Big news Redfinnians!
Redfin upgraded its service, so you can meet your Redfin agent from the first tour, and he always sees your house. You still get an agent paid to put customers ahead of commissions, digital convenience the whole way through a deal, but now also a face-to-face relationship with your Redfin agent. What took us so long? Honestly, I don’t know.
In other news, for Android, iPhone and iPad, Redfin now has the top-rated real estate applications. And we’ve launched Open Book, a directory of our customers’ favorite lenders, inspectors and escrow agents. Last but not least, you can now sign up for a monthly picture-book summary of all the homes that sold within a few blocks of your place. It’s beautiful.
That’s the Redfin news. But what’s going on in the market? Let’s dig in!
December Numbers Finally Came In. They’re Bad
Yikes, the numbers just out for December 2011 show another 1.1% drop:
|Market||MoM Price Change||YoY Price Change||Date of Max Price||Change from Max Price||Prices Last at
|# of Months
|20 City Index||-1.1%||-4.0%||Jul-06||-33.8%||Feb-03||4|
But Prices Will Probably Stop Falling
January will probably be down too just because the index is a three-month moving average but, as we predicted last year, the market is turning:
- Pending sales for January 2012 rose 8% from January 2011.
- The supply of homes nationwide dropped to a six-year low.
- Over the past year, inventory declined in 145 of 146 U.S. markets.
- In the last three months of 2011, foreclosure inventory dropped 27%.
- A survey of 1,331 Redfin buyers shows that 73% are concerned about limited inventory.
- Price-to-rent ratios are at 1998 levels, and rents are rising.
- Futures contracts now reflect investor sentiment that home prices have bottomed.
- The percentage of mortgages that are delinquent has declined for 23 months, but is still high.
- In California, more than 65% of 2012 Redfin offers have faced competition. Nationwide, the number is one in three.
- Bubble-bloggers, the gadflies who created blogs during the bubble dedicated to the thesis that real estate was over-valued, have mostly bought homes, in New Jersey, Portland, Seattle, San Diego and Santa Monica.
Meanwhile, Redfin agents report flashes of weirdness we haven’t seen since the bubble burst:
- In Denver, agents mass-mailing colleagues to ask if any listings are about to hit the market.
- In Portland, buyers who stop waiting for more listings and just sign new-construction contracts on un-built projects.
- In Seattle, houses that didn’t sell last fall coming back on the market, with only a $5,000-price drop — and selling in a week.
- In San Diego, sellers asking buyers to ignore low appraisals that scare banks — and just pony up for a bigger down-payment.
- In Seattle, sellers asking buyers for letters and family photos as a bidding-war tie-breaker.
- In DC, investors going door to door, looking for people willing to sell their homes.
Whereas last year, only picture-perfect houses got multiple offers, now run-of-the-mill listings are getting bid up too. That said, the market is still bi-modal: dumps and over-priced listings languish.
Is the Bottom Here? Depends on Whom You Ask
So we think the bottom is here. Earlier this year, Redfin forecast that 2012 prices would be between -1% and +1%. Our friends at Zillow still forecast a 3.7% drop.
We have disagreed before.
Last May, Zillow forecast that 2011 home prices would fall another 7% – 9%. In February 2011, Redfin said prices would mostly stop falling in March. From March – December, the Case-Shiller index fell .68%.
Don’t Get Cocky, Kid!
But we shouldn’t get ahead of ourselves. The bottom will be rocky. Whenever home-sellers get a glimpse of the groundhog, real estate junkies over-react, especially since the market always goes a little crazy in spring. And there are still too many foreclosures for prices to go up much any time soon.
The truth is that demand at Redfin went nuts in January — did you notice our website crashing under unexpected loads? — then leveled off in February. And sales volume won’t increase as much as everyone hopes, just because there’s not enough to buy. Nobody wants to sell at the bottom.
We’re Worried About Rates
Long-term, we’re worried about interest rates. Everyone says they’ll stay low for years, but the president of the Federal Reserve Bank of New York just gave a speech describing an “unusual period” of very low rates that concluded with: “This will not last.” Gulp.
For now, rates are below 4%:
As even the gloomy French existentialist Albert Camus had to admit “Happiness is inevitable, too.”
Stabilizing prices will be welcomed by all the real estate agents who complained in the past about Redfin’s dark predictions — we have called for 10% drops in a year, 4% drops in a month, and said the market would become like a fat man who couldn’t get up.
As for all the real estate bears who say we’re a sell-out every time we say the sky has stopped falling, gear up. The comments section is open!
Thanks as always for your support. Any questions about Redfin’s service, feel free to leave a comment below! We love to hear from you.
Glenn Kelman | CEO, Redfin
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PS Check out @REConfidential, Redfin’s new, all-true diary of the porn studios & pot farms we find on home tour!