The scorching housing market throughout the coronavirus pandemic may warmth up additional if extra properties are put up on the market, the CEO of actual property brokerage Redfin advised CNBC on Monday.
“If we see people get more comfortable letting others into their home, we’re going to see more inventory on the market, and that’s what will drive sales volume,” Glenn Kelman mentioned on “Closing Bell.” “Today, we are definitely inventory-constrained. There aren’t enough homes for people to buy.”
Home gross sales have been a degree of financial power regardless of the important injury attributable to the pandemic, pushed partly by the increased geographic flexibility of distant work.
Redfin’s complete income for the first 9 months of 2020 is up 17.4% in contrast with the identical interval final yr. Since its March low, Redfin’s inventory is up greater than 400%. Additionally, the iShares U.S. Home Construction ETF is up greater than 125% since its pandemic-era backside in mid-March.
“Every week I think it can’t get crazier, it gets crazier,” Kelman mentioned of the housing market. Still, he acknowledged the warmth can’t be sustained infinitely. “[Mortgage] rates are below 3%. That can’t last forever, but we think it can last through 2021,” he mentioned.
“We know, though, this is a cyclical business. There’s going to be a bust if there’s a boom,” Kelman added. “It’s just a matter of when. We don’t think it will happen soon.”
Kelman, whose Seattle-based firm launched its providers in 2006, mentioned the power in the present housing market will not be just like the mortgage bubble of the early 2000s. “Credit standards are much tighter than they were,” he mentioned.
“What’s driving this boom is true demand, that people want to live elsewhere. There’s less speculation. There’s less predatory lending. This isn’t just a finance-fueled boom,” Kelman mentioned. “It is driven by a true change in consumer behavior, where people want to go to Montana or, at least, Sacramento or Tucson rather than living in the major urban centers.”