While the housing market continues to get battered by rising interest rates and sky-high prices, Redfin’s CEO warned that homebuyers are feeling the inflation squeeze as the U.S. is “headed for recession.”
“People who are looking to buy homes right now are still driven by the same factors,” Redfin CEO Glenn Kelman told “Cavuto: Coast to Coast,” Friday.
“Rents are up 15% year-on-year. They’re really feeling the squeeze…I just think we’re headed for a recession.”
According to a Fox Business report, Kelman’s comments come on the heels of his real estate company laying off 8% of its employees due to home demands falling nearly 20% short of expectations in May. The CEO announced the firings in a public post on the company’s website, Tuesday.
“We tried to cut ahead of where we think the market is going, and we did it as a last resort, but it’s the right thing to do,” he explained.
Meanwhile, the Federal Reserve on Wednesday raised rates by 75 basis points for the first time in nearly three decades to tackle red-hot inflation.
Kelman forecasted years of fewer home sales as Americans continue to navigate the “crazy” market.
“It’s a tough call just because the market has never been so crazy. But we expect the next few months to be very soft,” he predicted.
“If you look at pending sales, they’re down about 8%, but demand is off about 15%…that’s a leading indicator that sales will continue their retreat because people’s stock portfolios have been wiped out.”
He continued to say that the sudden rise in mortgage rates is up nearly 50%, which will “price many people out of the market.”
The real estate brokerage had a “really tough time” in February and March getting any offers “to stick,” according to the Redfin CEO, as the Seattle-based company saw “fewer people bidding on homes.”
Kelman said he doesn’t expect the housing market to “crash.”
“There will be an uptick in foreclosures, but it will be off a very low number. We have seen no distress in the market whatsoever,” he noted.
“I think these credit-driven, forced sales that really rip the bottom out of the market haven’t surfaced yet, and I don’t expect they will.”