Author: Ted Ihde

Ted is a real estate broker, a real estate developer as well as co-CEO of Team With Heart.

Buying inexpensive real estate? Well, a large portion of our country was actually developed by Americans who acquired…free real estate!

During the latter part of the 19th Century, a substantive portion of westward-moving American settlers had been able to acquire their land as a result of benefits they found within the Homestead Act. The Homestead Act was signed into law by President Abraham Lincoln on May 20, 1862. Of note is the year the Homestead Act was signed into law – 1862.

As a precursor to the onslaught of the Civil War, southern states seceded from the Union in 1861. With the southern states’ secession from the union having already taken place in 1861, the Homestead Act was likely not able to viably have become a law in the United States prior to the secession of those southern states from the union. Furthermore, the Homestead Act likely may not have indeed become law in the United States at all, had it not been for the breakup of the union, through the southern states’ secession.

Among southern states’ political objectives in the early-to-mid-1860’s – political objectives which could be advanced through members of Congress who represented their very own southern states – had been advancing the institution of slavery in America. In relation to the planned westward expansion of the United States, and by association, in relation to homesteading, interests held by members of Congress who represented the South had been intently focused upon enabling their constituents to purchase additional land in what would soon become the western United States. At which time, if upon acquisition of land in the west by present-day slave owners, slavery as an institution would then have become a foundational pillar to the rural economy for western land acquired. Put into “institutional motion”, through Congress, at the direction of, slave owners. Since that land, ideally, in the eyes of Southern delegates, would then be owned by United States citizens who would want to sustain (and thus, also advance) an American economy based upon the institution of slavery. Within their new American states.

As to what the west ultimately could, or would then in time become, there was quite a bit of disagreement in 1860’s America. Disagreement, that is, which was actively being debated in Congress by very conflicted interests – slave owners, and free-staters.

Needless to say, there was quite a bit at stake, relating to an American path westward in the 1860’s. Both in terms of potential land in the west that could be and would be settled, and in terms of political sway as well. This was so, because as the United States pushed westward, and as the 20th Century dawned, in excess of 10% of the total land area of the United States as a whole would come to be conveyed to what would in time become, over 1.5 million American homesteaders. This million-plus member American citizenry, who would then make up a formidable voting block. A newly-formed voting block, which would soon, and which indeed did, join the union. Able, to cast their votes. Able, to dictate individual state policy, in the new American west.

Prior to the establishment of the Homestead Act, which, signed into law by President Lincoln in 1862, and having gone into effect the following year – in 1863 – the Preemption Act of 1841 allowed American settlers to claim up to 160 acres of federal land…at a cost of $1.25 per acre. So the concept of inexpensive land acquisition, and westward expansion for that matter, was already formal American policy…some twenty years before the Homestead Act became law.

The Preemption Act…

Acquisition of land in the American west – thanks to the Preemption Act – took place. According to provisions of the Act, the land acquirer was mandated to be either 21 years old, or serve as the head of a household.

As the topic of immigration often is brought into public debate today, through the Preemption Act, interestingly, an immigrant who intended to become a citizen of the United States, yet who would not have been a citizen of the United States at the time they acquired their land through the Preemption Act, was also eligible to acquire land at the cost of $1.25 per acre.

Upon acquiring land through provisions set forth by the Preemption Act, individuals who acquired land – be they United States citizens, or be they immigrants who were not yet citizens of the United States – were then required to make improvements to their homestead property. While also living on the property, for at least five years.

Progressing forward, intent written into the Homestead Act traces its thesis to a planned reduction in the cost of land in the west – at that time, available for $1.25 an acre – accompanied by the ancillary reduction in the cost of homesteading, overall. Homesteading that is, which had already been established and put into effect in America, through the Preemption Act.

Opposition to both the Preemption Act and to the Homestead Act festered in wealthy landowners, a large concentration of whom, resided in the southern states. Those being the same southern states that seceded from the westward-expanding union…in 1861.

