Compass co-founder and CEO Robert Reffkin said the U.S. real estate market is currently tilting in favor of buyers, who are resisting the high housing prices demanded by sellers.
He told CNBC on Wednesday that 30% of the inventory on the market has seen price declines, a steeper decline than at any time in the past 10 years. At the same time, market inventories increased by 16%.
“It’s a different environment. We’re seeing more sellers than buyers now.
Refkin said the price cuts were deeper in the South, which had previously seen prices rise sharply as Americans left more expensive states during the pandemic.
Florida’s real estate market has also been hit by soaring home insurance costs, which have increased 40 percent annually, putting pressure on asking prices, he explained.
“Sellers putting their homes on the market during this period need to understand how buyers are resisting,” Refkin said. “If your home is priced reasonably in this environment, it will sell quickly. But if not, it will Stay in the market. Then you have to lower your price. Then buyers will see the price drop and the sharks will hurt you more.
He told CNBC that the recent stock market rally has also boosted buyers in the high-end real estate market.
While soaring mortgage rates earlier this year, coupled with high home prices, further eroded affordability, this is less of a concern for buyers enjoying the wealth effects of their investments.
“If your stock portfolio is at an all-time high, you don’t need to lower your mortgage rates,” Refkin said.
A report released earlier this month showed that Texas and Florida hold the top spot for buyers in Zillow’s new Market Heat Index, which takes into account homes that accepted offers from buyers in 21 days or less. Proportion of homes, proportion of homes with price reductions, and engagement with active listings on the website and app
“Prospective buyers who saw intense competition in the sunny Texas and Florida markets early in the pandemic are not seeing that much competition now,” Zillow said.
Redfin CEO Glenn Kelman also expressed optimism about the housing market in the second half of 2024 after bottoming out in the first quarter.
But he cautioned that the outlook hinges on a rate cut by the Federal Reserve, warning that without a rate cut sales could slow or even fall.
Kelman said he’s not yet ready to “throw a party here and drink a bunch of champagne.” “Just a little bit better, a little bit better — that’s something to note.”
