In New York especially, off market transactions have been increasing over the past 3 years. Those with the right cash and the right connections are purchasing real estate before it even goes on the market. While these types of transactions are not generally new, they provide a great deal of benefit in the current market of low inventory and outsized demand. Some realtors believe that it is an unethical practice.
The amount of off-market transactions has increased 67% since 2019 with 20.6% of the homes sold in New York City in the third quarter of 2021 being “pocket listings” , another name for off-market homes for sale. “Whisper listings have always been desirable”, says Kathy Franklin, a New York City real estate agent. “It allows a purchaser to have a first look before there’s a larger audience.” In California, these listings are in a legal gray-area. The National Association of Realtors introduced a policy to try to limit these types of transactions. However, these policies do not apply to those who are not part of the NAR. “Although pocket listings remain a common practice; they can exacerbate segregation and wealth inequality because only certain people see these listings”, stated mortgage advisor Arnell Brady.
Housing is shining a bright light in New York City in the post-pandemic era, however with no inventory, increased prices and increased competition, wealthy buyers are circumventing the tough market with off-market listings. Although they are driving the real estate growth, they are also contributing to the problem of low inventory and higher prices.