Opponents of the Preemption Act – and of the Homestead Act, for that matter – feared that land acquired (inexpensively) in the west would come to be held by immigrants. And by farmers who possessed little economic viability. Each group, thus not being natural advocates for the advancement of the institution of slavery in the west. Immigrants, and farmers of little economic means, it had been surmised by wealthy southern land owners, would not hold the same political (nor economic) ideals as those ideals espoused by wealthy southern plantation owners. This really came down to, the institution of slavery in the west. Slavery, that is, being the bedrock on which the economy (and the political power) of the southern states comfortably and profitably lay.

Whereas the Preemption Act liberalized land ownership in America, so to speak, by making land available to non-United States citizens (and small farmers), through homesteading, the Homestead Act further opened up the gateway to land ownership in America by allowing individuals who were under the age of 21 – yet who had served at least 14 months in the United States army or navy – to acquire land, through the Act.

As the southern states did elect to secede from the union – in 1861 – the Homestead Act restricted conveyance of land in the American west, by way of the Act, for any individual who fought against the United States. Accordingly, within its very wording, citizens of the southern states – since those southern citizens resided in states which had seceded from the union (and fought against the United States) – were thus excluded from acquiring land as homesteaders, by way of the Act.

Interestingly, as owner occupancy is often one stated objective held by Land Banks in American cities today, in their conveyance of inexpensive city-owned properties to owner-occupying home buyers, land conveyed to land acquirers through the Homestead Act – i.e.: to homesteaders – was conveyed in accordance with an intent for that land to be settled, resided upon, and cultivated – i.e.: improved – by the individual acquiring the land. Owner occupancy of land, and the development of that acquired land for the benefit of the owner-occupant through homesteading, lay at the core of land conveyance policy, resulting from, the Homestead Act. As well as the Preemption Act. Similar in some ways, to property conveyances which take place today, through Land Banks.

Homesteading continued on as American policy up through the 1970’s. In 1976, as a result of the passage of the Federal Land Policy and Management Act, homesteading as a federal exercise ceased to exist. The Federal Land Policy and Management Act governs the way in which public land administered by the Bureau of Land Management is managed. The Federal Land Policy and Management Act was signed into law by President Gerald Ford. In 1976.

So, is homesteading long since gone in the United States today? Not exactly…

In 1873, a budding settlement which would later go on to become Marquette, Kansas, took hold.

Marquette is a small town in McPherson County, Kansas…it’s home to the Kansas Motorcycle Museum. By 1890, the population of Marquette stood at 367 people. Today, that population in Marquette is still far fewer than 1,000 residents.

Marquette is one of a handful of quaint Kansas towns that has provided modern day homesteading opportunities to those who elect to call small town Kansas – Marquette in this case – “home”.

Homesteading – i.e.: free land, with conditions – has been a unique benefit made available to those who elect to relocate to Marquette. And build a house, that is, upon relocating.

In Marquette, lot sizes which have been made available to modern day homesteaders have ranged from between 11,000 square feet per lot to 25,000 square feet per lot.

Lincoln is a small Kansas town found within Lincoln County. Home to Crispins Drug Store Museum, Lincoln was founded in 1870. Ten years later, in 1880, the population of Lincoln stood at just over 400 residents. By 2020, the population of Lincoln was still fewer than 1,500 residents.

In Lincoln, Kansas, free land (with conditions), by way of homesteading, has also been made available to those who elect to relocate to this town in the Sunflower State…relocate that is, and then build a home.

Residential lots in Lincoln which have been made available to “homesteaders” range from between 14,000 square feet per lot to 35,000 square feet per lot. One condition in Lincoln for land conveyances enacted in this manner has been for the acquirer of the land – i.e.: for the homesteader – to build a 1,300 square foot home on their lot, once they acquire the land.

Tracing back once again to the Homestead Act, one specific provision of the Act itself was the inclusion of a condition whereby the homesteader, once they were able to illustrate that their homestead property had been sustained for a period of at least five years, would be required to pay a $18 filing fee. Upon paying their filing fee, the homesteader would then receive their deed to the land.

One-hundred sixty acres had been available to an American homesteader through the Homestead Act. The 160 acres, that is, which would be accompanied by a commitment made by the homesteader to build a home on their homestead property. Similar to Lincoln, Kansas today. Similar to Marquette, Kansas today.

