The head of the Seattle-based brokerage talks about the market’s trajectory, the outlook for first-time buyers, and what it will take to fix the shortage of home inventory.
LOS ANGELES — The housing market is slowing as would-be buyers struggle with rising borrowing costs and a low number of properties on the market. Many economists forecast sales will weaken further in 2019.
Glenn Kelman, CEO of Seattle-based real-estate brokerage Redfin, spoke to The Associated Press about the state of the market.
Q: How do you see the housing market’s trajectory next year?
A: The housing market is probably the weakest sector of the U.S. economy, and the $64,000 question is just whether housing is going to bring down the U.S. economy or the U.S. economy is going to bring housing back up. People have good jobs and corporations are making money. If the stock market rebounds, you’re going to see a reasonable housing market next year. It will still be soft, but it won’t be catastrophic. If, on the other hand, housing undermines consumer confidence generally; people start feeling poor because their home has declined in value; and a huge sector of the economy for building and selling housing enters a recession, then you can see the start of a much larger cycle.
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Q: Do you see first-time buyers having an easier time?
A: They’re going to have a harder time. There’s so much inventory that’s rate-locked. The spread between 3.5 percent and the current mortgage rate, as that widens, it will just be a stronger and stronger incentive for people to hold on to their homes forever.
Q: What’s it going to take to fix this shortage in affordable housing?
A: I view much of our economic policy as a way to defend the wealth of baby boomers. People get up in arms about protecting the value of their home and making sure that it increases. When the city wants to increase density, everybody living in a single-family home, who is usually between the ages of 40 and 65, absolutely freaks out and prevents that construction.
And in some ways that’s just acting as a cartel where the people who hold the good prevent more supply of that good from reaching the market and maintain artificially high prices. What I’m hopeful about is just this idea that Americans aren’t trapped in a single city. If you go to almost any city hall, the only pocketbook issue that the middle class is up in arms about is the cost of housing. And every mayor is trying to solve that problem. And the cities that are solving it best are in the middle of the country, so that’s why you’re seeing this migration from coastal cities into the center of the country.