Ryan Gorman, Coldwell Banker CEO, joined Yahoo Finance Live to discuss home renovation trends and the hottest housing markets in the US.
ADAM SHAPIRO: There are three certainties in this life– death, taxes, and avocado green kitchens will never be in style. There’s my reference for the 1970s. Why do I bring it up? Because if you’re trying to sell a home or looking for a home, it’s about renovations right now. Let’s bring in Ryan Gorman, Coldwell Banker CEO, because renovation nation is here. And you folks did a survey to find out what it means for people to renovate, especially Gen Zs and millennials. What can you tell us? Do they do this on their own, or are they looking for some help?
RYAN GORMAN: Definitely looking for help. Thank you for having me to talk a little bit about this. Renovation nation sounds about right. Approximately 90% of all home sellers make some repairs and renovations ahead of selling, which is not particularly a surprise. But we also found that approximately 40% of those have to make new repairs and new renovations post-inspection. So what we hear constantly is what they are looking for is some help.
The three biggest pain points, what to do to do it intelligently, how to get someone to do it right now, in a constrained labor market, and then how to pay for it. Especially that millennial generation, about 60% of the time, they struggle to pay for it, which is why Cold Banker created the RealVitalize program with ANGI to be able to solve those problems and be able to put something in place, where they can get everything taken care of for them, from logistics to financials, and just pay for it at closing.
SEANA SMITH: Ryan, speaking of how to pay for things, you just got a reading out this morning. The median US home price hitting a record high, $363,300 in June. That’s up 23% from just a year ago. We’ve seen this trend continue to the upside. I guess, how much higher do you see prices going in the near term?
RYAN GORMAN: Well, I think it continues to be about supply and demand. So we continue to see buyer demand outstripping seller supply. I think it’s something like 112 months in a row that we’ve seen these price increases. You’ll start to see some noise in the year-over-year numbers, with volume. But with price, you’re seeing that supply demand focus, and it continues. With NAR’s more anecdotal reporting, they’re starting to see that maybe a newly listed home got 15 offers in 15 minutes a few months ago, and now maybe it’s five or six days for five or six offers. That’s still a very robust seller’s market, but perhaps with a little bit of buyer frustration and maybe a little buyer vacation coming into the mix here, as people get out and fill our national parks and hotels.
ADAM SHAPIRO: When you talk about renovation and this deal you’ve got going with ANGI to help people get things renovated, where are we? Because everyone thinks they’re an expert with real estate, when they’re not. So where should you be renovating, the bathroom, the kitchen? Which is it?
RYAN GORMAN: Well, there’s a good match between what people anticipate and what is actually needed when it comes to the light renovations, which is painting. About half the time, people think they should freshen up, and that’s exactly what they should do. But there’s also a heavy lean into things that might be personally preferable for folks when, really, that’s not necessarily what buyers are looking for. Especially that millennial generation is looking for move-in ready they. Care the most about that kitchen, and secondary is that bathroom space.
What people don’t anticipate as much is very high on the list of those who are looking to buy is making sure the back systems, electrical, and plumbing is done well. Almost no sellers aren’t really focused in that area, but buyers are. They want to make sure they move into a home that they don’t have to do anything new to. So that’s what your Cold Banker agent is going to tell you for sure, and that’s certainly what we found, in our survey, of what buyers really want.
SEANA SMITH: Ryan, in terms of some of the trends that you’re seeing nationwide, what are some of the hottest regions right now for sellers or people are out there watching this thinking about putting their house on the market? What are the places that buyers are most likely seeking right now?
RYAN GORMAN: The strength is nearly universal, which, in my career in housing, I’ve almost never seen before. But we’re seeing strength everywhere from New York City to New Orleans– so really, across the board. But the absolute strongest markets, I would say, continue to be those really attractive weather and tax destination areas, where the weather is a little more mild and where the tax climate is a little more favorable. So you certainly see that in areas like Florida, and Texas, the Carolinas, and Tennessee.
ADAM SHAPIRO: Do you worry that these prices getting out of hand might be the foreshadow of a bubble or all steam ahead?
RYAN GORMAN: Typically, when we worry about a bubble, what we’re looking for is things like speculation or loose lending standards. We’re not seeing any of that today. We’re really seeing fundamental demand. Those who are looking to sell are doing so because they want to upgrade. That’s the most common, more space, more amenities, or be closer to family. So really, the seller and buyer demand is still pretty fundamental. We’re not seeing any of those concerns.
What I do think we’re going to see is that price increase coming up here in the near term likely pulling more inventory onto the market. We saw inventory rise just a little, about 3.3% month over month. And we saw 2.6 up from 2.5 months of inventory on the market. I think you’re starting to see people realize the value of their home and realize the best thing for them might be to sell today or in the near term and move down the road. So I think you’re going to see inventory come on to abate a little bit of the pressure to come closer to meeting some of the demand, which I think will remain strong.
SEANA SMITH: Ryan, we also have investment firms like BlackRock, one of them coming in and scooping up these houses, obviously driving the prices higher. I guess, to what extent are these investment firms driving prices? Because I think people are trying to figure out just how big of a role they play in residential housing.
RYAN GORMAN: There are certainly pockets where it’s a larger percentage than others. But for most of the country, you’re looking at sort of single-digit percentage of purchases. You’ve seen some reports out there that trend that it’s maybe a larger percentage, but they’re oftentimes counting second home purchases or, really, anywhere where someone doesn’t live in the property that they’re selling, from a tax address standpoint. So it’s still a smaller piece of the market.
But I want to say the single-family rental market has historically been somewhat underserved. It’s always been a mom-and-pop business. It’ll continue to be. Over 12 million mom-and-pop units held out their renting. But some of these institutional buyers are kind of upgrading some of that inventory, so those who want to rent a single family home rather than an apartment are getting some higher-quality inventory. So it’s creating a little pressure, but also a little benefit.