During the pandemic-induced year, the US housing market was boiling with housing activities as it recorded an all-time high in terms of home sales and housing activities in general. However, the already hot housing market could heat up further “if more homes are put up for sale,” according to Redfin CEO.
“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 said. “Today, we are definitely inventory-constrained. There aren’t enough homes for people to buy.”
Through home sales, the housing market has been a point of economic strength in 2020 despite the massive havoc wreaked by the pandemic. The housing market was evidently at the frontline in leading the recovery process for the economy, and it continues to do so. Experts argue that real estate activities were able to thrive amid the pandemic due to the increased geographic flexibility of remote work accompanied by the historically low mortgage rates.
Redfin, a real estate brokerage firm, recorded a 17.4% growth in total income for the first nine months of 2020 compared to the same period in 2019. On the other hand, its stock increased by more than 400% since its decline in the early months of the pandemic.
“Every week, I think it can’t get crazier. It gets crazier,” Kelman said, referring to the housing market, acknowledging that the heat can’t be sustained infinitely. “[Mortgage] rates are below 3%. That can’t last forever, but we think it can last through 2021.”
“We know, though, this is a cyclical business. There’s going to be a bust if there’s a boom,” Kelman adds. “It’s just a matter of when. We don’t think it will happen soon.”
Kelman, whose Seattle-based brokerage firm began operation in 2006, also acknowledges that the current real estate market’s strength is nothing like they ever experienced before, not even similar to the mortgage bubble of the early 2000s. “Credit standards are much tighter than they were,” he stated.
“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 states. “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.”