Looking back, revisiting history, if the secession of the southern states had not taken place as it did, then the future westward expansion of the United States at that time…if it went on to occur at all…might have looked quite different. And that westward expansion in America (if it even occurred) would have had quite a different set of progressions…with varying settlement timelines as well. Homesteading, existing as a necessary byproduct of American westward expansion, might not have occurred. And if homesteading in America had not occurred when it did, maybe then, westward expansion for America would not have taken place.

Had Abraham Lincoln not been president… Had members of Congress who were domiciled in the southern states not been extricated from their membership in Congress… Had the Civil War not taken place… Had the Confederate States won the Civil War… Had one or more of these aforementioned historical circumstances ended up with a different outcome, then too, homesteading in the American west might not have taken place. Then too, without such a catalyst to westward expansion – i.e.: homesteading – the United States as we know it today, accordingly, might have looked, quite a bit different.

By the end of the Civil War – in 1865 – some 15,000 American homesteaders had claims in territories that we now know to be the states of Kansas, Colorado, Nebraska, Montana, and Wyoming.

By 1890, nearly 80 million acres of what is now the United States had been conveyed to westward-looking American homesteaders. Millions of acres conveyed – conveyed, that is, inexpensively. Millions of conveyed and developed western American acres that went on to become the structure for, and the formation of – very much the “DNA” for – countless American towns, American cities, and American states. Those very towns, cities, and states now being well known destination points and centers of American life, in 2022. The origins, for which, owe at least a decent portion of their very existence to…late 19th Century homesteading.

Trenton, where at one time, Trenton Made, and the World Took…

Trenton’s historically iconic slogan – “Trenton Makes, the World Takes” – can be seen today, as the City’s catchy tag is nicely affixed to the Lower Trenton Bridge. I.e.: to the Lower Free Bridge. I.e.: to the Trenton makes bridge. This illuminated, bold, manufacturing-derived Trenton statement – “Trenton Makes, the World Takes” – was hung on the Trenton makes bridge – the first bridge to cross the Delaware River, by the way – in 1935.

Trenton claimed its confident slogan in the year 1917. Justifiably so. Attaching the confident pronouncement of what Trenton was really, really good at – manufacturing – to a city which was indeed, at that time, thriving. Thriving, thanks to the strong manufacturing base in Trenton. Thriving, thanks to Trenton’s strong export economy, which was tied to its strong manufacturing base. Trenton’s early-Twentieth Century manufacturing prowess – coupled to Trenton exporting its finished manufactured products, such as wire rope and rubber – positioned Trenton as one of the truly booming early-Twentieth Century Mid-Atlantic industrial hubs.

Wrought iron beams…beams used to construct the dome in our nation’s Capital building. Those beams were manufactured in Trenton. Wire rope…wire rope used during the construction of the Brooklyn Bridge, the George Washington Bridge, the Golden Gate Bridge and the Wheeling Bridge (the bridge which connects West Virginia to Ohio). That wire rope was manufactured in Trenton. Prior to Akron, Ohio claiming the title as the “Rubber Capital of the World,” in the early-1900’s, Trenton was “the nation’s tire capital.”

John A. Roebling established his steel wire manufacturing empire – The Roebling Steel Company – in Trenton. In 1849. Roebling established his company alongside the Delaware Canal and the Raritan Canal. John A. Roebling’s creation of what would go on to become the iconic Trenton-based manufacturing masterpiece, a company which also became Trenton’s largest and most well-known employer, formed on 25 acres John A. Roebling purchased in Trenton in 1848. By 1850, the early-on foundation for what would go on to become Trenton’s burgeoning rubber industry had taken hold. By the late 1800’s, Trenton was, without question, on its way to becoming a distinct American manufacturing powerhouse.

Twenty years after John A. Roebling laid the initial groundwork for his Roebling Steel Company, a father and son team – Alan and Frank Magowan – formed a company in Trenton which went on to become the oldest rubber mill in the United States – Trenton Rubber Company.

