The hot housing market during the coronavirus pandemic could heat up further if more homes are put up for sale, the CEO of real estate brokerage Redfin told 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 said on “Closing Bell.” “Today, we are definitely inventory-constrained. There aren’t enough homes for people to buy.”
Home sales have been a point of economic strength despite the significant damage caused by the pandemic, driven in part by the increased geographic flexibility of remote work.
Redfin’s total revenue for the first nine months of 2020 is up 17.4% compared with the same period last year. Since its March low, Redfin’s stock is up more than 400%. Additionally, the iShares U.S. Home Construction ETF is up more than 125% since its pandemic-era bottom in mid-March.
“Every week I think it can’t get crazier, it gets crazier,” Kelman said of the housing market. Still, he acknowledged the heat cannot be sustained infinitely. “[Mortgage] rates are below 3%. That can’t last forever, but we think it can last through 2021,” he said.
“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 company launched its services in 2006, said the strength in the current housing market is not similar to the mortgage bubble of the early 2000s. “Credit standards are much tighter than they were,” he said.
“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 said. “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.”