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The CEO of Redfin, Glenn Kelman, believes the housing market has reached its lowest point, in spite of its dire condition.
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Mortgage rates and home prices are prohibitively high, negatively impacting affordability for potential homebuyers.
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Kelman forecasts a prolonged sales slowdown and the continuation of a grim market landscape.
The only comforting aspect regarding the US housing market at present is the belief that it can’t worsen based on Redfin CEO Glenn Kelman’s statements.
Kelman attributes the market’s difficulties to challenging conditions over the past year with affordability reaching its lowest points according to Goldman Sachs’ housing affordability gauge.
High mortgage rates are escalating the cost of borrowing while discouraging sellers from listing their homes, exacerbating supply shortages and escalating home prices despite falling demand due to high rates.
Just last month, the median sales price for a single-family home was closer to its all-time-high at $420,846, while mortgage rates linger above 7%.
Interviewed by CNBC, Kelman lamented, “The housing market is just taking a beating because affordability is at a four-decade low.”
Current statistics show a drastic decline in existing home sales which experts attribute to low inventory levels and a slowdown in new listings, a situation rarely seen during previous market downturns.
Further analysis suggests affordability won’t improve until mortgage rates decrease, a scenario unlikely to materialize over the next year due to the hawkish measures taken by central bankers to combat inflation.
Fed officials’ aggressive interest rate hikes contributed to mortgage rates reaching two-decade highs. Market projections indicate an estimated 44% probability for rates exceeding 5% by 2024. Despite this, Redfin anticipates a slight decline to around 6% by the end of 2023.
This story was originally published in September 2023.
Read the original article on Business Insider
