Starve the Beast

The Occupy Wall Street protests once seemed so futile to me. You just can’t stop smart people from making money, and I’m not really sure why you’d want to. But it turns out you can persuade those people to make money by doing something useful beyond lining up on either side of a financial bet. They can instead build software, or reinvent real estate.

I’ve spent 15 years making that case, often to the Winklevoss types Wall Street loves to hire: folks from elite schools, with high grades, a history of leadership, strong math skills, a broad education. Every year Wall Street paid more, with Bridgewater now offering college graduates $130,000, and every year recruiting got harder.

The same starry-eyed idealists who spent the first third of their life digging wells in Tibet and marching for every crunchy cause would chuck it all after graduation to run numbers for a bank. But that is changing this year.

Redfin is interviewing at least a dozen Ivy-League students, many studying the disciplines of math, philosophy and economics that Wall Street loves, who refused even to consider finance. Many worked on Wall Street last summer, but recently decided that wherever their career takes them next spring, it won’t be to a hedge fund.

I’m sure New York-based start-ups, venture capitalists and even management consulting firms are seeing the same trend: recruiting against Wall Street got much easier this year.

What changed? Part of it may be “The Social Network,” which made a sort of poetry out of writing software alone. Part of it may be the beatification of Steve Jobs. But at least part of the reason has to be that Occupy Wall Street has stigmatized a career in finance. The first slide of Redfin’s standard talk for Ivy League campuses begins with the headline, “Consider the Alternatives,” and shows poor Lloyd Blankfein squirming before a Congressional lynch mob.

These are the images that matter. Previous critiques of Wall Street failed because they were rational: Tom Wolfe’s Bonfire of the Vanities, Oliver Stone’s “Wall Street” and Michael Lewis’s Liar’s Poker nominally deplored Wall Street’s excess while reveling in its glamour. Who after all would you rather be, the virile corporate raider Gordon Gekko or the aging union boss played by Martin Sheen? Believe me, no one at Yale in the ’80s seriously considered a life at Bluestar Airlines. But now many I’m sure want to be like Mark Zuckerberg in “The Social Network.”

The Occupy Wall Street protesters are finishing the job, re-casting Wall Street’s Masters of the Universe in a more disdainful light. Like the animal-rights activists who splatter fur-wearing women with blood, these protesters are people you just don’t want to walk by every day on your way to work. No matter how easily you can dismiss the logic of their arguments, their presence might  make you feel dismayed, shamed, tainted, unsavory. How many 21-year-olds are ready to sign up for that?

Probably not as many. And this I think will be the most serious outcome of the Occupy Wall Street movement. It won’t result in any legislation that stymies Wall Street’s essential money-making powers, but it may in fact divert some of our best and brightest away from Wall Street and toward careers creating more useful products, and more jobs.

Though I respect the work that bankers do, and would far prefer that America rather than China or the United Kingdom dominate the financial services market, I think having more of our best and brightest work on Main Street rather than Wall Street is is a good direction for America, and I’m glad to see it happening now. You can’t fight the beast, and in many cases we shouldn’t try to anyway, but maybe we can starve it for a little talent.

So Long, And Thanks for All the Fish!

October is the quietest month at Redfin. The interns leave in September, and the new recruits don’t visit the office until November. In the mountains, it begins to rain but hasn’t yet snowed.

Before our thoughts turn to the holidays, we wanted to take a moment to thank last summer’s interns. Redfin’s engineering, products and marketing teams are notorious for piling the responsibilities onto young recruits, but this year’s group delivered the goods:

• Seth Goldenberg used machine-learning algorithms to predict which homes will sell, and also developed two new versions of the iPhone app once featured in Apple’s national TV ads. He’s re-joining us for a full-time job this winter.

• Daniel Petkevich produced, directed and shot a video of our top-rated Android application, ran a direct-mail campaign and single-handedly placed over a dozen Redfin stories in the local press. Since there isn’t a single quiet spot in the whole Redfin office, he shot the video from underneath a fire blanket. Now Daniel has made it his personal mission to persuade every Yale student to apply for a job at Redfin, which we appreciate. We’ll have the world’s  best company orchestra!

• Hardeep Uppal processed 100 gigabytes of data in Hadoop, then used Pig, Map/Reduce, and Hive to report on how revenue-producing customers use our site differently than everyone else. Hardeep is also a DJ. In the picture below, Hardeep is the one who is embarrassed at how much Daniel loves to show off his body.

