Major Real Estate Brokerage Anticipates Challenging Market Conditions for the Rest of 2023

Amid a lack of optimism among U.S. home buyers and renters regarding the current market conditions, a prominent real estate brokerage leader has introduced another concern to the landscape of this year.

Redfin CEO Glenn Kelman emphasized the current stagnation in the market during an appearance on “The Claman Countdown” on Tuesday. “Sales volume has reached a standstill,” he noted. “Individuals who need to sell are hesitant due to their attachment to their mortgages. Prospective buyers, who would typically make purchases, are struggling with affordability.”

He went on to highlight that this impasse between buyers and sellers is poised to make 2023 a challenging year for the industry. “The result is a deadlock between buyers and sellers, which indicates that the real estate sector is in for a difficult period.”

A recently published Redfin report for this month revealed a surge in the proportion of million-dollar homes, with nearly one in ten U.S. homes valued at a minimum of $1 million—almost reaching the all-time record high of 8.6% recorded in June.

As elevated home prices persist, the construction of new homes continues to face obstacles, as indicated by recent data from the National Association of Home Builders (NAHB), which highlighted a six-point decrease in builder sentiment from July to August.

The convergence of high home prices and mortgage rates is putting pressure on the average homebuyer, who traditionally seeks larger living spaces.

“The immediate impact wasn’t evident from 2020 to 2022 since many Americans migrated to more affordable cities. However, with the resurgence of office-based work, we are observing more individuals attempting to afford cities like Seattle, Denver, Portland, Dallas, and facing difficulties,” the CEO elaborated. “Consequently, our primary focus should be on increasing housing supply.”

Nevertheless, there are purportedly bureaucratic hurdles imposed on builders by local governments and restrictions like “not in my backyard” (NIMBY) policies.

“It’s high time for local governments to take proactive measures, alongside state and federal counterparts, by removing unnecessary bureaucratic obstacles. This will allow us to perform our duties more efficiently and enhance housing supply,” emphasized NAHB CEO Jim Tobin during his appearance on “Varney & Co.”

Tobin clarified that the focus should be on expediting permitting processes, acknowledging that builders are willing to navigate through the necessary procedures. However, he raised a valid question, “Does the permitting process truly necessitate six months? Must it inevitably lead to budget overruns? Is a cycle of endless revisions essential?” These are the aspects causing frustration among our members and contributing to the slowdown in home construction.

In certain markets, the perception of what $1 million can purchase would likely astonish many Americans, according to Kelman.

“People are grappling with the notion that they need lottery-like luck just to afford a home and embark on family life. This reality poses a genuine obstacle to achieving the American dream,” remarked the Redfin executive. “Hence, the ultimate remedy lies in expanding housing inventory.”

In harmony with Tobin’s concerns, Kelman pointed out a remarkable shift favoring free-market policies at the local level.

“Despite the progressive agenda’s emphasis on housing affordability, most of the regulations designed for that purpose inadvertently push builders to seek alternatives elsewhere,” he observed. “People’s actions speak volumes. Even those who differ politically find common ground in their pursuit of affordable housing. Currently, the free market is demonstrating a greater capacity to fulfill this need than the majority of our existing regulations.”