We said goodbye to ’09 by sending our monthly newsletter to 143,981 folks, a 7% increase from last month. If you’d like to receive it via email, just sign up.
See you in 2010,
Happy Holidays Redfinnians!
Here’s the last monthly Redfin newsletter of 2009, with all the data on what happened in the market. The bottom-line is that we continued to see prices and sales activity tick up, but some underlying weakness too — price increases have slowed, and dropped in some places, especially in the Northeast. Interest rates may soon stifle demand, and lots of new foreclosures will reach the market next summer. We are closing the decade with a whimper, not a bang, but we’ll be stronger for it in the decade to come.
The news hasn’t been all bad! In a harrowing economy, Redfin has ended up having a fantastic year, and we are grateful to everyone for your support. Revenues almost doubled from 2008, and the company has been profitable since June. Our customer satisfaction rating among home-buyers has remained at 97%, where it always seems to be, no matter how hard we’ve tried to reach 98%. We just expanded to Atlanta, and organized our agents into local teams of one agent and her assistants, which means no more call-center for scheduling home tours…hopefully we can keep getting better and better.
But enough about us! Let’s dive into the details on the market…
Case-Shiller Data Shows Fifth Straight Month of Price Increases but Possible Dips Ahead
According to this morning’s Case-Shiller report, prices continued to increase in October for the fifth straight month, but the gains were smaller, and some markets declined. Some analysts worried about a double-dip, where the summer recovery gives way to another drop in early 2010. This seems especially possible in the Northeast where, after four months of gains, New York and Boston declined for the second straight month in a row. Seattle on the other hand saw its first increase in 28 months.
|MoM Change||YoY Change||Date of Max||Change from Max||Prices Last at This
|San Diego Area||1.1%||-2.4%||Mar-06||-38.8%||Nov-02||5|
|New York Area||-0.2%||-7.7%||May-06||-19.5%||Jun-04||0|
Looking at the long-term trends, we see that most markets haven’t significantly declined since March or April.
Demand Goes Up and Down
What’s behind the mixed pricing data? Sales volume has increased for existing homes and decreased for new homes. The new homes sales under contract declined 11.3 percent in November, even in the West, where prices have been strongest. Meanwhile, existing home sales rose 7.4 percent in November. How could new home sales go down while existing home sales increase?
The Wall Street Journal observes that new-home sales are based on contracts signed, whereas existing-home sales are based on closed contracts; since it takes at least 45 days for a contract to close, the WSJ reasons, new-home sales are 45 days ahead of existing-home sales as a leading indicator. This is undoubtedly true, though we would argue that there also simply isn’t as much new-home inventory on the market, as builders almost everywhere except Seattle stopped new projects last summer.
Supply Likely to Increase Next Spring
As we reported last month, foreclosures are likely to increase in the first half of 2010, but continued to decline for now as we head toward the shortest days of the year: default notices declined 8 percent month over month in part, we like to think, because the banks don’t want to deliver bad news before Christmas. Year over year, defaults were still up 18%. Everyone believes the proverbial pig is still somewhere in the middle of the python. The Wall Street Journal’s James Hagerty notes that shadow inventory — the supply of homes facing foreclosure now that could reach the market over the next 12 months — has increased year over year 55 percent or more.
Mortgage Rates Increasing
Meanwhile, mortgage rates have increased for four consecutive weeks, with the average 30-year mortgage rate reaching 5.24%. If rates continue to increase, this will significantly dampen demand, moreso in our view than any marginal change in home prices. Almost all lenders believe rates will either increase or remain unchanged.
So that’s the news for this month. You’ll hear from us next month, but we just hired our first-ever writer, so maybe the next newsletter will come from him. For now, raise a glass at New Year’s Eve, kiss your sweetie or your dog, and keep safe.