• Ji Mun helped to revamp our online agent profiles, letting users vote customer reviews up or down; she also dived into machine-learning algorithms for automated home recommendations. Ji became famous for her hats.

• Coral Peterson built a dynamic tool for marketing listings that our home-selling customers love. As you can see from the photo, Redfin gave Coral an iPad at the end of her summer here, and a bong made out of tube socks.

• Kevin Thai analyzed some of our six million+ listings on a Hadoop cluster to find ways to automatically improve data quality, one of our primary sources of competitive advantage. Probably the best football player we’ve ever recruited.

• April Alexander: led a design team that increased the rates at which users signed up to become Redfin customers, with the potential to increase our 2012 performance by millions of dollars.  April is also re-joining us this winter.

Seth, Daniel, Hardeep, Ji Mun, Coral, Kevin, April and others, thanks to all of you for your dazzling work. You probably expected to sit around waiting for the next Costco order, but all of you went on a high-productivity rampage.

If you’re in Seattle for the holidays, come by the office and we’ll all go out to dinner. And if you decide to venture beyond Redfin for a permanent position, let me know where and I’ll tell your new boss to give you more money!

College students interested in working at Redfin for next summer or for a permanent position, just check out what we’re hiring for and throw your hat into the ring!

It’s Not a Monster Truck Rally, It’s A Real Estate Market

Big news Redfinnians!

Redfin just raised $15 million, mostly on the strength of nice revenue growth and very, very happy customers. Since launching our service with one Seattle agent in 2006, we’ve closed about $6 billion in home sales, with a customer satisfaction rate of 97%. Consumers have saved $85 million in commissions. The value of the company has increased a hundred-fold. Woo-hoo!

That’s the view from on-high but Redfin is also taking it to the streets, running new neighborhood-level meet-ups with appraisers and inspectors to teach you how to assess what a home is really worth, and where to look for hidden problems in its construction. Redfin agents run the show at these events, so it’s an easy, no-pressure way to meet those folks too.

Take Cheap Money. Add Frantic Banks. Stir…

But enough about us. What’s new in the real estate world? A lot of weird stuff. We’re seeing second mortgages coming back for the first time in five years. We’re seeing homes prices drop so low — to $40,000 or $50,000 — that agents and lenders don’t want to work on ‘em.

We see non-recourse states like California — where borrowers can walk away from their house without being sued — working through distressed inventory faster, which tells us they’ll bottom out sooner. In places like Vegas and Phoenix, we see short sales getting approved in seven days, not seven months.

The Leaves Began to Fall. Demand Didn’t

In our own business, customers writing offers picked up sharply in mid-October, right after rates dropped below 4%. This was the first time in years we saw buyers respond to lower interest rates.

Then last week, our business slid back a bit, and will probably keep moving south for the rest of the year. November’s always risky because of the holidays but there was enough activity in October that we’ll probably see a lot of Thanksgiving closings.

Across the U.S., sales volume dropped 3% in September, but was up 11% from last year, when the market was sleeping off a tax-credit hangover. Investors accounted for fewer sales because they couldn’t find as many deals. Foreclosures have been down for a year, and still the Shadow Whisperers insist that a big wave of distressed inventory is about to wreck the market again.

Worried About Shadow Inventory? Turn on the Lights

I used to be one of those people but here’s what changed: we worried about 2006 mortgages with expiring teaser rates, only to learn that the new rates are lower than the teaser. We worried about banks flooding the markets with foreclosures after the robo-signing scandal, but their real strategy seems to be trickling it out, just so they don’t drown themselves.

This means that distressed inventory’s impact isn’t so much to lower prices as to prevent them from rising for many, many years. Whenever a seller tries to get more money, the bank will foreclose on a home down the street, undercutting his efforts. I believe the banks will be doing this not just in 2012 but in 2013, 2014.

And Home Prices Are Flat or Down or Up

The latest indexes reflect this reality. For the fifth straight month, home prices are flat: up .2% in absolute terms but really flat once you account for summer-time surges. Prices dropped 4% last winter because the government stimulus expired but nothing much has moved prices since:

The East and Midwest have been even more stable:


Adjusting for inflation, prices are at 1999 and 2000 levels and the ratio of home prices to rents are at 2000 levels too. The fact that rents are stable or rising in most cities has begun to put a floor on how far entry-level home prices can fall, barring complete economic Armageddon.

