Something Waits Beneath Winter (November Roundup)

Every month, Redfin publishes two newsletters on real estate prices. One, usually published on the last Tuesday of every month, is a Redfin Roundup, which synthesizes data collected by economists, government agencies and others to provide a complete portrait of what happened in the market over the past month. The other is Redfin Insider, usually published by the 12th of each month, which analyzes our own databases to identify the major trends in listing inventory and prices as well as sales activity and consumer traffic. To receive these newsletters by email, just sign up! Here’s the November Roundup:

Happy Holidays Redfinnians!

The latest figures on real estate prices came out this morning, with September prices declining everywhere except Washington DC and Las Vegas, by an average of .7% nationwide.

As we predicted, October sales volume also declined, by 2.2%. Interest rates ticked up just before Thanksgiving to 4.39%, and have stayed put since.

But after spending the whole year predicting a 2010 market drop, Redfin’s confidence in spring 2011 is growing. Our November and December revenues are 10% stronger than we expected.

Right before Thanksgiving, customers signing offers ticked up 3%. This is probably just an aberration but it’s very unusual this time of year.

There are no data to support any price increases over the next three months and longer term, everyone agrees the housing market is going to follow the overall economy, so we’re hardly ones to guess what will happen next.

But we’ve made our own bet: after launching Vegas — which has really taken off — and Austin, Redfin is trying get Denver, Philly and Dallas up in January. And we’re hiring a lot of engineers.

Our round-up of all the real estate numbers on the web in November is below. Keep your fingers crossed. We have a lot to be grateful for in 2010.


Home Prices Decline .7% Nationwide

Let’s get right to it. The Case-Shiller index declined for the second straight month, and the news was bad almost everywhere:

Area MoM Change YoY Change Date of Max Change from Max Prices Last at This
Level in…
# of Months
of Decrease
Phoenix -1.5% -1.9% Jun-06 -52.9% Mar-01 4
LA -0.1% 4.4% Sep-06 -36.0% Dec-03 2
San Diego -1.0% 5.0% Nov-05 -35.1% Apr-03 2
Bay Area -0.9% 5.5% May-06 -35.2% Jul-02 2
DC Area 0.3% 4.5% May-06 -24.8% Jun-04 0
Atlanta -1.0% -3.1% Jul-07 -21.0% Mar-01 2
Chicago -1.5% -5.6% Sep-06 -26.0% Oct-02 1
Boston -1.3% 0.4% Sep-05 -14.3% Aug-03 2
New York -0.3% -0.1% Jun-06 -19.1% Jun-04 1
Portland -1.9% -3.6% Jul-07 -22.6% Apr-05 3
Seattle -0.6% -2.6% Jul-07 -24.6% Mar-05 2
20 City Index -0.7% 0.6% Jul-06 -28.6% Sep-03 2

Since Case-Shiller indexes are based on three-month averages, momentum shifts tend to be lasting; price declines will almost certainly continue until January at least, and U.S. real estate prices may soon dip below the bottom we saw in the spring of 2009:

How much has changed? In June, 15 of 20 Case-Shiller markets had seen prices rise year-over-year, but as of September, only 5 of 20 cities had held on to year-over-year gains.

Sales Volume Declines 2.2%

As we predicted last month, October sales volume declined, by 2.2 percent since September and by 26% since October 2009, when sales were surging prior to the initial deadline for the first-time home-buyer tax credit. October new-home sales declined 8.1% since September, and 29% since the prior year.

Notwithstanding Redfin’s optimism about our own business, the downbeat new-home sale numbers are an accurate forward-looking indicator for U.S. real estate, because new-home sales figures are based on just-signed contracts, whereas the actual closings may take another 30 – 300 days.

Foreclosure Filings Down, But Banks Keep Selling the Properties They Already Have

We used to worry that a second wave of foreclosure filings was headed our way in 2011. Now we’re hopeful more of those bad loans might be modified. Foreclosure filings declined by 4% in October, mostly because the big banks had to hold up on some foreclosures due to the robo-signing scandal.

Interestingly, banks don’t have any second thoughts about selling properties they’ve already foreclosed: the number of bank-owned properties being put up for sale actually increased in October.

But as Joe Nocera argued in the best article about this whole mess, we are hopeful that the scandal will encourage banks to pursue loan modifications for more of the home-owners still hanging on. If distressed inventory continues a long-term decline, it’ll help the market recover. If on the other hand the scandal blows over, having only slowed down the foreclosure process, it’ll delay a recovery. The jury’s still out.

