Ryan Serhant Says There Are Now “Four Americas” in Housing
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Ryan Serhant tells CNBC there’s "no longer a housing market" in America. Here’s what he meant and what agents can take from it.
“There is no longer a housing market in the United States…”
Those are Ryan Serhant’s words in response to one of the questions posed during a Fast Money panel conversation on CNBC. The CEO of SERHANT. went on to say “there are four Americas,” describing the four different players in the market right now:
Cash buyers
Buyers who need financing
Homeowners locked into 3% mortgages
Homebuilders
Each of those players experiences the market differently. That’s the point Serhant was making. Some players have more pull than others. Some are struggling to play their part.
The Four Americas Serhant Is Seeing on the Ground
Serhant broke down the four groups when asked about strength in the luxury market.
“There is no longer a housing market in the United States… There are four Americas. There are cash buyers who live in a completely different world. It didn’t used to be that way. Me growing up in the real estate industry, if you’re a cash or financing, it didn’t really make a difference. Today, it makes a difference.
“There’s cash buyers, there’s buyers who need financing who are paying six and a half percent, putting 20% down. There’s owners who are locked into 3% rates who are imprisoned in their own homes, and there’s builders.
“Those are four very, very different kind of cast players, and they look at the world in a different place.”
Cash buyers move without a lender in the picture, so rate moves and underwriting timelines don’t touch their decisions the way they touch everyone else’s.
Byron touched on this in his response to Serhant’s attention-grabbing opener:
“I think that headline can be twisted in a number of different ways. I would say my position on this… what he’s identified is these are the players who are winning the game right now… 2008, there were different kinds of players that were winning the game. Guess what: one of them was a cash buyer. Cash buyer wins in almost any market. Cash buyers have always had an advantage….”
On the other hand, buyers who need financing are working with roughly 6.5% rates and 20% down. Those challenges shape what they can offer right now and how fast they can close.
Owners sitting on 3% mortgages have the opposite problem. Selling means trading a locked-in rate for something well above double, which is a big reason so many of them aren’t listing at all.
Builders round out the group. Serhant treats them as their own distinct player, separate from resale sellers (he explains why in his next quote).
Agents talking to a buyer, seller, or owner this week should know which of these four groups they’re sitting across from before they open their mouth about rates or pricing.
The advice that works for a cash buyer will miss completely for someone locked into a 3% loan.
Where Overcapacity Is Flashing Red
Serhant was asked directly where he’d tell agents to use caution right now.
“We’re seeing buyers continuously flock to new construction. Everybody always wants the next new shiny toy. I was looking at some of our new listings that we have in North Dallas on Thursday. And there’s a town where two years ago, there were 10 buyers for every house. Today, there’s 10 houses for every buyer. Literally in one town over—not a whole lot different, similar school districts like it was two years ago, but the houses are just a little bit newer. But you’re dealing with builders. Builders are class system number four. They need to move inventory. They have construction debt, they have mez debt, they have equity partners. They’re throwing two years of tax payments, everything at the door. So there are moments where you can negotiate.
“The tougher market right now is, let’s say, that middle class market who bought a couple years ago, who is now competing against the incentives that builders can give out in new construction.”
That flip, from 10 buyers per house to 10 houses per buyer, happened in the same school district over two years. The only real difference is the age of the homes.
Builders can afford to move fast on price because of what they’re carrying:
Construction debt
Mezzanine debt
Equity partners who need to get paid
Serhant said they’re willing to throw two years of tax payments into the deal just to clear inventory. That leaves resale sellers, particularly the middle-class owners who bought a couple years ago, competing directly against builder incentives on nearly identical product.
All that to say, the four big players Serhant described as his “four Americas” are seeing the housing market from a very different place.
From a bird’s eye view, though, the U.S. housing market is still “moving,” despite the housing recession and all the challenges facing today’s insiders and those watching it from the outside.
In Byron’s words:
“Of course, we have a housing market in America… and this market, actually, with everything that’s going on with inflation, with everything that’s going on with the bros’ favorite investment with Bitcoin, with everything that’s going on with the stock market hitting record high, with people not feeling that great—look at the Michigan Center report—overall about the economy, with there being a fear baked into the market, overall consensus, what’s going on with Iran, the real estate market, yes in a real estate recession for multiple years, is holding onto the rope. The real estate market is still moving.”
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