In my continuing coverage of the country’s real estate market, I reached out to Compass Founder & CEO Robert Reffkin. In 2012 Reffkin started Compass with the idea to providing tools and services to help real estate agents grow their businesses and better serve their clients. Over the past eight years, Compass has grown to serve 18,000 real estate agents across 165+ U.S. cities, who were responsible for over $91 billion in real estate transactions in 2019. As an industry innovator and leader Reffkin has much to say on the current market.
EP: Are you surprised at how fast the national market rebounded after stay at home orders were lifted?
RR: It makes complete sense to me that after sheltering in place for so long, many Americans were eager to make a move. After spending months inside, people were more intimately aware of the changes they wanted to make to their homes than ever before. They asked themselves whether they had enough outdoor space, enough indoor space, enough bedrooms, enough room for a home office — and if they didn’t, they reached out to their real estate agent to start considering a move. They also were reminded of the fragility of life and the cost of delaying decisions to enjoy this life to its fullest.
What impressed me most was how Compass agents rose to that moment. At a time when most of them still couldn’t host open houses for sellers or take buyers on physical tours, they managed to help their clients navigate a market unlike any that anyone had ever seen before. They showed their true entrepreneurial spirit during those days, and they’re continuing to do the same today.
EP: What are some company initiatives Compass put in place recently to help agents compete in today’s market?
RR: When the pandemic hit, companies that had invested in software platforms fared much better than those who hadn’t, across all industries. Think about gyms vs Peloton, movie theaters vs Netflix
, business travel vs Zoom meetings. At Compass, we’ve been building an end-to-end platform for real estate agents for years so from the very outset Compass agents were better positioned than most to weather the storm. Building upon our existing platform, we were able to quickly build and release all the tools our agents would need to advise clients in a completely digital world.
In just 12 weeks, our 500+ Product and Engineering team launched products that empowered agents to host virtual open houses, provide livestream buyer tours, send digital CMAs, integrate 3D home tours into listings, compare homes and home values in a more precise and visual manner using artificial intelligence and machine learning, and more. During the height of the pandemic, our technology teams were launching twice as many tools for our agents as they had been in the six months prior — all while working entirely from home themselves. That helped Compass agents not just run their businesses but grow their businesses as the markets roared back to life in most regions.
EP: How sustainable are the fundamentals that have created this market with such strong activity and prices?
RR: There are a few major reasons to be bullish on the housing market into January and beyond. This pandemic, unlike other downturns, is inspiring people to move. After being stuck inside for months, people are more motivated to make changes than ever before, now acutely aware of what they need from their homes. Across almost every consumer category, people want homes with more space and this new demand is leading to an onslaught of ongoing transaction activity.
Our homes are becoming our sanctuaries, and without travel, staycations are becoming the norm. Single-family home sales reached the highest rate in 13 years this summer. Interest rates remain historically low. Mortgage rates have never been this low, mortgage applications are up significantly, and the Fed has stated they will wait until 2023 at the earliest to increase rates. COVID has also resulted in some people staying put, and delayed construction activity, thereby resulting in inventory shortages in many areas. The uncertainty of 2020 has made tangible assets very appealing. A home provides certainty because it allows you to see where you are invested, and I believe people will continue to value certainty for quite some time.
EP: Where do you see the market in January?
RR: I believe the market will continue to be robust through January and into 2021. We don’t see any reason why this higher level of demand and activity should decrease any time soon. By January we’ll know the results of the election, we should have a Federal stimulus package approved, we may have a vaccine approved (and a plan for mass distribution) as well as more effective treatments for COVID, and employment figures should have improved too. Continued robust activity appears to be the new normal in many parts of the country. And I personally believe in always having an abundance mindset: even in the depths of the lockdowns last spring, I was focused on all of the opportunities around us. I find that the more opportunity you look for in life, the more you find.
EP: What advice do you have for buyers and sellers today?
RR: The same advice I’d give someone looking to invest in the stock market – work with a professional. For most Americans, their home is the largest investment they’ll ever make, they need a real estate agent to guide them through the process, well before a transaction commences, throughout the transaction, and forever afterward. Working with a professional who can provide invaluable insights and strategically guide you through the process will ensure that you’re making the best possible investment both fiscally and lifestyle-wise.
The most practical advice I’d give to buyers is something they likely already know capitalize on these low-interest rates. At the same time, as a buyer, you should always focus on quality and the long term. Will this home satisfy your needs 5 years from now? Buy what you can afford knowing that moving too often can be expensive too. If you are looking to sell your home, it’s especially important to work with a professional. Marketing a home involves much more than paper-shuffling and a few showings. There are hundreds of subtle yet important nuances (not to mention heightened emotions) that only a seasoned agent can navigate effectively before, during, and after the transaction.