"Sellers are realizing that we are at the top of the market and are eager to get their homes listed and sold." This was a direct quote from the CEO of Redfin, Glenn Kelman. I like this guy... in fact he made 4 major points about housing that is worth looking at. Keep reading...
I loved this interview
The CEO of Redfin, Glenn Kelman, was answering CNBC's Wilfred Frost when he asked this about the residential housing market. "A little bit of a slow down, but nothing major... what's causing that?"
A return to normalcy
First, he said that there was a "return to normalcy". I asked myself... what is normal Mr Kelman? Oh, you mean when Buyers and Sellers negotiate to exchange ownership of a property at a fair market value? Yeah, that is normal. We are getting there fast.
Demand has slackened
He goes on to state that "demand has slackened somewhat but it's still strong." He continues with "what's NEW is the big increase of new listings. New inventory is up 10% and we haven't seen an increase in inventory in a long time." -- This is a major statement and something is going on. He continues...
We are at the top of the market
This one should hit everyone reading this. One of the country's top Real Estate CEOs just said that we are at the top of the market! He states, "It used to be hard to persuade sellers to sell, they wanted to wait to make more money, but Sellers are realizing that we are at the top of the market and are eager to get their homes listed and sold." Let's be real shall we? Sellers are starting to freak out that they may be missing the boat and the market is starting to flood with more reasonable listings.
It's easier to put deals together
As I mentioned earlier, there is an urgency amongst Sellers now... more than I've seen in quite some time. Kelman puts the cherry on top by saying, "It's easier to put deals together than it has been in a year." I can personally confirm this statement. It hasn't been since early last year that buyers have had any chance to negotiate. Now, I'm seeing price reductions, seller concessions and even contingent offers being accepted with 90 day closing dates! (gasp)
He's not the only one
Zillow President Susan Daimler corroborated his statements saying that their data shows inventory has risen month over month for the last 4 months (data through Aug 2021) and that there is a "healthy rebalancing coming" which will "make the market more sustainable". Wait it's not here yet? p.s. You know how something gets balanced right? It's swings one way too far, then the other way (a correction) and then it balances out in a clear direction.
In my opinion, this housing market was facilitated by the immense shoveling of government funds into the mortgage markets pouring gasoline on a white hot fire. All that with an all too transparent plan of sustaining the very system they almost collapsed back in March of 2020. (ready my blog article about that HERE).
But here we are at the tail end of 2021... it's been a good run for housing and mortgage rates, but the Fed knows they over-cooked it. So what happens to housing when the largest purchaser of mortgage securities decides it's finally time to leave the dance and go home?
I'll tell you what it's going to be like. The housing market is going to be like 4th quarter at an Eagles home game with 8 minutes remaining and your team is down 27 because Brady just through Gronk another TD across the middle. Everyone starts to get up and walk out and you think to yourself, well shoot, this game is over, and look at all these people starting to leave. If we don't leave now, we'll be stuck behind everyone. I need some analogy work, but you get my point.
The question is... will the Fed continue to prop up the stock market and housing by their manipulation of monetary policy? I have mixed feelings, but as my Dad would say "the proof is in the pudding". So, what are the facts? Rates are moving higher, there is more home inventory and the overall housing market has visibly shifted. Not only that, but two major CEOs have stated that their data shows a slow-down.
The real answer to this question is to see how the Fed reacts to factors that show hinderance to their prescribed economic growth. Remember that 3 Trillion dollar price tag that has to be dealt with? Another story for another day.
In the meantime, enjoy the normalizing of the housing market and the comfort of knowing we won't see too massive of an interest rate swing for a while, nor a housing market crash. The moral of the story is: Don't worry, Uncle Sam has got your back... for now.