Big news Redfinnians!
Now you can use the brand-new Redfin Scouting Report to look up stats on any agent — where he sold homes, how quickly, at what prices, with how many price reductions — all on a map, with pictures of every sale. It doesn’t work in Seattle and DC though.
The gerbils we tried it out on absolutely demolished their cages after we took it away. On the New York Times and across the big blogs we’ve been getting rave reviews, with one editor commenting that this is “the most disruptive real estate play in years.”
Meanwhile, Redfin’s own real estate agents now handle short sales, and our new Android app is already the top-rated real estate search tool on the Android Market. The iPad app is coming this winter, but what we really need are a few more San Francisco software engineers to get the job done; just write me back to apply.
Prices Up, But It’s Just a Seasonal Thing
Now let’s talk about what’s going on with U.S. real estate: home prices ticked up from the summer-time rush, interest rates are dipping below 4%, inventory is down, foreclosures are on the rise again, and demand is still weak but getting stronger.
The numbers for July just came out this week, and prices rose for the fourth straight month, which tends to happen during the summer:
|Area||MoM Change||YoY Change||Date of Max||Change from Max||Prices Last at
|# of Months
|Phoenix Real Estate||-0.1%||-8.8%||Jun-06||-55.8%||Feb-00||0|
|Los Angeles Real Estate||0.2%||-3.5%||Sep-06||-37.9%||Oct-03||4|
|San Diego Real Estate||0.1%||-5.9%||Nov-05||-38.0%||Dec-02||4|
|San Francisco Real Estate||0.3%||-5.6%||May-06||-38.1%||Apr-02||4|
|Denver Real Estate||0.0%||-2.1%||Aug-06||-10.2%||Jun-03||0|
|Washington DC Real Estate||2.4%||0.3%||May-06||-25.2%||May-04||4|
|Atlanta Real Estate||0.2%||-5.0%||Jul-07||-23.4%||May-00||4|
|Chicago Real Estate||1.9%||-6.6%||Sep-06||-30.1%||Mar-02||3|
|Boston Real Estate||0.8%||-1.9%||Sep-05||-14.6%||Aug-03||3|
|Las Vegas Real Estate||-0.2%||-5.4%||Aug-06||-59.3%||Dec-98||0|
|New York City Real Estate||1.1%||-3.7%||Jun-06||-21.9%||Apr-04||4|
|Portland Real Estate||1.0%||-8.4%||Jul-07||-27.2%||Jan-05||4|
|Dallas Real Estate||0.9%||-3.2%||Jun-07||-7.5%||Jul-04||4|
|Seattle Real Estate||0.1%||-6.4%||Jul-07||-28.5%||Nov-04||5|
|20 City Index||0.9%||-4.1%||Jul-06||-30.9%||Jun-03||4|
Even when you say, “OK, that was just the summer,” and wipe out the gains, it’s still a big deal that prices haven’t fallen since April, especially since most pundits predicted another 8% drop from April – December 2011.
One reason stable prices are a big deal to me is that this is exactly what we said would happen in April. And the other reason is that when prices stabilize, buyers can start coming out in greater numbers, with more confidence.
The hitch is that many sellers will still hold off until prices actually rise; we all think our house should be worth more than it really is right now. This is the main reason why the number of home sales has been down, near the lows it reached last summer when the federal tax credit expired.
Demand Among Buyers Up Right Now, Listings Way Off
Hungry buyers and fewer listings are exactly what we’re seeing in our own business. Demand among buyers using Redfin agents increased fairly sharply over the past three weeks. This was unexpected since sales usually dip a bit in the fall, and the stock market has been a Rocky Horror Picture Show.
Last week, customers requesting tours was up 5% from the four-week average, and customers writing offers was up 7%. Demand in Seattle was weak but not anywhere else, and Southern California and Boston were really strong.
When we ask people “why now, when the summer’s over?” we hear about low interest rates, higher rents and “I couldn’t wait forever.” New Redfin listings on the other hand were down a whopping 64%. Many of the in-home listing consultations recently hosted by Redfin agents end with the owner deciding to wait until next spring.
So Why Is Inventory So Low?
The reason Redfin has been so confident about stable home prices is that the inventory nationwide is dropping. The number of homes for sale has declined 17% since last year. Shadow inventory, which represents the scary backlog of distressed properties that haven’t yet reached the market, has actually declined 16% year over year.
It isn’t hard to imagine why inventory is so low. Regular home-sellers are waiting for better days unless they absolutely have to sell. And banks that used to flood the market with foreclosures have been slowly withdrawing from the market, for now.
What worries us is that default notices – which the bank sends you when you don’t pay your mortgage for three months – spiked 33% in August. But foreclosure auctions are still near three-year lows. When we look at individual court records, we see the banks threatening to kick people out but never following through.
Maybe the banks just got tired of re-possessing and then selling properties. Maybe they realized getting the owner to sell the place for a loss is still a better outcome than a foreclosure that puts the bank on the hook for a sale. Maybe they had more poetic qualms. Or maybe they’re just gearing up for more foreclosures next year. We don’t know. Our best guess is that they’ve lost their appetite for destruction.
Interest Rates Dip Below 4%
But they certainly haven’t lost their appetite for lending money, at least not when the government is guaranteeing about 95% of all loans. Rates have been dropping like a rock, occasionally dipping below 4%:
Since most people have to buy the money for a home before they buy the home itself, the drop in interest rates has had more of an effect this year on what it really costs to own a place than any change in prices.
And that’s the news from Redfin! If you have any comments just write back and I’ll forward your question to a Redfin agent — if I can’t answer it myself. Happy October and thanks for all your Redfin support!