Redfin CEO Glenn Kelman on the current state and future of the US housing market | E1261

Episode Summary

Executive Summary: In this episode, Jason Calacanis interviews Glenn Kelman, CEO of Redfin, discussing the housing market crisis, remote work trends, and real estate innovation. They explore how the pandemic accelerated migration from expensive cities, the impact of NIMBYism on housing supply, and the future of commercial real estate. Kelman shares insights on Redfin's evolution, the DOJ's antitrust actions against the National Association of Realtors, and the importance of transparency in real estate commissions. The conversation also touches on generational differences in work ethic, the role of journalists, and the need for accountability in tech.

Main Topics: Housing Market Crisis and Migration Trends (Priority: 5/5): Discussion on how remote work has enabled people to move from expensive cities like San Francisco to more affordable areas like Austin and Nashville, driving up home prices in those regions. The pandemic accelerated this trend, creating social disruptions and pricing out local residents. NIMBYism and Housing Supply (Priority: 5/5): Critique of NIMBY (Not In My Backyard) attitudes, especially in liberal cities like San Francisco, that block new housing development. Kelman argues that building more housing, even luxury units, helps lower overall prices and that NIMBYism contradicts progressive ideals. Future of Commercial Real Estate (Priority: 4/5): Analysis of the decline in demand for office space due to remote work. Kelman predicts massive deflation in commercial real estate, with companies trying to exit long-term leases and downtown locations losing value. Real Estate Innovation and Vertical Integration (Priority: 4/5): Overview of Redfin's innovations, including employing salaried agents, iBuying (instant buying), and vertical integration of lending and title services. The goal is to make home buying faster, cheaper, and more convenient. DOJ Antitrust Actions and Real Estate Commissions (Priority: 4/5): Discussion on the DOJ's case against the National Association of Realtors, focusing on making buyer agent commissions transparent and shifting the cost from sellers to buyers. Kelman supports this as a way to increase competition and lower costs. Generational Differences in Work Ethic (Priority: 3/5): Exploration of how younger generations prioritize work-life balance and are more cynical about capitalism, partly due to student debt and housing unaffordability. Kelman emphasizes the need for purpose-driven work and equitable equity distribution. Media Relations and Accountability (Priority: 3/5): Debate between Calacanis and Kelman on whether CEOs should talk to journalists like the New York Times. Calacanis argues journalists have anti-capitalist agendas, while Kelman stresses the importance of accountability and building relationships with the press.

Key Arguments: Building more housing, regardless of type, lowers overall prices due to supply and demand. NIMBYism in liberal cities contradicts progressive values and exacerbates housing crises. Remote work has permanently shifted the balance of power from employers to employees, making office-centric models obsolete. The DOJ's push to make buyer agent commissions transparent and paid by buyers will increase competition and lower costs. Pocket listings (withholding listings from MLS) are anti-competitive and violate fair housing principles. Tech companies should provide more equity to employees and extend option exercise windows to reduce cynicism about capitalism. CEOs should engage with journalists to build relationships and ensure accountability, despite risks of negative coverage.

Data Points: Migration ratio: 7:1 - In Florida, for every one person leaving, seven are coming in. Migration ratio: 5:1 - In Texas, for every one person leaving, five are coming in. Migration ratio: 4:1 - For low-tax states overall, for every person leaving, four are coming in. Commissions refunded by Redfin: $1 billion - Redfin has refunded a billion dollars in commissions to consumers. iBuyer commission discount: 50% less - iBuyers pay real estate agents 50% less in commissions (1.5% vs 3%). Home price increase in Boise: 20-week period - Home prices in Boise changed dramatically over a 20-week period, pricing out locals. Cost of a Tour de France bicycle: $12,000 - Kelman uses this as an example of a splurge that feels excessive even with wealth.

Pivotal Quotes: "I am tired of seeing the Black Lives Matter sign and the Not My Backyard sign in the same freaking lawn. It is such a contradiction in terms." — Glenn Kelman: Criticizing NIMBYism in progressive cities that block housing development. "The whole reason I'm in this isn't just to make a buck, it's to make real estate better for everyone." — Glenn Kelman: Explaining his motivation for leading Redfin and challenging the traditional real estate industry. "If you're going to run a major technology platform, at some point it is a public trust and you just have to be accountable to the press." — Glenn Kelman: Arguing that CEOs should engage with journalists despite the risk of negative coverage.

Implications: The housing market will continue to see migration to affordable areas, pressuring local prices. Commercial real estate faces long-term deflation. Real estate commissions will likely become more transparent and competitive, benefiting consumers. Tech companies must adapt to remote work and address employee cynicism through equity and purpose.