Homebuyers are much more active than they were before, says Compass CEO RObert Reffkin

Mortgage rates dipping now to a two-year low this week and that is giving potential homebuyers more spending power What's it doing to prices? We're going to talk about it joining us right now with more on the demand of the real estate market Robert Repkin founder and CEO of compass good morning to you Robert It's been a tough year or two in terms of or maybe more than that now three But how much is this really impacting things and and how do you see it going over the next 12 months? Yeah, and Andrew we have a very unique perspective. We're the largest brokerage firm by sold volume in the country We now have 35,000 agents and a compass are in contract listings are up 20% year-over-year And so we definitely see that the lower mortgage rates are bringing the buyers back And in terms of as you go around the country is there certain cities where this is making a material difference and And how much of a difference have you seen even the last month Well, it started about it's a two and a half weeks ago right after Labor Day We didn't see much activity over the summer when mortgage rates were coming down But at this level, I think that buyers are definitely much more active than they were before You particularly see the activity in the tech hubs a little less activity in the south a little less activity in Florida But overall there are more open houses we have open house traffic of 18% year-over-year Yeah, I will say I just anecdotally speaking I was surprised driving through a bunch of towns in North Jersey yesterday that actually had for sale signs where there was no inventory before But the weird thing is if you look at what's happening to the 10-year the 10-year yield has been rising Since the Fed cut rates, you know The the two-year they've got under control the ten years been rising and Mortgage rates are based off of that. So what what's the rate that is really important? And do you anticipate that rates will continue to come down? I mean the dream rate is 5.999 if we get a 5.99 that headline for a few months would bring out six point one six point two one okay, yeah, but it's still it's the lowest that it's been in over 18 months and Consumers react more to the change in the mortgage rate than the absolute rate itself and remember last year is 8.2 So buyers now know not to take 6.2 for for granted Hey Robert is your sense? Well, actually, let me ask you this are more of your buyers taking 30-year fixed mortgages 15-year fix that they're doing 10 years They're doing seven years. Are they doing arms five-year? What what's going on? 30 year is still the most prevalent But I what the biggest trend has been over the last year is the percentage of all cash buyers We have more all cash buyers in the luxury market than any point in the last 10 years and How much of that though? Do you think is it so these are not first time and these are not first-time buyers and and how many people are selling their? property to buy the next So the issue that we've had over the last two years is the lock-in effect 75% of homeowners were locked into 4% mortgage rates or below about two and a half years ago now It's approaching 50% so the issue should be gone in the next two years for all intents and purposes but that has prevented people from Selling because they they valued that low rate so much and that's why they get to five point nine nine Four to five point nine nine. That's not as much of a big deal compared to four to eight point two Last fall and You know buyers. I mean sellers. I was gonna say never want to take a loss But given this more this interesting sort of mortgage dynamic when people are trying to move Maybe they're trying to move for a new job and others by the way I think that's also this lock-in effect you're talking about has Prevented some of that is that easing up a little bit and has the psychology changed around that Well the context of the market right now is it's the lowest level of transactions Since 1995 for now two years in a row so four million homes sold last year. We've four million again this year Again lowest level since 1995 and the population is 26% bigger today than it was back then We are seeing more inventory inventories up 23% year-over-year I expect it to continue to grow as mortgage rates come down and the lock-in effect winds winds down But we still have 25% less inventory than we did this time in 2019 in the pre pandemic period