The New Normal Is Just Normal

And as the President of the Federal Reserve Bank of New York noted on Tuesday, America doesn’t really need prices to rise; would-be home-buyers just have to believe that prices have stopped dropping to get on with moving up or moving out.

For consumers this is all a bit like Scream 4: at some point you get tired of being scared and then you’re just bored.

And when you’re bored you can make rational decisions. If you need to move you will, without feeling like a sucker. If you want to flip a home for twice its value, you’ll just lose money. There won’t be another panic anytime soon and there won’t be another frenzy either. That’s a good thing.

Thanks for your support!

Best, Glenn

When Rabid Squirrels Attack

Redfin just raised $14.8 million, in a round led by Globespan Capital. The press release rattles off the stunning accomplishments that brought us to this pass: $6 billion in Redfin transactions, $85 million in savings to consumers, 97% customer satisfaction.

Michael Arrington broke the news, in a blog post with a photo of Redfin as a rabid squirrel. Which he intended as a compliment. It is a fact that his interview focused on the question, “Have you ever participated in an orgy?”

“Is this,” I asked breathlessly, “off the record?”

But the real question is: what’s the story behind the fundraising? Why did we raise more capital? Why Globespan?

Initially I didn’t want to do it. I once heard that Gene Simmons burst into an MTV playlist-meeting wearing roller skates and kneepads, asking what it would take to persuade bored executives to air a Kiss video. And this is how I’ve always thought about the fund-raising process too.

But fundraising isn’t such a riddle to us anymore because our business isn’t such a riddle anymore, to investors or to ourselves. We’re able to explain how it makes money now, and how it can make more money later. And so we told Globespan all about it, at first in an informal 2010 meeting with a managing director, Venky Ganesan.

It was then that Venky told us all about his firm’s experience with a progressive, local company we loved, Zipcar. And so we kept in touch.

Like many of us, Venky had started his own software company during the ‘90’s boom and somehow made it work through the bust. When pursuing Redfin, he used a term from a Cameron Crowe movie, “humble daily siege,” which I’ve since used on a lot of candidates Redfin is recruiting. He had a brilliant due diligence process, which relied heavily on contacting customers who’d left us Yelp reviews, good and bad. We like him a lot, and we’re glad he’s joining our Board.

Why did we raise more money? We didn’t need to, not desperately anyway. As of now, we’ve only spent a few hundred thousand of the $10 million we’d raised from Greylock in 2009. But in between, we dipped into the $10 million quite a bit because we’re a seasonal business, losing millions in winter and making millions in summer.

We emerge from our caves every spring a gaunt, scared little bear, so we decided it makes sense to put more huckleberries in the bank. And before our last round with Greylock, when we ran the business with only a few hundred thousand in the bank, we got really tight about every little risk. Like someone emerging from a crazy relationship, we hadn’t even noticed we’d gotten that way until we weren’t anymore.

We don’t want to get tight again. A company with less than 1% share of a $60 billion market can’t stop taking risks. As we’ve learned from Amazon, you have to keep making big bets, which can be capital-intensive when you’re in an operationally intensive business running at a larger scale. Our goal is thus to be as cheap as possible, even when that isn’t actually cheap.

We’ll use the money to keep expanding geographically, to offer buyers and sellers services we’ve never offered before, and to go deeper in R&D. Strap in Redfin! It’s going to be a wild ride.

You Complete Us; Let Us Auto-Complete Your Search

Today’s Redfin upgrade brings with it a couple new features you’ve told us would make your search faster and easier.  Check them out:

Auto-complete for search locations: Ever had trouble remembering the peculiar spelling of a city or neighborhood? Now, as soon as you type the third character of the city or neighborhood name on the home page or in the search box, we’ll offer suggestions to help you fill the rest in. We’d hate for a mindless spelling error to interfere with your home search.

Listing details open in the same tab: We heard you wanted quicker, smoother transitions between the map page and the listing details page.  The listing details page now opens in the same tab as the map, so you can use the back and forward buttons to move quickly between those pages. For those of you who derive comfort from the sight of a screen full of tabs, you can still open the listing details page in a new tab by right-clicking View Details and then left clicking Open link in new tab or by Ctrl + clicking View Details.

As always, if there are any other changes you’d like us to make to help improve our site, email them to feedback@redfin.com.

Happy searching!

What day of the week should I list my home?

With home sales in the gutter, anyone thinking of selling a home today can use all the help they can get, starting with what day of the week to debut.

