Compass CEO Robert Reffkin believes that a return to 5%-5.5% mortgage rates will entice sellers to list their properties and bring back “the pandemic craze.”
“We need to have an unlock of inventory which will probably happen when mortgage rates get to 5%-5.5% in a sustainable level,” Reffkin said during a CNBC appearance on Wednesday. “At that point, I would expect there to be a flood of inventory in the market and it will feel like the pandemic craze all over again.”
In the current market, the balance of power tilts heavily in favor of sellers as demand remains higher than supply. Buyers have accepted the 6% or 7% range mortgage rates and add pressure to an already tight inventory. Observers have attributed this to the “lock-in” effect, with 30% of homeowners locked into rates at 3% or below and 70% locked in at 4% or below.
Reffkin said some homebuyers are already bringing their rates down to the 5% range through buydowns.
“There are definitely incentives and buydowns bringing mortgage rates down by two points in a number of our markets,” he said.
“It’s a great time to be a homebuilder because they’re benefiting from the price increase that are a result of low inventory,” Reffkin said. “Homebuilders are meeting [buyer] demand. Last month, we saw the largest amount of housing starts since 2016, and that’s because homebuilders, their sentiment index improved for the first time in over a year.”