The Covid-19 pandemic-fueled housing boom is expected to carry over into 2021, says Redfin CEO Glenn Kelman. That’s good news for flippers who have their sights set on the New Year.
House hunters who weren’t able to snatch up a property this year have greater expectations for the next. “There are so many people now who have decided they’re not going to be able to buy a home by year-end who expect to do so going into 2021,” said Kelman in a CNBC interview late this month.
According to the National Association of Realtors (NAR), existing home sales rose 9.4 percent in September, which exceeded expectations. The median purchase price increased nearly 15 percent year over year.
The Redfin CEO said that although this rate of increase and demand isn’t sustainable it might be the norm for now. “There’s no way it can last forever. This level of demand is absolutely insane. I would expect it to last into 2021, at least…I do think we’re going to see this for some time.”
The demand for housing is being fueled by affluent professionals who are able to work from home, Kelman explained, which has afforded them the option of moving from major metro areas into more remote suburbs, or purchasing vacation homes “and then taking a permanent vacation where they’re working from those homes.”
He credited low mortgage interest rates for the major role they have played in motivating buyers, as Paces Funding has noted in previous posts in August and September. Kelman warned, however, that the rates won’t remain low.
“Part of what is fueling this boom is that the economy has just split into two,” he said. “Rich people are able to access capital almost for free, so, of course, they’re going to use that money to buy homes.”
He continued, “There’s just another group of Americans who are still struggling, who can’t access the credit because we’ve raised credit standards, and you have high unemployment. I just think those two trends, at some point, have to collide.”
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