Serious sellers know that it is important to make repairs, stage well, and showcase their home online with professional photos, but there isn’t a consensus about which day of the week you should list your home for the best results. This is evidenced by the fact that new listings on the market are spread pretty evenly between Monday and Friday, with each day getting between seventeen and nineteen percent of the total share of listings (Saturday and Sunday are much lower at five to seven percent).

Since you only get one chance to make a first impression with your listing, we decided to dig into our data to find out whether putting your home on the market on a certain day of the week is correlated with sales success. We pulled the data on over a million listings spread throughout the nation over the last twenty-one months, and here’s what we found:

• Homes listed on Sunday get marginally more online views.
• Homes listed on Friday are toured 19% more.
• Homes listed on Friday or Thursday sell for slightly closer to original list price.
• Homes listed on Friday are 12% more likely to sell in 90 days.

The difference in views and sale-to-list ratios were not very dramatic across the week, but in the tours and sales categories, Friday was the clear winner. For the most tours and the best chance of selling your home, list it on a Friday. If you are the kind of seller that is more interested in online views than actually selling your home for a good price, listing on Sunday is a great plan. But since we’re pretty sure that kind of seller doesn’t exist, we’re confident in recommending Friday as the seller’s best day to list their home.

So why would Friday be such a great day to put your home on the market? Our theory is that since home buyers tend to tour homes on the weekends (Saturday and Sunday have 2.5x as many tours per day than Monday to Friday), homes listed on Fridays are the freshest in buyers’ minds when they’re making their weekend plans. It also seems likely that many home buyers sort their weekend “must see” lists by date listed, going to see the freshest homes first so they have the best chance of getting in on a potential good deal before other buyers. These factors put homes listed on Friday in front of more touring buyers on the weekend (which our touring data bears out). More tours leads to more offers, and more offers leads to a better price and a better chance of selling.

That’s our theory, now let’s hear yours! Also, for your viewing enjoyment, we have compiled our findings into the convenient chart form below. Note that while the sales data is based on all listings, the data on views is based only on views at Redfin.com, and the touring data is based only on homes that our agents took our customers out to see.

Trying & Not-Trying

Many folks asked this past week how I’ve felt about Steve Jobs’s death, and wondered why I haven’t written about it.

When I first heard the news, I thought of a graph Jonathan Franzen drew in “How to Be Alone,” about how Franzen’s ailing father made no concessions to Parkinson’s and then, when that effort finally became unbearable, declined very rapidly, almost willfully:

The public never saw Steve Jobs suffer, but I wonder if he made the same journey, holding on to everything he loved until his resignation, and then, in the space of only a few weeks, letting go. Unlike the serial entrepreneurs now in vogue, he was someone who for his entire life made sense in only one place, at Apple.

Many, many folks have already talked about what he left behind. Over the past few days I’ve noticed that all of us, from sandwich-makers to software developers, seem to be trying a little harder to make it beautiful. On Friday night, when it was just about to get dark, the folks at Redfin opened some beers and found ourselves talking about whether we were living up to our craft. Nobody mentioned Steve.

But something about the beatification of Steve Jobs in the media and blogs has, for me, been almost unbearable. He is already in danger of becoming a Twitter hashtag, a dorm-wall poster, an online fashion accessory. I hesitated to write a post about his death because I couldn’t imagine you wanted to read another one.

Many eulogies celebrate Steve  in terms of his “products” — those mass-produced little gadgets that we love for letting  us check email in front of our friends – and lose sight of his grass-strained spirit. What always moved me about Steve was the calligraphy and the LSD, the passage to India and his firing from Apple, his struggles at NeXT and his return from the wilderness.

The insistence on Steve’s perfection, on the vast difference between him as a producer and us as consumers, seems inhuman and even lonely to me. I wish we could take a moment in eulogizing Steve to grieve for him as one frail human to another, and feel in his passing the miracle of every human life; so many other people, geniuses on a smaller scale, are struggling his struggle. It hurts me that we have so much love to give to Steve and not to them.

I also wish we could find in him a more useful story to tell ourselves than one of utter perfection; yes, it is striking that every CEO has an unspoken relationship with Steve Jobs as the ideal leader, but for every CEO I know, that relationship  is a fraught one: none of us is comfortable proceeding from the assumption that we’re perfect.

