A Picnic on A Volcano (July 2011 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 July Roundup:

Howdy Redfinnians!

Welcome to the Redfin straight-shooting, rip-roaring round-up of July’s real estate news!

While Redfin engineers launched a top-rated Android app, Redfin agents notched our best month ever, with happy customers and lots of homes bought and sold. July and August look weak but September looks better.

That can change fast. The debt ceiling makes every new home search — how did Robert Louis Stevenson describe his childhood? — like a picnic on the slopes of a volcano, and consumers are jumpy. This means that prices are going to be up-and-down.

Here’s a run-down of the key trends:

Metric Trend
May Prices Up 1.0% vs. April, mostly seasonal
June Sales Down 0.8% vs. May
July Rates Flat vs. June at 4.52%
Redfin’s Early-Stage Demand July new customers up 8% vs. June

Rocky Bottom

Demand is weak, but supply is weaker. Prices have stabilized, with Tuesday’s Case-Shiller numbers for May showing a second straight month of increases, this time by 1%. Call it a seasonal gain if you like but in February, we said prices would stop falling in March. Others disagreed. Prices stabilized in April.

Case Shiller Index, May 2011, East

Case Shiller Index, May 2011, West

Release the Kraken

Ten months after the robo-signing scandal broke, banks are still gun-shy about putting foreclosures up for sale. Nobody else wants to sell at these prices, and rents are rising. The market, having relied on the banks since 2008 to set prices and force sales, is now like Shaquille O’Neal, hand-fed by his assistant for so long that he almost forgot how to feed himself. By our own estimates new inventory in June was down 5% – 20% from last year, depending on where you look; new bank-owned listings declined by as much as 35%. This is why prices have firmed up. How long will it last?

Silent Summer

Sales have been slow this summer. Home-buyers can’t get credit, and can’t find much good to buy. Would-be sellers are holding off ’til next year because they now think time is on their side. June sales were down 0.8% from May, but we’ve seen a surprising uptick in new demand just over the past two weeks, by about 8% compared to June. Could be a flash in the pan.

Cheap Rates, Tight Banks

Rates have stayed low at around 4.52% but what has changed just since May or so is tighter lending standards. A bank just asked one Redfin customer to prove she’d get the same bonus from her boss through 2016. Sellers are jumping on cash deals even when buyers with financing are willing to pay $25,000 or $30,000 more.

The Rich Get Richer

Turn-key homes in centrally located neighborhoods with good schools are getting bid up $50,000 or even $100,000 this summer. Outlying areas are languishing. The drop hit the exurbs — rural places that became like suburbs in the last boom — the hardest in 2009, and here in 2011 those areas are still falling.

(Sorry about the mixed metaphors)

The market-by-market detail shows the biggest gains in the Bay Area because of the IPO frenzy, and recession-proof Washington DC. Seattle and Portland are doing pretty well too, but sales volume is so patchy up here right now it’s hard to tell if that’s a real trend:

Market MoM Change YoY Change Date of Max Change from Max Prices Last at This
Level in…
# of Months
of Increase
Phoenix Real Estate 0.0% -9.5% Jun-06 -55.9% Jan-00 2
Los Angeles Real Estate 0.5% -3.2% Sep-06 -38.3% Oct-03 2
San Diego Real Estate 0.2% -5.1% Nov-05 -38.2% Dec-02 2
San Francisco Real Estate 1.8% -5.4% May-06 -38.4% Apr-02 2
Denver Real Estate 1.4% -3.3% Aug-06 -11.6% May-02 2
Washington DC Real Estate 2.4% 1.3% May-06 -26.4% May-04 2
Atlanta Real Estate 1.0% -4.6% Jul-07 -24.6% Apr-00 2
Chicago Real Estate 1.7% -8.1% Sep-06 -33.6% Apr-01 1
Boston Real Estate 2.7% -3.2% Sep-05 -17.2% Apr-03 1
Las Vegas Real Estate -0.9% -6.6% Aug-06 -59.3% Dec-98 0
New York City Real Estate 0.7% -3.2% Jun-06 -23.6% Feb-04 2
Portland Real Estate 1.2% -9.1% Jul-07 -27.9% Oct-04 2
Dallas Real Estate 0.9% -4.7% Jun-07 -9.6% Jul-02 2
Seattle Real Estate 1.1% -7.0% Jul-07 -29.0% Oct-04 3
20 City Index 1.0% -4.5% Jul-06 -32.3% Apr-03 2

Case-Shiller Price Index Data for May 2011

That’s it! If you have any comments or questions about a particular area, leave a comment below and we’ll hook you up with the best Redfin agent to pitch in with more local insights. We won’t bother you later, either. It’s our job, so ask away. Have a great August, and thanks for your support!


  • Danstvguy


    “Sellers are jumping on cash deals even when buyers with financing are willing to
    pay $25,000 or $30,000 more.”

    I asked a Redfin rep in Phoenix (3 months ago) if this was happening in this region and it was a flat no.   He said in his experience it made no difference at all .. cash deal or financing.  Has something changed recently? … something peculiar about Phoenix, maybe?

