The U.S. housing market is now tilted in favor of buyers who are resisting the high home prices demanded by sellers, according to Compass co-founder and CEO Robert Reffkin.
He said CNBC on Wednesday that 30% of goods on the market have fallen in price, which is more than at any time in the last 10 years. Meanwhile, the market saw a 16% increase in inventory.
“It’s a different environment. We are now seeing more sellers than buyers,” he said.
Reffkin said there was a bigger decline in prices in the South, which had previously seen sharp increases as Americans fled more expensive states during the pandemic.
Florida’s housing market has also been hit by soaring home insurance costs, which are up 40% year over year and putting pressure on asking prices, he explained.
“Sellers putting their homes on the market during this period should be aware of buyer resistance,” Reffkin said. “If your home is priced well in this environment, it will sell quickly. But if this does not happen, it will remain on the market. Then you will have to lower the price. Then buyers will see that the price has decreased. The sharks will come out and it will hurt you even more.”
Buyers in the luxury home market have also received a boost from the recent stock market rally, he told CNBC.
While rising mortgage rates earlier this year combined with high home prices are further reducing housing affordability, this is less of a concern for buyers enjoying the wealth effect of their investments.
“You don’t need lower mortgage rates if your stock portfolio is at an all-time high,” Reffkin said.
His comments follow a report released earlier this month that showed Texas and Florida dominate the top destinations for buyers in the US. New Zillow Market Heat Indexwhich takes into account the proportion of homes that have an accepted offer within 21 days or less, the proportion of homes that have their prices reduced, and interactions with active listings on the website and app.
“Prospective buyers who witnessed intense competition in the Texas and Florida solar markets earlier in the pandemic are seeing no such craziness now,” Zillow says.
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 that forecast depends on the Federal Reserve cutting rates, he cautioned, warning that sales could slow or even decline altogether.
At this point, he’s not ready to “have a party here and drink champagne,” Kelman said. “It’s just a little better, a little better—and that’s worth celebrating.”