This is why my heroes have always been people who overcame their flaws: blacks and whites lined up on either side of the tracks for Robert F. Kennedy’s funeral procession only a few years after he ordered government snoops to follow Martin Luther King into public restrooms; Robert Kennedy changed. Ezra Pound composed the rag-and-bone poetry of the Pisan Cantos from an open-air cage while awaiting trial for treason.

And this is why Steve Jobs is one of my heroes. He was never perfect, especially when he left Apple the first time, but what I like about him is that he never, until the very end, stopped trying to be.

Requiem for a Dream

Redfin just took down Scouting Report 1.0 for good. Our latest problem was that the data we used for Scouting Report had problems at the source that weren’t easy for us to fix, mostly because agents work informally in teams, or sometimes don’t formally record when an out-of-town agent represented a buyer in a deal.

So we took Scouting Report down. The post I was going to write about this decision apologized a lot. I’m sorry we didn’t get the data right; it was arrogance to think that we had. I’m sorry we showed up in the Google index, too, and wish we hadn’t run any Redfin ads on another agent’s page, though these problems would have been easy to fix.

But I still think the folks most violently opposed to Scouting Report didn’t hate it because it was wrong but because it was right. I know that consumers loved it and now they can’t get it anywhere else. And I still believe that brokers should be the ones to tell regular folks how agents have performed in different neighborhoods, because we’re the only ones with reliable data.

As for the rest of the story, you can read all about it in the note I sent the company. Thanks to everyone who supported us or reasoned with us for your time & kindness.

Hi Redfinnians,
 
As you may have heard, Redfin just pulled the Scouting Report we released last Thursday to allow consumers to see the deal history and performance metrics of any real estate agent. The basic problem is that the data wasn’t accurate, first because of bugs then ultimately because of problems with the source data in MLSs.

Only a tiny fraction of transactions weren’t accounted for but it would have been enough to destroy our credibility if we had insisted on keeping Scouting Report live.  Had the data been accurate we’d have defended ourselves from MLS and agent complaints ’til hell froze over, but in the absence of accuracy we have no defense.
 
I don’t know when Scouting Report will see the light of day again, though I am hopeful that if we allow any agent to curate her own profile, we will resolve many of the inaccuracies. In the meantime, we’ll use some of the data to tell consumers when a Redfin agent has worked with another agent before.

Some of our competitors will dance on Scouting Report’s grave and say I told you so. I certainly feel frustrated that I wasn’t more thoughtful in launching the service; a beta program involving our partners would have avoided all sorts of problems.
 
We have to account for what happened over the past week as a failure, and try to understand how we can do better. Obviously, it’s my fault. I’ve thought a lot about how hard folks worked to pull this off. I wish you’d had a better leader in me. But the lesson we should draw is to be more thoughtful about making a risk pay, not more cautious in avoiding the risk altogether.
 
There are all sorts of projects that fail at any corporation for a different and less conspicuous reason, because the risk was measured out in teaspoons and the idea was compromised beyond recognition and nobody made decisions and the thing had absolutely no personality and nobody really cared in the end whether it was good or bad — or even knew that it existed. The reason most people give up on a great company like Redfin is because it stops making decisions and stops taking risks. They give up because the company loses its gonads and its heart and then its soul.
 
To which I say nuts. That wasn’t the problem here, and The Great Pumpkin willing it never will be. One of our values is to be fearless: bet big, tinker constantly, fail fast, measure results. If you see people who worked on Scouting Report don’t BS ‘em and say the first release was a triumph — man oh man it wasn’t — but maybe thank them for their fearlessness all the same. In the end it’s that spirit that makes me sure we’ll win.
 
Love, Glenn

Scouting Report, the Morning After

When Redfin first launched our home-buying service, David Eraker sent an email to the whole company that I’ll never forget:

“Strap in Team Redfin. We’re in for a wild ride.”

No truer statement has ever been made about Redfin’s journey, which took another turn last week when we launched Redfin Scouting Report. We made big mistakes. And we heard from some data providers that we couldn’t access their data.

First, I want to apologize for our mistakes and explain what we’ve been doing about them.

Days on Market: Immediately Fixed (But That Was Really Bad)
Our most egregious mistake was miscalculating how long many agents took to sell their listings. It was a bug that crawled into the code right before we launched, and we corrected it on the same day. Many thanks to Holly Weatherwax in Northern Virginia for being the first to identify the error.

