Source: Market Watch —
The real-estate sector is in crisis amid the housing downturn. Expect more pain to come before things start to normalize, one housing chief says.
“There’s going to be a terrible consolidation,” Glenn Kelman, CEO of real-estate brokerage Redfin RDFN, +4.39%, told MarketWatch in a recent episode of Barron’s Live.
But he added a caveat: “I do think it’ll be good for the industry.”
During the pandemic years of 2020 and 2021, many Americans jumped into the real-estate industry, Kelman recounted, so many that “we had more real-estate agents than listings by 2021.”
At this point, there are about million-and-a-half realtors trying to sell roughly over five million homes, meaning that they’re only doing five or six deals a year, which “isn’t a productive, fulfilling life,” Kelman said.
Some of the excess capacity in the sector has been released. In 2022, Redfin went through layoffs twice, responding to market conditions. Compass, another brokerage, announced a third round of layoffs on Thursday, to reduce expenses.
“I hope the industry is close to [becoming] right-sized and that things can get better from here,” Kelman said on Wednesday. “I don’t think that’s happened yet.”
‘It’s just a roommate generation now’
But for many Americans, high housing prices and mortgage rates make homeownership unaffordable. The Redfin chief executive sympathized with younger Americans priced out of the market.
“It’s just a roommate generation now, where people are staying with their parents, living in the basement or just shacking up with friends longer because home prices and rents have both gotten so far out of hand,” Kelman said.
There is some relief for those renters, as rents have fallen over the past few months.
;
