When the coronavirus hit our shores in mid-March 2020, Americans were largely unprepared, as the virus had simply made headlines on our phones and televisions – not a real threat that could kill nearly anywhere. ‘a million of our family, friends, colleagues and neighbors.
Redfin CEO Glenn Kelman was one of the first real estate leaders to feel the impact of COVID firsthand, as the virus quickly ravaged several King County nursing homes and spawned a path to Seattle, the home territory of Redfin. Kelman had to make quick decisions about its operations and staff, including sacking hundreds of workers and firing 41% of Redfin agents.
Even though it looked like Kelman had made the right decision, the housing market has taken an interesting turn. In May, the market exploded into a frenzy of activity as homebuyers took advantage of lower mortgage rates and the freedom to move away from cramped coastal markets as employers embraced remote working.
“I get a lot of money for making good decisions,” Kelman said Bordered of his misstep. “I remember the analysts saying, ‘I’m not sure you want to hear that …’ – because once you’ve got the papers ready for a thousand people to go on leave and put away severance pay, you can’t really go back. “
Now that Redfin has bounced back – the company’s revenue has grown 121% per year since the height of the pandemic – Kelman has put a magnifying glass on his other decisions and what he could have gone wrong about. Redfin, real estate and concept. of the American Dream.
The first moment Kelman revisited was the purchase of his 115-year-old house in the 2008 real estate crash. The seller, who had invested thousands of people in renovating the house before being forced to give up his plans, ripped off the bathroom mirrors before closing.
“He was angry that he didn’t make a million dollars off this house and ran out of money and had to sell it at a loss considering all the construction he put into it,” said Kelman about the seller’s anger. “In business we always like to talk about a win-win, but it felt more like a zero-sum game between him and me.”
While frustrating, the CEO said he recognizes that others have seen a much worse situation, as the economic downturn and subsequent financial policies have essentially erased the homeownership chances of ordinary Americans. .
“Some well-intentioned reforms wiped out the subprime market, and the government never really replaced it with anything else. Now half of America can’t claim credit, ”Kelman said. “I used to read stories about strawberry pickers buying McMansions in central California, and everyone considered it the absolute height of the madness. But reading Piketty five years later, is it so bad that the strawberry picker had a nice home?
This awareness spilled over into Kelman’s work at Redfin. As house prices peak and Americans’ wages remain unable to keep up, the CEO said he was thinking of Redfin’s accidental leap into the luxury realm.
“The original premise of my time at Redfin was that we were selling the American Dream and the idea that anyone can afford a house sooner or later if they work hard and play by the rules,” he said. “Recently I got the feeling that there are so many people who will never become Redfin customers – that maybe the product we are selling is no longer a middle class product but a wealthy product. “
Kelman said he was also worried about living in a world marked by climate change where ravenous hurricanes, wildfires and tornadoes are not a one-time event, but something that can happen multiple times a year. .
“In Florida and Houston it’s only hurricane after hurricane,” he said. “And in California, your house is going to be on fire or inundated with smoke for months of the year. But I haven’t seen consumer behavior change so much, and while this is partly an economic necessity, I can’t help but think that there is a certain human stubbornness as well.
Kelman said his view on climate change was transformed during a conversation with a Houston-based Redfin official. When asked why someone would move to a floodplain, the manager replied, “Do you think they don’t know? They know.”
The “they” were low-income minority homebuyers who would do anything to get their share of the American Dream, even if it meant their home could potentially be washed away every few years. “The future is here,” Kelman said. “It’s just very unevenly distributed. “
Email Marian McPherson