Wrong Brokerage for Some Phoenix Agents: Fixed Today!
For about 10% of Portland, Phoenix and Las Vegas agents, we showed the wrong brokerage, saying for example that the agent worked for Coldwell Banker when he or she worked for Century 21. We fixed Vegas and Portland on Friday, and Phoenix this afternoon.

Only Two Years of Past Sales in Denver and San Diego: Fixed Today!
In Denver, we claimed to show sales going back to January 1, 2008, but for the most part we only had data going back to October 1, 2008 and in Boulder we had less than that. So that our data are complete and reliable for the entire Denver area, we are only going to show one year of sales there. We had the same issue in San Diego and Long Island, but will be able to show sales going back two years, to October 3, 2009. These changes will be complete this afternoon. Thanks to Bob Connors for first noticing the problem.

Dual Agency and Self-Represented Buyers: Fixed Today!
We described some agents as having represented both buyers and sellers on one deal, a controversial practice known as dual agency, when in some cases the buyer was unrepresented by an agent. This is a problem in the source data we get from Multiple Listing Services, so we can only provide a more nuanced description of dual agency, which includes the possibility of unrepresented buyers. This description will be posted throughout the site this afternoon.

Dual Agency on Phoenix REOs: The MLS Can Help!
Our old, good friend Greg Swann in Phoenix has told us that many Phoenix listing agents don’t give the buyer’s agent credit on a deal, especially when the listing is a foreclosure being sold by a bank. This is a problem in the source data maintained by the Multiple Listing Services (MLSs) used by real estate agents to share listings and record deals, so we asked two MLSs today for their guidance on the issue. Both recommended that the buyer’s agent contact the MLS compliance department to get credit for representing the buyer in that sale. These MLSs have a process for this type of issue and will work with both agents to get it fixed.

Sales Withheld from our Feed: Fixed Today!
We have also found that some agents sell a property but don’t get credit for it in Scouting Report, because they withhold a record of the sale from our data feed, known in the industry as a Virtual Office Website (VOW) feed. Sometimes, the agent allowed the sale to be included in the feed, but it disappeared due to a bug in the feed. Without that record, we can’t locate the deal on our map, determine its price or show its pictures — but we can include it in the agent’s total deal count, with a note explaining the discrepancy. We’ll do that later today. We would also encourage agents to include every sale in the VOW feed; it’s good for you, and good for every agent’s customers to see all the sale records.

Teams Where a Team-Member Is Not Listed as a Co-Agent: Email Us
We also have had agents such as Carol Carnevale contact us because deals completed by a member of their teams, under a different license number, did not show up in the team leader’s profile. When two agents list one property as co-agents, the original Scouting Report handled this well, but when an agent doesn’t do it that way, we have no other way of knowing when two agents work together as a team.  We are handling this on a case-by-case basis; if you as an agent would like your deals combined with that of another agent, contact data-issue (at) redfin (dot) com.

Data Licensing Problems: Washington DC Area & the East Bay of the San Francisco Bay Area
We also have data-licensing problems. In Washington DC and the East Bay of San Francisco, our data partners have asked for a more careful review process. We are suspending access to the Scouting Report in these areas until we can complete that review. In neither case have we discussed a specific rules violation, so we shouldn’t jump to any conclusions yet about what this means or where it’ll end up.

Sayonara Sacramento
In Sacramento, we have come to our own conclusion that Scouting Report violates data-sharing rules. We’re contacting our data partner there to confirm this, but expect to remove Sacramento access to the Scouting Report later today.

Half the Data Isn’t Good Enough: We Should Never Have Launched Atlanta Scouting Report
In Atlanta, we have become more pessimistic about the possibility of getting complete data on every agent there, so we are disabling the Atlanta Scouting Report. We should have waited to publish the Scouting Report in Atlanta until we were ready to jump through all the hoops — from both providers, not just one.

Southern California, Denver and Portland: Registration Now Required
To comply with rules from our Southern California, Denver and Portland data providers, we are requiring consumers there to register before seeing Scouting Report.

Three Data Providers Affirm that Redfin Scouting Report is Within the Rules
And the good news is that in three major areas we have heard from our data providers that Scouting Report is within the rules, which bodes well for the many other areas that have similar data licensing contracts.

Here’s a summary of how everything has ended up, in every area that Redfin serves:

What’s Next?
Who knows! Surfacing millions of records that have never seen the light of day before is always a bit like opening Pandora’s Box. But it’s worth it in the end if you can get it right. That’s what we’re trying very, very hard to do, working late in the night and through the weekends. Again, we are sorry for all the ways we screwed up in presenting data from dozens of feeds, based on thousands of rules.