The Trenton Rubber Company was the resulting entity, formed through a conversion by the Magowans of an existing rubber outfit – Whitehead Brother’s Rubber Company – into the Magowans’ own rubber company, Trenton Rubber Company. Thanks in part to successes the McGowan’s enjoyed by reaping fruits bestowed upon them from their profits in the Trenton rubber business, Trenton, by the late 1800’s, became a major producer of rubber.

Roebling went on to become the world’s largest manufacturer of wire rope. Wire rope, shipping, mining, construction, electrical power transmission, cable cars, tramways, aircraft, submarine netting, musical instruments, elevators, logging, oil drilling… Each proudly manufactured and produced, at one time, in Trenton.

The early-Twentieth Century industrial strength of Trenton – and of Trenton industrialists – owed much of its sustenance to the City’s ability to utilize newly-built area canals and railroads to transport finished manufactured goods made in Trenton to larger end markets, such as New York City and Philadelphia.

While Trenton certainly enjoyed a long, well-sustained run as an important American manufacturing center, in June of 1974, the final 1,400 employees of what had once been Roebling’s Trenton industrial empire lost their jobs. These final Roebling-related layoffs, the result of numerous previous failed attempts to revive the then-Trenton plant controlled by (at that time) Roebling’s acquirer – Colorado Fuel & Iron. The two Trenton-based Roebling manufacturing plants closed their doors for good in 1974. Marking the formal end of Roebling’s manufacturing presence in Trenton. And, to some, also marking a finality of sorts, to what once had been a thriving industrial hub…

Cheaper foreign competition in the manufacturing sector. The hollowing out of the City’s property tax base. Suburbanization. Each contributing in their own unique way to Trenton’s decline. A decline in output…a decline in population.

Prior to Trenton’s continual decade-by-decade population descent, the City’s population had steadily increased, year-by-year, beginning in the late 18th Century. Right up through the 1950’s. Topping off at a population of just about 128,000 by the mid-1950’s. In 2022, Trenton’s population was about 90,000. 90,000 residents in Trenton. 90,000, a population total which is roughly 70% of the Trenton population total from seventy years ago.

Mechanicals used in San Francisco’s first streetcars? Manufactured in Trenton. Cable, spark plugs, and electrical wire used in aviator Charles Lindbergh’s iconic single-engine Spirit of St Louis plane in 1927? Trenton. Cable stays on the Wright Brother first airplane? Trenton. Under the Articles of Confederation, Trenton was once – albeit briefly, from November 1, 1784 until December 24, 1784, our nation’s capital.

While Trenton’s population peaked in the mid-1950’s, during this same time frame, specific socioeconomic challenges began to take hold in cities throughout the United States. One characteristic which accompanied some of these socioeconomic challenges had been found in laborers who, previously residing in southern US states, began migrating to northern industrial cities. To Trenton. Their migration, attributed to migrants’ need to identify higher wages, larger weekly paychecks, and more favorable employment conditions. In northern factories. Trenton, a northern industrial city, partook in this influx of mid-century migrants from the south.

A notable portion of mid-century migrants who ended up in Trenton (as had so too been the case in numerous northern cities) were not in possession of the advanced skill sets needed to enable the migrants to attain wages which were high enough to support the purchase (and the upkeep) of Trenton homes. Nor would the substandard wages paid to unskilled Trenton migratory workers enable the migrant laborers to afford to pay property taxes on Trenton homes (when they proceeded to purchase Trenton homes). The outcome being, over time, more and more Trenton homes fell into a state of disrepair.

Non-maintenance of Trenton homes, combined with (arguably, by some) a trend towards lax oversight by the City when it came to enforcing housing maintenance standards in Trenton, led to the deterioration of the condition of Trenton housing stock in center city. Which, when combined with White flight, likely redlining by lenders, trending suburbanization, a decrease in center city Trenton home values, and an increased ease accompanying the drive in to (and out of) center city Trenton, from the suburbs (thanks to the construction of new roads and highways), led to a substantive increase in blight within Trenton.

In Trenton today, upwards of 60% of Trenton residents rent their homes (or their apartments). Whereas, in Mercer County, New Jersey, as well as in the State of New Jersey overall, only between 30% to 40% of residents rent.