    • http://blog.redfin.com GlennKelman

      We have seen cash deals win the day in competitive situations in California, Washington DC, Denver and elsewhere but I've asked Marcus to weigh in specifically about Phoenix…

      • http://www.redfin.com Marcus Fleming

        Its always interesting talking with agents in other markets and hearing about how differently the banks act from transaction to transaction. In Phoenix we definitely see banks using different policies than they would in other markets. I think it has to do with the volume of lender owned transactions and short sales that happen in Phoenix.

        In Phoenix the banks tend to care more about the net price/profit than they do about the financing method. A fair number of banks are starting to require home buyers with financing to get pre-qualified with their loan officers. This lets the bank know the home buyers are qualified and provided they are using a competent loan officer the deal will close. 

        That being said, we are seeing lending guidelines tighten up and it is complicating our financed transactions. It will take awhile, but its possible financed deals will start falling apart at a higher rate which will make cash transactions more attractive. 

        Keep in mind, if a financing buyer offers $25,000 – 30,000 over list price (aka bank market value), there is a good chance the home will not appraise and the bank will have to drop their price to the appraisal value. With appraisers being all over the board with appraisal values, the banks run the risk of selling the home for less than the cash offer. Its a trade off between risk and reward for the banks.

  • Hih3323


  • puddle_jumper

    This is by far the most well written and informative blog on the subject. I look forward to these letters. Kudos.

    • http://blog.redfin.com GlennKelman

      Wow, thanks!

  • lenlil

    The economy will never improve as long as housing prices are out of
    reach by the majority of the people. If the people are paying 50% and
    higher of their income for housing, which has been the trend happening
    for the past 30 years, starting in New York City and flooding across the
    country to Los Angeles; they have no disposable income to stimulate the
    economy. 25% needs to be the norm for the cost of housing. The homeless
    population has increased drastically in the past 30 years, coinciding
    with the increase in the cost of housing. People have had to “double
    up”, “triple up” and move back in with parents. This trend still
    continues today as most people cannot afford the high price of housing
    even though it has “fallen” to 2003 levels, for example, as housing in
    2003 was too expensive for most to afford. Therefore,the continued
    growth of the homeless is with us now. The consumer has lost sight of
    the power they have to control the high cost of necessities, such as
    housing. Just don't pay it and they can't charge it. Always bargain the
    cost of housing, whether rental or buying.lillianabel.blogspot.co…

    • http://blog.redfin.com GlennKelman

      I agree with your assessment on the percentage of pre-tax income devoted to housing but feel like affordability is decent outside of NYC and LA.

      • nematoda

        Yes, LA (and Orange and San Diego) counties are still “overpriced.” I live in an LA suburb, and prices have come down, but the median is still unaffordable in terms of pre-tax income devoted to housing. Where I'm looking (Pasadena-Arcadia-Monrovia), anything in move-in condition with 3+ bedrooms and 1,700+ square feet is still at least $550,000 (and, honestly, I cannot find anything less than $650,000–except for short sales–that offers a significant upgrade from my 25-year old, 1,600 sq. foot townhouse). It's sad. The only bright note is that I bought in 1999, just before the market shot up. My townhouse was very affordable then, and even more now with low interest rates. My pre-tax to housing cost ratio is only a 20% today.

        • SimplyMe

          I agree with you. I am currently looking too and I see the same thing. And for the same areas. Very frustrating.

      • Steve7rant

        Affordability is decent in the DC and SF areas?  A graphic accompanying
        an article in the WSJ yesterday
        html#articleTabs%3Dinteractive) indicates that in many areas the ratio between income and housing prices remain well above historical averages.

  • Okspud

    I have two houses for sale.  One upstate NY and one on Long Island–both below market value-  No one is even looking on the internet anymore.  Future buyers must be living in pup tents.  What happened to the demand in prime areas?

  • Hughbike

    I live in Austin, 78749.and work at the local LOWES in the paint dept. Everyday I deal w/ 8 or 10 people who are getting ready to sell their house. Alternately, I deal w/ a good handful of folks who are renovating newly purchased homes. These are just the people that communicate this info. Prices are moderate here, but downtown condos have risen dramatically over the winter and spring.

  • Danstvguy

    I would ask them politely where they will be moving to … will they be buying or renting?   I'd heard that Austin and Texas markets were strong … Is that the case?  I think its probably natural that working at Lowe's you'd meet folks prepping their homes for sale but have you noticed an increase lately?

  • Renting in Mass

    The US consumer is like Wile E. Coyote after he's run off a cliff. The only reason we aren't in freefall is that we haven't yet realized that there's nothing under our feet.

  • http://sandiegomovers.webs.com Ourmanoliver

    Here's how to sell your house fast. First look at the average income in your city. Then, look at how much the payment on your house should be based off of 25% of post tax income. Now, price that according to what the average buyer would pay in your area. If you are upside down, work out a short-sale with your bank. BAM you've sold your home.

    One of the biggest problems I've seen in this market is that a lot of people paid “fool's gold” prices and trying to find another fool to buy it; which is not likely to happen. So they are saddled with this debt, out of spite and lose their homes and any other chance at buying one in the near future

  • Noboss123456

    Curious why Greater Sacramento area was left out of the listing?

  • http://twitter.com/rieltor2010 Alex

    http://hahol.net hi vi a domt nou from ukraine