Redfin has hardly been an advocate for real estate tax credits. When the original first-time home-buyer credit was set to expire last November, we urged Congress to let it expire. But now that the federal credit has finally expired, the $24,000 question is how the market will respond.
It will take months to sort this out, as contracts signed on May 1 and beyond won’t close until June, and may not reach the national data services until July. But we can already see a sharp drop in the earliest leading indicator, traffic to Redfin.com.
Generally in the past few months, Redfin’s traffic has enjoyed double-digit percentage-point gains in traffic. But if you compare traffic on Monday, April 26, before the credit expired, to Monday, May 3, after the credit expired, the difference is stark and uniform: an 8% drop in one week. Here’s a table that provides details on which markets dropped the most:
| Market | % Change in Visits |
|---|---|
| Phoenix | -1.5% |
| San Francisco | -5.6% |
| Southern California | -5.6% |
| New York | -6.6% |
| Sacramento | -7.1% |
| Washington, DC | -9.1% |
| Atlanta | -9.9% |
| Portland | -10.4% |
| Boston | -11.2% |
| Chicago | -12.8% |
| Seattle | -14.7% |
We have measured the drop across several different time frames, comparing this past weekend to the weekend prior, and the data are the same. It confirms the prediction we made before the credit expired that summer demand would not grow as much as it usually does from April – July.
Sasha Aickin, the leader of our search engineering team, first noticed this change, and further observed that California’s decline was less drastic than other markets, probably because California has a state tax credit that began on May 1. As you would expect, the decline in California markets was more moderate (-6.6%) than all the other markets (-11.0%).
And there are, of course, complicating factors. On one hand, our Seattle traffic may have declined in anticipation of a May 4 – May 6 suspension in listing updates from one of our data providers, the Seattle-area MLS. And our agents report being very busy, in all markets. On the other hand, agent activity often lags traffic changes by a few weeks. And the markets (Phoenix, Portland, New York) where we recently opened the site for business have had such strong traffic growth until last week that any decline is noteworthy.
Of course, it is still early yet, and the fundamental forces driving the market are prices and interest rates, not government programs. Moreover, Redfin is only one of many real estate-related websites that consumers visit. We’ve heard from at least one other leader of a major real estate site that traffic is down this week, but we’re interested to learn if this trend is consistent across all real estate websites. Leave a comment and let us know what you’re seeing or, if you’re a home-buyer, how you’re feeling…
(Photo courtesy of Warner Brothers Pictures)
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