The luxury market is back. That was the main message from Compass co-founder and CEO Robert Reffkin during a recent appearance on CNBC’s “Squawk on the Street,” where he talked about home price trends, mortgage rates and the rise and fall of the stock market.
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The luxury market is back.
That was the main message from Compass co-founder and CEO Robert Reffkin during a recent appearance on CNBC’s “Squawk on the Street,” where he talked about home price trends, mortgage rates and the rise and fall of the stock market.
Robert Revkin
“The seasonally adjusted annual rate of home sales was down 2% from last month, but up 12% from the November low, when sales were at a seasonally adjusted annual rate of 12%,” he said. “But what we’re seeing is the lower end of the market is slower than the upper end of the market. The million-dollar-plus market grew to 44% in April.
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Refkin said that while homebuyers at the lower end of the market are vulnerable to fluctuations in mortgage rates, those at the higher end of the market are more sensitive to stock market swings.
“The stock market is at an all-time high,” he said. “If your stock portfolio is at an all-time high, you don’t need low mortgage rates.”
As luxury buyers ride the stock market’s highs, mortgage rates need to fall below 6% to unleash pent-up demand from others.
“You can ask any agent and they’ll basically say, ‘You give me 5.999 [percent], I’ll give you the pre-pandemic craze again,” Refkin said. “We think anything with a 5 on it will make the market explode.”
“Now, if we can get to 6.5 [percent], we will create a very strong market,” he added. “I would say 6.5 [percent] will give you 4.7 [million] 4.9 million homes sold.
Despite a slower-than-average start to the spring market, Refkin said he expects May and June to be stronger as interest rates slide toward 7%. A change from 7.5% to 7% is enough to put more sellers on the sidelines and increase inventory levels in most markets.
“We’re seeing more sellers than buyers right now. There’s a 16% increase in inventory on the market and a 40% increase in million-dollar-plus domestic market inventory. “But buyers are resisting. “
Now more than ever, homebuyers are more sensitive to pricing and will simply ignore overpriced listings until sellers adjust.
“34% of the inventory on the market has seen price decreases. So sellers putting their homes on the market during this period need to understand how buyers are resisting,” he said. “If your house is priced reasonably in this environment, it will sell quickly.”
“But if not, it will stay on the market,” he added. “Then your prices will go down.”
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