Housing Notes: A Fed Paper Shows Just How Private Listings Screw over the Elderly

Why It Matters

The findings highlight a systemic disadvantage for elderly sellers, prompting regulators and industry players to reconsider private‑listing practices that erode price discovery and consumer protection. Addressing the age gap could improve equity in the housing market and reduce regulatory scrutiny on major brokerages.

Key Takeaways

• Older sellers earn ~5% lower returns than middle‑aged peers
• Private (off‑MLS) listings rise sharply for sellers 76+
• MRED’s 2016 transparency reform cut the age gap by half
• Compass’s 10% internal referral program fuels double‑ending deals
• Zillow‑Compass fight over private listing networks intensifies market fragmentation

Pulse Analysis

The Federal Reserve Bank of Philadelphia’s "Aging and Housing Returns" paper quantifies a persistent "age gap" in home‑sale profits, showing that owners 76 and older receive roughly five percent less than younger peers when property condition and market factors are held constant. The research links this disparity to two key mechanisms: a higher propensity for off‑MLS, or private, listings and a greater likelihood of selling to investors, both of which suppress price discovery. Cognitive decline among seniors further hampers their ability to negotiate favorable terms, making them vulnerable to agents who prioritize volume over price.

A natural experiment emerged in 2016 when MRED, a major MLS operator, mandated greater transparency for listings involving sellers aged 75+. The reform shifted about ten percentage points of private sales onto the public MLS in Illinois, halving the age‑related return gap. This causal evidence suggests that policy‑driven transparency can materially improve outcomes for elderly homeowners and offers a template for regulators seeking to curb opaque practices. As the post‑NAR settlement era pushes for more open markets, lawmakers may look to replicate MRED’s approach nationwide.

Industry dynamics, however, remain contentious. Compass’s recent 10% internal referral incentive effectively rewards agents for steering buyer leads back to the firm, a practice that can amplify double‑ending—where the same brokerage represents both buyer and seller. Coupled with Compass’s aggressive expansion of private listing networks through the Compass‑Anywhere merger, the firm is locked in a high‑stakes battle with Zillow, which accuses MRED of abandoning neutrality. The clash underscores broader concerns about data gatekeeping, digital redlining, and the erosion of transparent price signals. Stakeholders—from senior homeowners to policymakers—must monitor these developments as they shape the fairness and efficiency of the U.S. housing market.