Though we will not shy away from our responsibility to be authoritative and reliable, we also think it’s a mistake to set ourselves up as the sole authority on an agent’s performance. We already encourage agents to contact us with corrections, but we will at some point add a more public way for an agent to comment on what we’ve published about him or her.

That said, we’re not interested in Scouting Report becoming a marketing vehicle for agents who work for other brokers; promoting a brokerage’s agents is, after all, that brokerage’s role. But we do think it’s important that the brokers, and not pay-for-play media sites, provide the most reliable record of what agents have done and where. It’s hard, but not impossible, and it’s worthwhile. Redfin is just the first broker to do this, not the last.

Which Areas Will Be Most Affected by Lending Policy Changes?

Over the weekend, the U.S. stopped guaranteeing big loans in expensive cities, and ever since the folks in real estate have been holding our breaths to see the market’s reaction. Now Redfin has released new data showing which areas are most vulnerable to the policy change.

First, some background. The reason the government began backing bigger loans in 2008 was because the banks were too jittery to fund jumbo loans on their own. Today, the banks are still jittery about jumbos, but the government is intent on letting the market take its course all the same.

In LA, San Francisco, Washington DC and New York, the government will now only guarantee loans borrowing less than $625,000, whereas on Friday the the limit was $729,750. This means that if you’re borrowing more than $625,000 in those areas today, you’ll now have to pay higher interest rates, and you may not be able to qualify for a loan at all. This could lead to fewer sales.

Projections have differed sharply. Last Monday, the head of the California Association of Realtors was apoplectic: “This is just going to kill us,” Beth L. Peerce told the LA Times’s Alejandro Lazo. But the Federal Reserve estimated that only 3.4% of the loans backed by the government last year would have been affected by the lower loan limit. The Wall Street Journal article citing this data was the most-emailed real estate news for three days straight.

So who’s right, the government or the Realtor association? It depends not just on whom you ask but where. For the areas we cover, Redfin Real Estate Scientist Tim Ellis analyzed sales activity over the last six months county by county and neighborhood by neighborhood to project which areas would be hit hardest. Let’s look first at the county data, so you can also see how loan limits changed:

As you can see, most of the U.S. won’t feel a thing at all, but a few counties will.

Where did these numbers come from? To calculate the percentage affected, we looked at closed sales where the loan would have been below the older, higher limit, but was still above the new, lower limit.

And since government-guaranteed loans require a 20% down-payment, the affected home-prices are actually higher: where you can now borrow $625,500 with a 20% down-payment, you can buy a home worth $781,850. Where the upper limit used to be a $729,750 loan, this allowed you to buy a $912,188 home.

To project how many LA or DC homes are likely to sell for more than $781,850 but less than $912,188, we looked at sales that closed between April 1 – September 30—not currently active listings—just because active listings don’t always sell for their asking price.

There is a gap in this analysis, because loans directly ensured by the FHA don’t require a 20% down-payment, thus expanding the range of homes for which demand will be affected. But we focused on conventional government-backed loans to get a simple, conservative answer.

In order to better visualize how the effect varies by location, we created zip code heat maps of each of the above-listed regions. Here’s the Bay Area, which looks like it will be hardest hit by this change. Click on any zip code to see the breakdown. Red represents 20% or more affected, Orange for 10% to <20%, Yellow for 5% to <10%, and Blue for <5%.

Here are links to the full collection of heat maps (or just zoom out and drag the above map to your area):

• Bay Area
• Washington DC
• San Diego
• Boston
• Seattle
• Los Angeles
• Queens, NY
• Sacramento
• Baltimore
• Portland

Finally, let’s break this down in list form by neighborhood and by city.

