The U.S. housing market is now tilted in favor of buyers, who are resisting the higher home prices demanded by sellers, according to Robert Rifkin, co-founder and CEO of Compass.
Tell CNBC on Wednesday 30% of inventory on the market has seen price declines, more than at any time in the past 10 years. At the same time, the market saw a 16% increase in inventory.
“It's a different environment. We're now seeing more sellers than buyers,” he said.
Rifkin said there were more price cuts in the South, which had seen sharp increases earlier as Americans left more expensive states during the pandemic.
Florida's housing market has also been hurt by rising home insurance costs, which are up 40% year-over-year and impacting asking prices, he said.
“Sellers who are putting their homes on the market during this period should be aware of how buyers are holding back,” Rifkin said. “If your home is priced well in this environment, it will sell quickly. But if not, it will sit on the market. Then you will have to take a price drop. Then buyers will see that they got a price drop. The sharks will come out.” And it will hurt you more.
Buyers at the low end of the housing market have been supported by recent gains in the stock market, he told CNBC.
While the rise in mortgage rates earlier this year combined with rising home prices further eroded affordability, this is not a concern for buyers who enjoy the wealth effect of their investments.
“You don't need low mortgage rates if your stock portfolio is at an all-time high,” Rivkin said.
His comments come on the heels of a report released earlier this month that showed Texas and Florida dominated the best locations for buyers. Zillow's new Market Heat Indexwhich takes into account the share of homes that received an accepted offer from a buyer in 21 days or less, the share of homes that had their prices reduced, and engagement with active listings on the website and app
“Prospective buyers who saw intense competition in sunny Texas and Florida markets earlier in the pandemic are seeing no such frenzy now,” according to Zillow.
Redfin CEO Glenn Kellman also sounded optimistic about the housing market in the latter half of 2024 after it hit “rock bottom” in the first quarter.
But he cautioned that these forecasts depend on interest rate cuts by the Federal Reserve, warning that sales could slow or even decline without any reduction.
Right now, Kellman said, he's not ready to “have a party here and drink a bunch of champagne.” “It's a little better, it's a little better, and that's noteworthy.”