While U.S. home buyers and renters don’t have much optimism about the market right now, one real estate brokerage giant added another woe to this year’s landscape.
“The market is at a standstill,” Redfin CEO Glenn Kelman said on “The Claman Countdown” Tuesday. “Sales volume is absolutely rock bottom. The people who need to sell won’t do it because they don’t want to give up their mortgage. The people who normally would buy can’t afford it.”
“So buyers and sellers are at a standoff,” he continued, “and it means that the industry is just going to have a tough 2023.”
A new Redfin report released this month found the share of million-dollar homes is on the rise, as nearly 1 in 10 U.S. homes are worth at least $1 million, close to June’s all-time record high of 8.6%.
As home prices remain elevated, new home construction stays struggling as recent data from the National Association of Home Builders (NAHB) indicated builder sentiment dropped six points from July to August.
The combination of high home prices and mortgage rates puts “a real crimp” on the average homebuyer who typically moves into a bigger space.
“We didn’t feel the effect immediately through 2020 to 2022 because so many Americans have moved to less expensive cities. But now, as there is more return-to-the-office, we are seeing more people trying to afford a Seattle, a Denver, a Portland to Dallas, even, and struggling to do it,” the CEO explained. “So what we need to do is just build more houses.”
But there’s allegedly “red tape” put around builders by local governments and “not in my backyard” (NIMBY) policies.
“It’s time for local governments to step up and state governments and federal governments, get their red tape out of the way, let us do our jobs and put more supply in the market,” NAHB CEO Jim Tobin also said Tuesday on “Varney & Co.“
“It’s permitting times,” he clarified. “Our builders are happy to go through the permitting process, that’s part of the land development process. But does it really need to take six months to do it? Does it really need to take cost overruns? Does it need to take revision after revision after revision? Those are the things that drive our members crazy. Those are the things that slowed down the construction of homes.”
Kelman expressed that many Americans would be “shocked” to see “how little” $1 million buys in certain markets.
“People feel like they have to win the lottery just to be able to buy a home and start a family. And that is just a real challenge for the American dream,” the Redfin exec said. “So the only solution to that is obviously more inventory.”
Echoing similar concerns as Tobin, Kelman pointed out there’s been a “real vindication” at the local level of free market politics.
“Despite how important it is to the progressive agenda to make housing more affordable, almost all the regulations to do that just force builders to build elsewhere,” he said. “People are voting with their feet. Even people who are politically in a different place with their pocketbook want an affordable house. And right now, the free market is able to deliver that better than most of the regulations we have.”