The Redfin CEO believes the "completely insane" demand in the actual property market will proceed by 2021
Real estate broker Redfin CEO told CNBC on Thursday that he expected the coronavirus boom in the property market caused by the pandemic to continue into the next year.
Existing property sales rose 9.4% in September, exceeding expectations. The average purchase price rose almost 15% year over year, as the National Association of Realtors announced earlier Thursday.
"There's no way it can last forever. That demand is absolutely insane. I would expect it to last at least until 2021," Redfin said at Power Lunch. "There are so many people now who have decided they won't be able to buy a home by the end of the year and who expect to be able to do so by 2021, especially if their children move school districts. I think we are." I will see this for a while. "
Housing demand is primarily driven by wealthy professionals who are able to work remotely, Kelman said. This has given them the opportunity to move from large metropolitan areas to more distant suburbs, or to buy holiday homes, "and then have a permanent vacation working from those houses".
Low interest rates also motivate homebuyers, Kelman said. However, he pointed out that interest rates won't always be low.
"Part of this boom is that the economy has just split in two and rich people can access capital almost free of charge. Of course, they will use that money to buy houses," he said. "There's just one other group of Americans who are still struggling and unable to access credit because we've raised credit standards and you have high unemployment. I just think these two trends have to collide at some point."
Redfin’s shares, with a market cap of $ 4.5 billion, rose more than 1% on Thursday to around $ 45.60 apiece. The stock is up more than 115% in 2020.
A shortage of houses for sale has led to higher purchase prices. According to the National Association of Realtors, an offer was only available for 2.7 months at the end of September based on the current sales pace. It's the lowest since 1982 when brokers started tracking the metric.
Kelman said he believes the post-presidential election post-November supply is likely to pick up if uncertainty eases somewhat. Because the process of listing and selling a home can take months, sellers typically have a lower risk tolerance than interested buyers, he said.
"Buyers, when they see a home they love, rush for themselves," he said. "I think sellers are only looking at the economy long term and are still concerned. Many of them will be putting their homes on the market in January and February."
– CNBC's Diana Olick contributed to this report.