Furthermore, Trenton has thousands of vacant lots, vacant buildings and vacant homes. The hollowing out of Trenton’s industrial base. The deterioration of the quality of Trenton’s center city housing stock. This once-industrial powerhouse certainly owns its share of economic and housing-related challenges. Yet, with thousands of vacant lots, vacant buildings, and vacant homes located within its borders, this former Mid-Atlantic industrial heavyweight arguably also possesses the ingredients to establish processes to transition the now non-performing Trenton properties to high-quality affordable housing options. Available, then, to those who call Trenton “home.” While at the same time, increasing the city’s property tax base.

Home loans: using the 2 – 1 buydown

The 2-1 buydown is a real estate financing technique…an attractive home loan provision whereby funds are set aside in an escrow account at the closing, for the benefit of the buyer. These escrowed buy down funds permit the home buyer to “buy down” the interest rate on their home loan…as the buyer’s interest rate is “bought down” for the two-year period.

Inadequate Supply: Assessing Annual New Home Build Levels

One factor which has greatly contributed to – a factor which, on an annual basis, continues to contribute to – challenges Americans face today in regard to choosing from a limited housing inventory…a housing inventory which, by any metric used, would be considered inadequate, would be the 2007-2008 Financial Crisis.

America is simply not building enough new homes to satisfy demand. This leads to inadequate supply levels. This contributes to affordability challenges. This contributes to escalating home prices. This contributes to the naggingly-stubborn inflation that the Federal Reserve is combating with higher interest rates.

When the Financial Crisis took hold in 2007-2008, home builders stopped building homes. Home builders closed their doors. Home builders shut down. Home builders went out of business. As home builders exited the marketplace, the tradespeople that home builders relied upon to get their new homes built – and positioned, for sale, in the market – simply found other careers. Tradespeople found new ways to make a living. Tradespeople exited the housing industry. They left the construction business. This left a void in the market, which has contributed to an inability on the part of home builders to build enough homes each year, to satisfy demand.

Post-Crisis, as the real estate market began to stabilize, and as home purchase numbers began to climb once again – albeit very, very slowly – the new home construction industry was simply ill-equipped, not rightly-sized, and understaffed. Thus, the new home construction industry was unable to keep up with the increasing (albeit, a slowly increasing) demand for new homes. That inability of home builders to keep up with increasing demand levels for new homes continued. Each year. Year by year. Every year. Last year. This year. All leading to the housing inventory shortage we have today. And to inflation. And to an inadequately-functioning housing market. And to the imbalance we have in the housing market today between supply and demand. And to the challenges Americans face everyday, in regard to housing affordability (or lack thereof).

Let’s look at some data, to see how we arrived at this inadequately low number of new homes which are available to buyers in the marketplace.

We simply have an inadequately low number of new homes being built and added to the market each year. The number of new houses built and added to the market each year is continually contributing to the challenges we see in housing affordability (or lack thereof). This low supply level of new homes in the marketplace is continually contributing to inflation.

In the year 2000, the number of new housing permits for privately owned homes totaled just about 1.6 million for the full year. This, as the number of new housing starts for privately owned homes also approached 1.6 million for the full year in 2000. While in 2000, the United States population was a tad over 282 million.

Fast forward from the year 2000, to 4 years later…

Taking place in back-to-back years – in 2004 and once again in 2005 – housing permits obtained for privately owned homes topped 2 million each year – in 2004, and again in 2005. The year 2004 had been the first year that permits obtained for privately owned homes exceeded 2 million in a year. That 2 million level of housing permits issued for privately owned homes had been reached in back-to-back years in 2004 and 2005. The trajectory of new home builds in the United States had been on an upward swing, in the mid-2000’s.

Housing starts for privately owned homes surpassed the 2-million threshold in 2005. Housing starts for privately-owned homes fell just short of 2 million during the prior year, in 2004. At that point in time, the market had been absorbing just about 2 million new homes a year.

Permits for privately owned homes – as well as actual housing starts for privately owned homes – in 2004 and in 2005 as well – had reached a level which was just about 400,000 higher each year – higher in both 2004 and 2005 – than the level of permits and housing starts reached in 2000. While at the same time, the population of the United States was approaching 297 million by 2005.

