Reffkin said Tuesday, during a Needham Technology & Media Conference session, that housing is in a “sideways” market — but after last year, homebuyers are now afraid prices will go even higher.

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Compass CEO Robert Reffkin on Tuesday said that the housing market is currently dominated by a lack of inventory, pent-up demand and consumers who are afraid of even higher prices — and that his company is poised to capitalize as conditions improve.

Reffkin made the comments while appearing at the 18th Annual Needham Technology & Media Conference in New York City. On stage, he offered an overall positive take on housing, saying that “multiple offers are back in the majority of our markets,” and that January and February saw a “good-to-great market.”

More recently conditions have shifted slightly, and Reffkin thinks the current market is “OK-to-good.”

But the good news is that there is a significant amount of “artificially pent-up demand from the fall” thanks to higher mortgage rates and a “buyers’ strike” that took place as consumers waited for prices to fall — which didn’t meaningfully happen.

“The prices didn’t go down as expected on balance,” Reffkin said.

The result is that there are many people waiting in the wings to buy a home. And many of those people have accepted that prices aren’t dropping any time soon. In other words, the fear of missing out — or FOMO — with regard to today’s prices is a driving force in housing right now.

“Buyers are scared they’re going to go up,” Reffkin said, referring to prices. “So that’s the reason buyers are back.”

Reffkin also said many homeowners are reluctant to sell thanks to having low rates on their current homes. But if rates were to drop from the 6 percent range to somewhere in the neighborhood of 5 percent, the market would see a “massive unlock of inventory.”

“That’s the moment that I’m waiting for,” Reffkin added.

Robert Reffkin, right, at the Needham Technology & Media Conference Tuesday | Needham

So how does Compass plan to pounce on a changing market in the near future?

Reffkin laid out a number of different strategies during his conference appearance, including the goal of growing Compass’ market share by 10 percent to 15 percent.

He also said the company is reigning in operating expenses and focusing on recruiting — noting in the latter case that the number of agents leaving Compass each month is shrinking while the number joining is growing. Moreover, Compass has expanded the type of agents it’s willing to hire.

“We used to only hire the top 5 percent,” Reffkin said. “Now we hire the top 50 percent.”

Hiring a more expansive group of agents increases Compass’ margins, Reffkin explained, because even though top performers make the most money, they actually tend to pay less to their brokerages than more moderate producers.

Also on the topic of headcount growth, Reffkin said that Compass reduced its number of recruiter positions amid its cost-cutting measures that began last year. But the company is now rehiring recruiters, while also “moving certain roles to low-cost labor.”

Reffkin’s comments about headcount growth recall individuals Inman has dubbed “boomerang agents” — Compass calls them “win backs” — which are agents who left the brokerage then returned a short time later. When Inman spoke to several such agents last month, many pointed to the brokerage’s technology as a major reason they came back.

During Tuesday’s conference appearance, Reffkin confirmed that technology is a major draw for agents joining Compass.

“The No. 1 one reason agents come to Compass is technology,” Reffkin said. “The No. 1 reason they stay at Compass is technology.”

Reffkin also said he believes that over the last three years, agents have come to believe that “if they’re not using technology they’re going to be left behind.” The shift happened thanks to pressure from consumers and from various brokerages’ own messaging about tech.

“We’re seeing more agent understanding of the importance of technology than we ever had before,” he said.

But, Reffkin also argued that no other real estate company has made the same kinds of financial commitments to technology as Compass. And the result is that “there’s no other place that exists” with the type of all-in-one platform Compass provides to agents.

“The average agent has to use 11 different tools to do their job that aren’t connected,” Reffkin added. He believes that by comparison, Compass’ platform allows agents to be more efficient — he specifically pointed to agents ordering title services within the platform — and that it allows the integration of other tools, such as ChatGPT. “The innovation at Compass is integration.”

Compass has of course been investing in technology for years, both via building products on its own and via buying other companies. But Reffkin was skeptical that rivals, big or small, could do the same. That’s because, he said Tuesday, the amount of money agents pay to their brokerages isn’t generally enough for those brokerages to really build or invest in technology.

At the same time, agents often feel like they’re paying a lot, and as a result, think they ought to have high-tech tools. So there’s a gap between what agents expect and what they can actually get at most companies.

Reffkin believes that dynamic gives Compass, which has a functioning technology platform in place, a significant advantage that other brokerages can’t match. And he concluded that he is more “optimistic about this company” than ever before.

“It’s been a hard year,” Reffkin said, “but I think during this period the distance between us and our competition has actually increased.”

Update: This post was updated after publication with additional commentary from Reffkin’s appearance at Tuesday’s conference. 

Email Jim Dalrymple II

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