THE leader of one of the nation’s largest real estate companies has sounded the alarm about the housing market.
Redfin CEO Glenn Kelman said the situation is currently at “rock bottom” and he isn’t sure when conditions will improve.
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His comments – which pinned the problem on high-interest rates, low supply, and generational wealth imbalances – came during an appearance on the Fox Business program The Big Money Show.
“You’ll have to ask the (US Federal Reserve) when the market’s going to get better because it seems very unlikely that interest rates will ease by the end of this year,” Kelman said.
“So, the only real question is whether we’re going to catch a break entering the home buying season of 2024.
“But I think most people have written off the 2023 home-buying season.”
Going into summer, Kelman said some buyers had adjusted to high-interest rates and were ready to move forward with a purchase.
However many of these transactions were thrown off when interest rates were raised again.
“We saw 20 percent to 25 percent of deals being canceled over the past four to five weeks because rates cleared 7.5 percent,” Kelman said.
However, the CEO noted that the issue goes much deeper.
“So many people have stopped believing in the American dream,” he said.
“One in five millennials believe they will never own a home.
“And if you don’t have that conviction that you’re going to get your piece, it’s really hard to invest in the long term. It’s really hard to believe that society is going to work out for you.”
Kelman said the nation needs to figure out a way to quickly build affordable housing at scale so younger people can pursue property ownership.
“Home affordability is a four-decade low,” Kelman said.
“Prices are up 40 percent since 2019, and now interest rates have compounded that.”
He also noted that younger generations are struggling more than their parents.
“I think the real issue for us is that this generation owns less than 20 percent of American wealth entering home-buying age,” the CEO said.
“I’m talking about the millennial generation, whereas baby boomers own more than 30 percent of American wealth.”
Red states have done a better job of building more houses through “low regulation” and “partnership(s) with builders,” Kelman said.
“Places like Orlando and Las Vegas have just been building like crazy, and that’s where everyone’s moving,” the CEO said.
He added that this imbalance has triggered a large-scale migration to those locales
“It used to be that about 18 percent of our customers were relocating,” Kelman said.
“Now it’s more than 25 percent of our customers are relocating.
“That continued through the pandemic. It’s not going to stop.”