Between the years 2000 and 2005, there had been an increase in population in the United States which totaled just about 14 million. That would be, fourteen million people added to the population of the United States over those five years (2000 to 2005). While at the same time, the number of housing permits for privately owned homes – and the number of housing starts for privately owned homes – had been just about 400,000 higher each of these two years – 2004 and in 2005 – as compared to the number of housing permits and housing starts for privately owned homes in 2000.

Let’s look at the effect the Financial Crisis had on the number of new homes that were being built in the United States…

Between the years 2008 and 2013, in each of these six years, the number of new housing permits for privately owned homes – in 2008, 2009, 2010, 2011, 2012, and once again in 2013 – failed to reach 1 million in any given year. Too few new homes were being built…

In 2009, new home starts for privately owned homes fell to just about 550,000 for the full year. This level of 550,000 new housing starts for privately owned homes in 2009 encompassed nearly 1.5 million fewer new home starts for privately owned homes than the marketplace had absorbed four years earlier, in 2005. While there had been just about 1.5 million fewer new homes built in 2009 than had been built in 2005, the population of the United States increased by 12 million over that same four-year period, between 2005 and 2009.

The United States has an increasing population, which is coupled to a highly inadequate number of new homes which are built each year, and added to the marketplace.

There is so much discussion today about the topic of inflation. No matter which news channel you prefer, we see that inflation is a problem that we all face. If we de-politicize the topic of inflation, and just focus on the topic of housing in relation to inflation, we see a significant imbalance that exists between supply and demand for new homes being added to the market. We also see how this imbalance in housing contributes to inflation. The imbalance we have – an imbalance which compounds annually – is compounded by the inadequate supply levels. This leads to escalating home prices, further complicating the task the Fed has in combating inflation.

The Fed is correct in ratcheting up interest rates to squelch overall demand in the economy. The Fed’s approach of higher interest rates is correct in combating inflation. The inflation challenge we have, and the demand level in the marketplace which contributes to inflation – each of which is being addressed by the Fed – are unfortunate ancillary consequences of an imbalanced housing market. A market imbalance which traces its origin to the limited supply of new housing which is being added to the market each year. A problem, which is coupled to higher demand levels for homes, each and every year.

The housing supply and demand challenges we face today lead to a situation where, each year, starting in 2006, we have continued to see too few homes being built and added to the market. To simplify our housing and inflation challenge, too few homes are being built each year. This leads to our housing problems. A housing problem which is present, which is current, and which is ongoing. Ongong, a full sixteen years after the number of new homes built each year drastically fell, on an annual basis, as a result of the Financial Crisis.

One point to consider when assessing the condition of today’s housing market would be the aggregated, annual, compounding, ongoing, every-year challenge one would find in any supply-and-demand equation, when supply – every year – is inadequate, in relation to demand. The topic of housing just happens to be the largest, most relevant, most highly-visible example of supply-and-demand that we have – that we can see – each and every day. So let’s look further at our inadequate housing supply levels…

New housing starts fell from a level whereby 2 million privately owned homes were built in 2005, to the much lower level of 1.3 million privately owned homes built two years later, in 2007. Seven hundred thousand fewer new homes were built in 2007 than had been built two years earlier, in 2005. While at the same time, the population of the United States increased by 6 million people during that same two year period – 2005 to 2007. This is an inadequate supply of new housing created, which was not satisfying demand.

One year later – in 2008 – new housing starts for privately owned homes fell further…dropping by another 400,000 for the year, to just over 900,000 new housing starts. In 2008, there were 1.1 million fewer new privately owned homes built than had been built three years earlier, in 2005. While at the same time, the population of the United States increased by 3 million people. A supply of new housing created, which is inadequate, in relation to home buyer demand.

As has been previously cited, new housing starts for privately owned homes fell to the very low level of 550,000 in 2009. New housing starts remained at a sub-600 million level, each year, through 2010.

