|Caryn Gardiner, CRS, REALTOR||11:47 AM (3 hours ago)|
What’s up everyone
Redfin CEO, Glenn Kelman said recently to expect more pain coming from the housing downturn.
In this recent article on Market Watch, Kelman talks about everything from affordability to investor activity to Canada’s latest ban on foreigners buying homes in Canada.
So, lets take a look at what he’s saying because some of it was – well, let’s say “interesting”.
Let’s dive right in.
After the 2 recent layoffs by Redfin, Kelman says he “Hopes things can get better from here” but “doesn’t think that’s happened yet”.
As we all know, Housing is simply unaffordable with the high housing prices and mortgage rates.
Kelman seems to sympathize with younger Americans priced out of the market.
“It’s just a roommate generation now, where people are staying with their parents, living in the basement or just shacking up with friends longer because home prices and rents have both gotten so far out of hand,” Kelman said.
Interestingly, rents have dropped for the fourth month in a row in December, Apartment List said in its monthly national rent report
“Rents decreased in December in 90 of the nation’s largest 100 cities,’ the report stated, “with prices down by 3% month-over-month.”
Kelman thinks that would be sellers are now opting to rent out their homes rather than sell them in this changing market, thus creating more rental inventory and helping to keep rents down.
I really find it interesting that Kelman seems to be sympathetic towards young people trying to buy their first house, and yet his ibuyer program – which failed btw- was made up of homes that young buyers could have bought if they were not in competition with investor cash.
Which leads me to his next subject – Investors.
Kelman said that investors are still on the prowl, and are scouring disaster zones for deals.
In 2021, investors bought 24% of all single-family homes sold nationwide, a Pew Trusts report said last year.
Kelman said that some out-of-town investors today are tracking damaged homes, such as in Florida, to find deals.
He said that when he recently visited one of the Redfin offices in Florida, his employees told him investors were calling as hurricane Ian made landfall.
“We were trying to tour properties that the National Guard had closed …that were literally submerged. We would have had to visit the property by boat,” Kelman recounted.
So, in other words, as people are suffering and losing their homes and everything in them, the vulture investors are trying to buy up the properties for future use. Buy low, rebuild, sell high.
Kelman is quoted as saying “Even as the regular residents of Florida are calling us, almost in tears, because they’re standing on their second-floor balcony and they’re up to their knees and water …there’s another group of people coming from all over the world who see this as an investment opportunity,”
Unlike regular buyers who most likely have a loan and need insurance, investors buy cash and therefore don’t have to worry about disaster insurance or flood insurance if they don’t want to .
I’m trying to figure out if Kelman is enabling the investors and therefore supporting them even if it hurts the locals, or if he is simply serving the areas Redfin works in and just reporting what’s happening.
I dug a little deeper and read some of Kelman’s tweets regarding the Florida situation. He did say that they are “giving employees time off to put their lives back together, but customers keep calling”
What do you guys think about this? Is Kelman part of the problem, or is he just a reporter of events happening.
Regardless, it sounds like Investors are still on the prowl for properties.
Which brings us to Canada.
In response to investors’ buying frenzy, Canada, which is also dealing with an unaffordable housing market, decided to take a hard stance.
Kelman said he was impressed.
At the start of 2023, the Canadian government enacted a ban on foreigners buying homes in Canada for two years. The law provides exceptions for purchases made by immigrants and permanent residents of Canada, CNN reported.
Kelman said he was “impressed and shocked at what Canada did”
“At one level, it’s just a massive self-inflicted wound to the economy,” he said. But on another level it’s “a real commitment to making housing more affordable for Canadians,” he added.
While the United States frets over a shortage in the supply of homes available for eager buyers, “Canada just said screw it. They pulled the cord,” Kelman said.
He goes onto say that the real esate industry in Canada will be terrible for a while, especially for would be sellers.
But ultimately he thinks “a new generation of Canadians is going to be able to afford a place, and so that was a pretty bold move,”
So what do you guys think of Glenn Kelman because on the one hand, he’s been a major player in the investor market and has contributed to the housing problem
But on the other hand, he seems to sympathize with the affordability crisis and seems to encourage drastic action to ultimately reconcile the housing market.
LEt’s look at Redfin’s data to see what’s happening in the housing market and where the trends are going
This data covers the 4 week period ending Jan 1
- New listings of homes for sale were down 22.4% from a year earlier, dropping to their lowest level on record.
- Active listings (the number of homes listed for sale at any point during the period) were up 18.6% from a year earlier, the biggest annual increase since at least 2015.
- Months of supply—a measure of the balance between supply and demand, calculated by dividing the number of active listings by closed sales—was 3.4 months, up slightly from from a week earlier and up from 1.8 months a year earlier.
- Homes that sold were on the market for a median of 42 days, up nearly two weeks from 30 days a year earlier and up from the record low of 18 days set in May.
- On average, 3.8% of homes for sale each week had a price drop, down sharply from 4.7% a week earlier and 5.7% a month earlier.
- The average sale-to-list price ratio, which measures how close homes are selling to their final asking prices, fell to 98% from 100.1% a year earlier. That’s the lowest level since March 2020.