Gary Keller delivered his annual State of the Housing Market keynote on Monday, musing on sales trends and market competitiveness — while offering a few quips about Compass and CoStar.
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Gary Keller couldn’t care less about Compass. Or Anywhere. Or Redfin. Or Rocket Mortgage. He does, however, care some about Homes.com and Andy Florance, whom he “truly likes” and considers a “heck of a competitor.”
“The Compass-Anywhere merger was all over the news. It’s now going under scrutiny a little bit because it was apparently the fastest approved merger of giant businesses in history, and they’ve now tracked that to some back-room relationships that greased the wheels…” Keller said, drawing noise from an audience of more than 10,000 agents at KW’s annual Family Reunion conference on Monday. “Do we care? I don’t. I mean, I wouldn’t have done it.”
Commenting on other hot industry topics, Keller indicated that he’s watching to see who wins in the conflict between Homes.com parent CoStar and that company’s investors — though Keller said he does like CoStar CEO Andy Florance.
Regarding Rocket, Keller said the mortgage giant’s acquisition of Redfin is all about “trying to connect leads to mortgages” rather than increase Redfin’s sales volume.
Keller weighed in on private listings as well, saying the battle “is interesting,” though his opinion is that “the consumer is always right. The buyer is always right; the seller is always right.”
Otherwise, the only thing on the Keller Williams founder’s mind is the current housing market — and exactly how he’ll lead the franchisor’s 157,000 affiliated agents through it.
Gary Keller | Credit: KWRI
“Historically, that [sides per agent] number would be around nine to 10 [sides] and across history, it’s just fluctuated around that,” he told . “We were doing pretty good up until COVID, and we weren’t doing bad when you added the increased volume of sales that was occurring, right?”
“However, in the last handful of years, we’ve reached new territory and low sides per agent,” he added. “You have more agents chasing a lot less transactions.”
The uptick in resale stock — which is expected to climb 2 percent this year — still isn’t enough to quell an ongoing inventory shortage, meaning agents are staring down another year where every sale will be hard fought. Pricing, Keller and his panelists Jay Papasan, Jason Abrams and Ruben Gonzalez said, will often be the deciding factor on whether a listing booms or busts.
“We’re missing the four and a half million or so new homes that were never built, and then, because of this structural change, where people have low interest rates, they don’t want to part with that, and as a result, it’s kind of locked in inventory,” Keller said. “When you’re in the kind of market we’re in, we’re going to see price drops, which isn’t necessarily an indication of poor pricing. It’s also just an indication of the competitiveness to get the property sold.”
The inventory shortage could ease in the coming years as federal legislators place a higher priority on improving housing affordability by reducing regulatory barriers, reforming zoning, and expanding financing options for homebuyers and homebuilders. KW Head of Industry and Learning Jason Abrams highlighted the Housing for the 21st Century Act and the ROAD to Housing Act, two bills with strong bipartisan support in the House and Senate.
“They do four things: They expand mortgage access under $150,000, they streamline manufactured and modular housing to make that more acceptable, [and] they cut the environmental reviews,” he said. “And they’re talking about even pushing these cities by withholding funding if they don’t target more lots.”
But even if these bills become law, it could take years before the benefits reach homebuyers, homesellers and other stakeholders in the housing market, Keller said. And these solutions may come a little too late for millennials and Gen Zers, who are struggling with high student debt and relying on inheritances to enter homeownership.
“I’m a Boomer, by the way,” Keller said. “Boomers currently control $85 trillion in assets, almost 50 percent of all assets in the United States. That makes sense, though, from an age standpoint. Nineteen trillion is in real estate, and 73 percent of the people over 55, when surveyed, said they want to give some or all of their estate to their children before they die. And on average, they want to give away 30 percent while they’re still alive.”
Although it may be tempting for younger generations to stay on the sidelines and wait for market headwinds to blow over, Keller said historical data proves that now is as good a time to buy as any, considering home value appreciation.
“Look at the jump from ’19 to ’20 and ’20 to ’22, that’s massive, right? Then we get to ’23, and you go, ‘Whoa, we just took an overall $100,000 leap in such a short period of time.’ And because of that, everybody has a poor perspective on what really happens with pricing,” he explained. “They think, well, we’re way too expensive, but folks are only 7.4 percent above the 4 percent trend line, only 7.4 percent — that’s all. And except for the Great Recession, you’ll notice that prices really don’t drop. So the expectation that prices will go down, it doesn’t really work that way normally.”
On the whole, millennials and Gen Zers are better off than their parents were at 30, with a little more than $200,000 in assets — roughly $53,000 more than their parents had. However, KW Chief Economist Ruben Gonzalez said the issue is a widening wealth gap that’s making it increasingly difficult for those with lower incomes to build wealth.
“It’s been a consistent theme where people like to harp on younger generations over the years of like, ‘Oh, they’re not doing, they’re not doing, they’re not doing,'” he said. “But this pretty much shows that it’s kind of a wash. Most people are doing about the same. But what’s different is … the haves and have-nots within each of these generations, with the gaps getting bigger with each generation.”
Keller and Abrams asked agents to eschew the doom and gloom of the current moment — home sales, they said, will likely be no better than 2025 — and think about the market in historical cycles, which show home values tend to trend up, building a solid source of wealth for homeowners.
“Feelings — do not look at that,” Keller said. “Work with facts.”
Email Marian McPherson
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