In 2011, new housing starts for privately owned homes finally crept back up to over 600,000 for the year. Six hundred thousand new homes built in 2011…the 600,000 new homes built, still being an inadequate number of new privately owned homes added to the marketplace for the year, in relation to buyer demand levels.

Three years later –  in 2014 – the market would finally once again absorb one million new home builds for the year. One million privately owned homes were built in 2014…a new home build total which still had been one million fewer than 2005 levels.

In 2021, the market absorbed 1.7 million new permits for privately owned homes, while the market also took on 1.6 million new privately owned homes which had been built. The 1.7 million new permits, and the 1.6 million new housing starts…each total representing annual figures which were three-hundred thousand fewer (permits) and four-hundred thousand fewer (housing starts) than the market absorbed 16 years earlier.

According to U.S. census data, the total number of new homes built between 2012 and 2019 would be a new home build total representative of 3.9 million homes less than the total number of new households created in the United States during that same seven year time frame. The country is just about 4 million new homes short over the past seven years…and that is 3.9 million homes short, only taking into account housing demand coming through the creation of new households. This 3.9 million new home construction shortfall does not even take into account home buyers who have older homes, who would like to trade up, to a new construction home.

Multiple Listing Services

In the year 1908, the National Real Estate Exchanges was first established. During the first decade of the 20th Century, one of the early goals for the National Real Estate Exchanges was to facilitate an effective cooperation system which could be used by different real estate brokerages to sell real estate. In summary, these were the earliest days of what we today refer to as cooperation among REALTORS.

The National Real Estate Exchanges set out to find good ways to communicate the benefits of – and the saleable features for – individual properties which were available to be purchased through members of the National Real Estate Exchanges. This would have been real estate which was only able to be made available to the buying public through the earliest centralized efforts of cooperation undertaken by National Real Estate Exchanges members.

The National Real Estate Exchanges established innovative methods for member-brokers to effectively communicate – i.e.: sell – the features of the real estate they were marketing, to other member-brokers. These were other real estate brokers, that is, who were working at different real estate offices. The idea being, these could be real estate brokers who may very well have had the right buyers for the properties their colleagues were promoting.

The National Real Estate Exchanges, in the early days of the 20th Century, was committed to facilitating processes that could be used by member-brokers to sell real estate. While simultaneously developing processes through which those real estate sales could take place. Helping National Real Estate Exchanges member-brokers to sell their properties. Helping National Real Estate Exchanges member-brokers to locate properties for their buyers. To simplify: cooperation among members to sell real estate.

In the very, very beginning of the business of property-information-sharing, taking place a couple of times each month, what was then the dissemination of MLS property information would have looked like the physical delivery of property information – delivery by real estate brokers – to the actual doorsteps of other real estate brokers, at their brick-and-mortar real estate offices. The earliest stages of REALTOR cooperation, and the very earliest forms of the sharing of information about properties in the real estate industry. It looked very much like property information drop-offs: 1) head over to the local real estate office, 2) drop off information about properties which were available for sale.

Preceding this physical dropping off of property information at the front doors of real estate offices, in the late-19th Century, real estate brokers liked to meet in the offices of their local real estate trade associations. To discuss the properties the brokers were selling. The meetings which took place at offices of these local real estate trade associations were scheduled with an intent for the brokers to share information about their properties. And to sell their real estate. Real estate brokers who participated in these early-on MLS member meetings agreed to compensate one another…a collaborative effort undertaken to assist one another in the sale of member-brokers’ properties. Functioning something like this: Help me to sell my property, and I’ll help you to sell yours…

At these early-20th Century association meetings, brokers would have conversations with other member-brokers about the properties they had available. Discussing specific criteria applicable to the properties the brokers were hoping to sell. Sell, that is, by presenting their properties to their trade association colleagues; colleagues who would meet – regularly – at their local real estate trade association office. To find properties for their buyers. To sell their properties through their colleagues. Broker cooperation.

Today, there are just about sixty-thousand licensed REALTORS in New Jersey. Florida has over two-hundred twenty-thousand licensed REALTORS. This makes Florida – by far – the most highly-concentrated state, in terms of licensed REALTORS. There are in the range of two-hundred two-thousand licensed REALTORS in California. In Texas, there are over one-hundred fifty-thousand licensed REALTORS.

