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‘The sharks will come out and it will hurt you even more’

The U.S. housing market is now tilting in favor of buyers, who are resisting the high home prices sellers are demanding, according to Compass co-founder and CEO Robert Reffkin.

He told CNBC on Wednesday that 30% of the stock on the market has seen a price drop, which is more than at any time in the past decade. Meanwhile, the market has seen a 16% increase in inventory.

“It’s a different environment. We’re seeing more sellers than buyers now,” he said.

Reffkin said there have been more price cuts in the South, which previously saw steep increases as Americans left more expensive states during the pandemic.

Florida’s housing market has also been hit by a spike in home insurance costs, which have risen 40% year over year and are weighing on asking prices, he explained.

“Sellers putting their homes on the market during this time should be aware of buyer withdrawals,” Reffkin said. “If your house is priced right in this area, it will sell quickly. But if it isn’t, it will stay on the market. Then you should have a price drop. Then buyers will see that they get a price drop. ” The sharks will come out, and it will hurt you even more.”

Buyers at the top end of the housing market have also received support from recent stock market gains, he told CNBC.

Although the rise in mortgage rates earlier this year, combined with high house prices, further erodes affordability, this is less of a concern for buyers who benefit from the wealth effect of their investments.

“You don’t need lower mortgage rates if your stock portfolio is at an all-time high,” Reffkin says.

His comments follow a report released earlier this month that found Texas and Florida dominated the top places for buyers in Zillow’s new market heat index, which takes into account the share of homes that receive an accepted offer from a buyer in 21 days or less has got. share of homes with a price reduction and engagement with active listings on the website and app

“Potential buyers who witnessed intense competition in the sunny markets of Texas and Florida earlier in the pandemic are no longer seeing such a frenzy,” Zillow said.

Redfin CEO Glenn Kelman also sounded optimistic about the housing market in the second half of 2024 after bottoming out in the first quarter.

But that outlook depends on interest rate cuts from the Federal Reserve, he said, warning that sales could slow or even decline if there were no rate cuts.

For now, he’s not ready to “throw a party here and drink a lot of champagne,” Kelman said. “It’s just a little bit better, it’s a little bit better – and that’s worth noting.”

This story originally appeared on Fortune.com