Interest Rates Tick Up

Many real estate agents keep hoping that an uptick in rates will jolt home-buyers into realizing that homes have become more affordable. The week before Thanksgiving, interest rates ticked up from 4.17% to 4.39%, but were steady last week.

We still don’t see much evidence that rates will take off, which means home-buyers will probably take their time until some pretty new homes hit the market in the spring.

And that’s the round-up for this month. Leave a comment below and give us your take. Stay warm this winter and thanks for all the support!


  • Jeff

    @Glenn, I echo your sentiment about the numbers in the spring of 2011. Consumer sentiment is up and the Santa rally should prove to be better than expected. Americans are resilient. Seattle condo inventory is falling and I look forward to seeing what an improved economy will do for housing. Happy Holidays. Cheers!

    P.S. Congrats on the new openings.

    • GlennKelman

      Thanks Jeff! I worry more about Seattle than other markets but am hopeful nonetheless.

  • Mark Edson

    Number's are also down in Denver this month, but with the interest rate clicking up slowly, that will hopefully stir motivation among buyers. Denver is also consistent with national news and new home sales are doing quite well here. Looking forward to Redfin coming to Denver soon, our real estate here is getting kind of boring, and we need something new!

    Mark Edson

    • Houses for Sale MN

      I am experiencing what Mark mentioned above…that is, here in Minneapolis, the active buyers that I'm helping (some of them have been on the bench for a while), are really beginning to chatter about the interest rates beginning to creep upwards. And consequently, there are waiting less time between rounds of showings, and are also stalling less prior to writing offers. I hope this trend continues…

  • sbr287

    I would appreciate a clarification of “The Case-Shiller index declined for the second straight month, and the news was bad almost everywhere:” It seems to me that many buyers would not necessarily agree that a decline in prices is a bad thing. Personally, I am over-invested in real estate and my financial wealth would be significantly affected by declines in the market. However, I care about my children being able to afford a house; I care about house prices generally being at their long-term sustainable levels – relative to incomes. Therefore, I see a decline in prices as having benefits for many, notwithstanding the short term damage that will suffered by others.

    • GlennKelman

      I've made the same point and now I feel silly having described affordable homes as bad. Good bust sbr287!

    • Lobsang

      I feel exactly the same way. People have this strange notion that a house is something that you buy, use and still make a profit. This does not make sense in any way.

      Many of my friends say “prices are low now”. They're not. They're back to market prices. Look at a long time graph and you'll clearly see the bubble that started in 2004-2005 and died down in 2008.

  • sbr287

    Glen – have you hired someone to write these blog posting for you?

    “Many real estate agents keep hoping that an uptick in rates will jolt home-buyers into realizing that homes have become more affordable.”
    Puh-lease – this remark is just the thing that I would expect a 'typical' realtor to make. I thought Redfin was trying to be different. Increasing interest rates will increase payments on a mortgage of any given size. Therefore, it is far more likely that market values will have to decline if affordability is to remain constant. It is not at all clear that buying just before interest rates rise is a good idea – unless the anticipated rise in rates has already been 'priced in' by the seller in setting the asking price.

    • GlennKelman

      No, I wrote the post. A lot of Realtors think that home-buyers are taking low interest rates for granted, assuming they'll be around forever. It's certainly a fact that when interest rates go up, it pulls people off the fence:

      Whether that's a good thing or not depends on whether you're a Realtor, of course, which is why we were careful to explain the attribution.

  • Kdockery2

    Hello I have a comment I have 150K cash to pay for a decent home I live outside Rockford IL I am looking for propperty in or near the burbs Shamuburg, or the likes. What I cannot understand why is it that everyone is saying that it is a buyers market but when you have the cash all I see are 230K or more homes where are all they home that are a steal in todays market that I have been hearing about.


  • Alex

    Glenn, I noticed the statement “we are hopeful that the scandal will encourage banks to pursue loan modifications for more of the home-owners still hanging on.”

    Does Redfin have a position on loan modifications, or on political pressure for modifications?

    As a prospective buyer, I'm fine with lenders and borrowers negotiating an outcome that's better for both. Political pressure turns an arms-length negotiation into a glorified bailout, though, or with cash incentives, an actual bailout, and taints most modifications. Even post-purchase, I'd gladly accept increased supply (and lower or no appreciation) for a predictable, simpler market – not that I'll have that choice.

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