More homes are sitting in Cleveland’s real estate market, this broker says
More homes are sitting in Cleveland’s real estate market, this broker says
A few months ago, Amanda Pohlman, a real estate broker at Keller Williams Living in Cleveland, told “Marketplace” host Amy Scott about how rising interest rates were pushing some buyers out of the market, and sellers were hanging on to unrealistic asking prices. Since then, mortgage rates have surpassed 7%, and the consumer price index released Thursday showed that prices continue to rise for rent and owner-equivalent rent.
Scott checked in with Pohlman, who said houses are sitting on the market much longer than they were in July. The following is an edited transcript of their conversation.
Amy Scott: So, with the understanding that real estate is local, what are you seeing right now in your market and in the Cleveland area?
Amanda Pohlman: Well, in the Cleveland area, I would say the market has softened. What we’re seeing now is longer market time. We’ve definitely got more houses available, though, I would say in the Midwest, because our housing is quite affordable, we still have a good amount of inventory, it’s climbing, and we’re still in a seller’s market for sure. There’s just more inventory around.
Scott: Is there more inventory because more people are putting their houses on the market or because it’s taking longer for houses to sell?
Pohlman: I believe because it’s taking longer for houses to sell. For example, I’m in Solon, Ohio, and the average days on market has gone from less than a week up to about 89 days. So we’re definitely seeing more houses. Yeah, more houses are sitting. And I think that’s just because affordability is at an all-time low with the interest rates that are much higher.
Scott: Yeah. So Freddie Mac says today 30-year mortgage rates are above 7%. I mean, this time last year, it was under 3%. So what does that mean for affordability?
Pohlman: It means that the buying power for the buyer is that they have to pay a lot more money to get the home. So they’re looking for more creative ways, per se, to be able to get into a home if they have to right now, or they might be deciding to get out of the market because the interest rates seem to be too high. Whereas in actual fact, they’re really not still very high. They’re just a lot higher than they were, like you said, a year ago.
Scott: Yeah. You know, when we spoke last time, I think it was in July, probably before the slowdown you’re describing, you said sellers were having some trouble being realistic [about prices] as the market was starting to slow down. Are they still holding out for, you know, more than maybe they should? Or are they starting to see that, “You know what, if I’m gonna move this house after 80 days on the market, I probably need to come down.”
Pohlman: Yes, I think there’s been some sticker shock because the softening of the market happened so quickly, that a lot of sellers are looking back three to six months and saying, “Well, you know, how come my neighbor down the road got $40,000 more?” They have to understand that the time on market could be longer, especially if they’re trying to push the prices. The market just isn’t as robust as it has been.
Scott: We have seen a reaction in your industry. Just this week, the brokerage Redfin said it’s laying off 13% of its staff. A lot of them are in its home-flipping business. But you know, across the board, those in the business of selling real estate are feeling this. What’s it like to be in this business right now?
Pohlman: Yes, I saw that too. And their agents are employees, and most agents and other brokerages are 1099 [contractors]. So that kind of model hasn’t been tested in a downturn in the market. So we might see more of these unprofitable real estate startups struggle to adapt as this market correction continues to soften the market.
Scott: But for you, I mean, are you seeing folks, you know, who maybe rushed into this business when the market was so hot, maybe think twice about that?
Pohlman: I think we’re expecting that there will be less agents by the end of the year. I think that it’s been so easy to list or, well, to list a house and to sell it — you can kind of sneeze and sell it, you know, because the market sells itself. But I also think there’s a lot of fatigue around how difficult this market has been. And we’ll have to see what happens by the end of the year.
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