A new study funded by the National Association of Realtors concludes that competition for customers among real estate brokerage firms in local housing markets across the nation is strong.

The study, compiled by researchers at Pennsylvania State University, looks at 12 local real estate markets and draws data from multiple listing services, interviews and secondary sources.

A new study funded by the National Association of Realtors concludes that competition for customers among real estate brokerage firms in local housing markets across the nation is strong.

The study, compiled by researchers at Pennsylvania State University, looks at 12 local real estate markets and draws data from multiple listing services, interviews and secondary sources.

“The central finding is the intense competition in local real estate markets,” Professor Steve Sawyer of Penn State’s School of Information Sciences & Technology writes.

The report is timely in the continuing battle between the U.S. Justice Department and organized real estate. Competition in the real estate industry has come under fire after the DOJ filed an antitrust lawsuit last week against the National Association of Realtors over its policies for online listings. The DOJ charges that the powerful trade group’s policies restrain competition by obstructing real estate brokers who use Web-based systems to offer consumers lower costs.

NAR says its policy for Web property listings is “fair, pro-consumer, pro-competitive and accommodates innovation.”

The DOJ and the Federal Trade Commission will hold a public forum to discuss competition in the real estate industry on Oct. 25, in Washington, D.C. The forum will focus on the real estate transaction, the multiple listing service, and private and state actions that affect competition among brokers.

The Penn State study, while focusing on a small sample of real estate markets, concludes that inter-firm competition is fierce within local housing markets.

In 10 of the 12 markets examined in the Penn State study, market share held by top firms was found to be shrinking.

Meanwhile, franchised firms had a larger percentage of market share than other locally owned firms in seven of the 12 markets and in four of the six largest markets studied.

The study also noted that there is steady to substantial growth in each of the 12 markets, and that smaller markets are seeing the least growth.

“This high level of competition in real estate is striking given that the combined volume dollar growth across the many local real estate markets would suggest that competition might be lessened,” Sawyer wrote.

As home sales and housing prices have soared in markets nationwide over the last few years, so have the number of Realtors. The National Association of Realtors now has about 1.1 million members, a record high for the trade group.

Markets included in the Penn State study were St. Louis, Mo.; Tampa, Fla.; Columbus, Ohio; Madison, Wis.; Lima, Ohio; Baltimore, Md.; Culpepper, Va.; Cumberland, Md.; Charlotte, N.C.; Easton, Md.; Hagerstown, Md.; and Wilmington, N.C.

The study suggests that increased consumer access to real estate information is redefining how consumers engage real estate services and may be contributing to growth of real estate markets even as it drives competition.

Increased access to housing information on the Web may be “a critical factor in the current surge in house prices,” the study suggests. “Buyers and sellers are better informed, and this is reflected in their confidence in the housing market.”

In collecting data for the 12 markets cited in the study, researchers interviewed five people from the local real estate markets, including one from St. Louis, one from Madison, Wis., one from Tampa, Fla., and two from Lima, Ohio.

Interviewees noted that competition among agents – even those affiliated with the same brokerage company – for a listing is fierce, researchers said. Increased access to real estate information has armed consumers with more knowledge and raised their expectations for the services provided by real estate agents.

“The ability for consumers to access real estate information about their markets is raising the stakes for real estate agents and brokers,” the study noted.

The Penn State researchers also found no numerical evidence of discount brokerage or for-sale-by-owner sales increasing even in the fastest growing of the 12 local markets studied. The discount brokerages involved in the areas accounted for less than one percent of the total market share.

The author noted that few patterns of competitive activity are common to all local real estate markets. Smaller markets are more concentrated than larger markets, and there are market share position changes among the top firms in each market.

In St. Louis, one firm has a dominant share of the local real estate market, the study found. However, the researchers said they learned through interviews that the unidentified firm competes in most of the micro-markets that make up St. Louis, and in each of the micro-markets there are one or two other firms with substantial percentages of market share.

Meanwhile, in Tampa, four brokerage firms affiliated with a single national franchise compete with each other and other locally owned firms and their year-to-year market shares vary, the study found.

In Madison, brokerage companies affiliated with national franchises have a smaller share of the total market than other locally owned companies, researchers said.

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Send tips or a Letter to the Editor to jessica@inman.com or call (510) 658-9252, ext. 133.

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