Using Texas as our example, those 150,000-plus Texas REALTORS access Texas MLS property information through a consortium of Texas multiple listing services. Each of which are managed and controlled by the Texas Real Estate Commission.

One of the oldest MLS’s in the state of Texas is the Austin Board of REALTORS Multiple Listing Service. The origin of the Austin Board of REALTORS goes all the way back to the year 1918…its establishment in Austin taking place a mere ten years after the earliest formation of what would go on to become the National Association of REALTORS. Today, the Austin Board of REALTORS Multiple Listing Service serves over 18,000 real estate professionals practicing their craft in eighteen Texas counties.

In the United States today, MLS’s are organized locally. And they are managed locally too. The importance of local MLS management – and local MLS control – can be found to be quite evident when one thinks about real estate listings in the state of Texas.

In Texas, MLS property descriptions may include pertinent information about – among other features such as kitchens, bedrooms, and property taxes – oil leases, mineral rights, as well as additional considerations which could be applicable to oil and gas interests. These would be Texas property details – about oil and gas, that is – which may be included (with relevance) in many Texas MLS property listings. As these property details about oil and gas in Texas would not be so relevant, for example, in Florida MLS property listings or in New Jersey MLS property listings. Because the energy industry would be more of a factor for real estate valuation in Houston, Texas, than it would be for property valuation in Holmdel, New Jersey. Or in Miami. Or in Los Angeles. Accordingly, the argument for localized MLS control and management.

The largest MLS in the state of Texas is the Houston Association of REALTORS Multiple Listing Service. Houston’s MLS was established in 1918. Serving over 164,000 real estate agents and brokers, the Houston Association of REALTORS Multiple Listing Service is the 10th largest MLS in the country.

The California Regional Multiple Listing Service is the largest multiple listing service in the United States. The California Regional Multiple Listing Service serves over 100,000 REALTORS, as well as 40-plus local associations, boards, and MLS’s.

Two other notably large – large, as measured against other MLS’s in the United States – are also domiciled in California: 1) the LA/Westside MLS, and 2) the California Regional MLS. The LA/Westside MLS serves over 16,000 agents and brokers in California.

The largest MLS in the state of New Jersey – and the 39th largest MLS in the country – is the Monmouth-Ocean Regional REALTORS Multiple Listing Service. Established in 1936, Monmouth-Ocean Regional REALTORS has over 11,000 members, serving home buyers and home sellers in two New Jersey counties: 1) Monmouth County, and 2) Ocean County.

The second largest MLS in New Jersey is the Garden State MLS. The Garden State MLS – established in 2010 – is the 89th largest MLS in the United States. Based in Parsippany, New Jersey, serving ten New Jersey counties, the Garden State MLS typically has nearly 19,000 real estate listings to choose from.

Founded in 1908, the National Association of Real Estate Exchanges became the National Association of Real Estate Boards eight years later, in 1916. By 1972, the National Association of Real Estate Boards officially became the National Association of REALTORS, the NAR.

Of note, the National Association of REALTORS is entirely distinct from, and independent of, the National Association of Real Estate Brokers – NAREB.

Founded in 1947 in Tampa, Florida, members of the NAREB would be REALTIST members, not REALTORS.

The NAREB is the oldest minority business association in the United States. The NAREB functions as an equal opportunity and civil rights advocacy organization…focusing their efforts on advancing the interests of African-American real estate professionals, consumers, and neighborhoods.

Headquartered in Maryland, the establishment of the NAREB goes all the way back to early-day efforts which were then undertaken by Black real estate professionals who had a goal to form their own real estate trade group. Incentivized to do so due to Black real estate professionals’ then-exclusion from NAR membership, due to race.

The first NAREB convention was held in New Jersey. In Atlantic City. In 1948.

Today, the National Association of REALTORS governs – and establishes policies for – most of the multiple listing services in the United States. NAR members belong to local real estate boards and associations which are strewn throughout the United States; of which there are about 1,600.

NAR members are REALTORS. With over 1.5 million members, the NAR is the largest trade association in the United States.