years as interest payments rise.

“We are seeing in real time the painful combination of rising debt, inflation and interest costs, all leading to even more debt,” said Michael Peterson, CEO of the Peter G. Peterson Foundation, a nonpartisan organization that seeks to raise awareness of the US’ long-term fiscal challenges. “Interest costs rose almost 40% last year, and soon we’ll spend more on interest than we do on national defense.”