Aspiring homebuyers losing out on bidding war after bidding war aren’t the only ones frustrated with the housing market.
Redfin CEO Glenn Kelman blasted the state of the national housing market on a call with analysts Thursday, blaming a historic shortage of homes for sale for skyrocketing prices all over the nation, not just in tech-heavy cities like Seattle and San Francisco. Since 2016, he said, the number of available homes per capita nationwide is down 33 percent over historical averages.
“No matter what we do to deliver more value to customers, the fundamental problem is that there aren’t enough homes to buy,” Kelman said.
In popular coastal markets, including Redfin’s hometown of Seattle, this problem is even worse. Seattle has been the hottest housing market in the nation for 18 straight months, with median sale prices approaching $820,000.
The market in Seattle has become so frothy that in April Redfin on its own had almost as many customers as there were homes for sale — and Redfin only has a 5 percent market share here.
Housing inventory is so low right now that Kelman and Redfin now view availability as the number one driver of the housing market. The stock market, wages, interest rates — none of these metrics matter as much as the fact there are no homes for anyone to buy.
And the reason for this shortage, according to Kelman: zoning laws that restrict housing supply.
“These laws, supported on the left and right are fiercely defended by well-meaning neighborhood associations that have sometimes started to act as a cartel to limit housing supply and keep prices high,” Kelman said. “It’s these laws, not market forces, that prevent builders from replacing parking lots, stripmalls and single-family homes with affordable high density condos and townhouses.”
Kelman said he doesn’t see a solution for this inventory crunch anytime soon. He said only about 900,000 homes are expected to start this year, a figure that is down 39 percent from historical averages.
This lack of affordable homes has created a lot of frustration and anger among buyers trying sometimes for months or years to find a place. This trend is creating a major dichotomy across the country between those who own and those who don’t.
“Credit has become cheap, but is limited to only half of America, making us a landlord nation, with one half of Americans renting out homes to the other half,” Kelman said.