San Francisco
Within the hardest-hit county of San Francisco, we can see that the area where I used to live, the Castro and Mission Dolores, is the likely to be most affected:

• Castro: 24.2%
• Bernal Heights: 23.2%
• Mission Dolores: 19.0%
• Russian Hill: 18.6%
• Central Sunset: 18.4%
• Miraloma Park: 17.9%
• Noe Valley: 16.8%
• Potrero Hill: 15.9%
• Sunset District: 15.8%
• Marina District: 15.2%
• Twin Peaks West: 14.8%
• Richmond District: 12.0%
• Mission Bay: 11.9%
• South Beach: 11.4%
• Potrero: 11.3%
• Parkside: 10.9%
• Mission: 10.8%

San Mateo County, Northern California
Traveling south to the second hardest-hit county, San Mateo, we project that the damage will be concentrated mid-Peninsula and north:

• Belmont: 23.7%
• San Carlos: 21.1%
• Millbrae: 19.7%
• Foster City: 15.7%
• San Mateo: 10.0%
• Burlingame: 9.9%
• Redwood City: 9.0%
• Menlo Park: 8.1%
• Half Moon Bay: 6.7%

San Mateo County, Northern California
Rounding out the Bay Area in Santa Clara County, the most-affected areas are all south of downtown San Jose:

• Almaden Valley: 21.7%
• Willow Glen: 16.6%
• West San Jose: 12.8%
• Silver Creek: 11.3%

Fairfax City & County, Northern Virginia
Outside of DC, the closer you get to the Potomac River, the greater the effect:

• Wolf Trap: 20.7%
• Great Falls: 17.2%
• McLean: 15.4%
• Mantua: 14.1%
• Tysons Corner: 11.5%
• Dunn Loring: 10.3%

Arlington County, Northern Virginia
In tiny Arlington County, the most affected areas were all within Arlington, not Alexandria, so we look at the data by neighborhood:

• North Rosslyn: 18.3%
• Courthouse: 15.6%
• Rosslyn: 14.9%
• Lee Heights: 14.1%
• Radnor / Fort Myer Heights: 9.3%

Washington DC
And in Washington DC, the damage is scattered throughout town:

• American University Park / Friendship Heights / Tenleytown: 34.0%
• Southeast Chevy Chase: 30.0%
• Capitol Hill: 13.9%
• Massachusetts Avenue Heights: 13.0%
• Mount Pleasant: 12.2%
• Capitol Hill/Lincoln Park: 12.1%
• Glover Park: 11.7%
• Van Ness/Forest Hills/Wakefield: 11.4%
• Howard University/Le Droit Park: 10.2%
• Glover Park/Cathedral Heights/McLean Gardens: 10.1%
• Foxhall/Palisades/Spring Valley/Wesley Heights: 10.1%
• Stanton Park: 9.2%
• U Street Corridor: 8.5%
• Cardozo/Shaw: 7.9%
• Northwest 7.8%
• Georgetown: 7.3%

San Diego County, Southern California
In San Diego, the most-affected cities are mostly along the beach north of the city:

• Solana Beach: 27.6%
• Carlsbad: 16.9%
• Encinitas: 14.5%
• Coronado: 13.9%
• Poway: 9.3%

Orange County, Southern California
In Orange County, the damage is mostly off the coast:

• Laguna Beach: 15.1%
• Yorba Linda: 13.3%
• Ladera Ranch: 12.6%
• North Tustin & Tustin Foothills: 12.2%
• Rossmoor: 11.5%
• San Clemente: 10.1%

LA County, Southern California
In Los Angeles, the affected areas are all over the map:

• La Canada Flintridge: 17.8%
• El Segundo: 16.1%
• Sierra Madre: 14.9%
• Calabasas: 14.7%
• Westlake Village: 14.5%
• Manhattan Beach: 14.2%
• Rancho Palos Verdes: 13.3%
• Arcadia: 13.3%
• West Hollywood: 13.3%
• Rolling Hills Estates: 12.8%
• Palos Verdes Estates: 12.4%
• Redondo Beach: 12.1%
• Hermosa Beach: 12.0%
• Beverly Hills: 11.4%
• East San Gabriel: 11.1%
• La Crescenta-Montrose: 10.9%
• Santa Monica: 9.6%
• South Pasadena: 9.3%

Suffolk County, Boston Area
In Suffolk County, the hardest-hit areas are all in Boston:

• Bunker Hill/Thompson Square: 12.5%
• Charlestown: 9.8%
• City Point: 9.0%
• South End: 8.8%
• West Roxbury: 8.7%
• Downtown: 8.1%
• North End/Waterfront: 7.8%
• Central: 6.9%
• Brook Farm/Veterans of Foreign Wars Parkway: 6.8%
• Upper Washington: 6.7%
• West Broadway/D Street: 6.6%
• Jamaica Hills: 6.3%

King County, Seattle Area
And finally in King County, the areas most likely to be affected are on the Eastside:

• Sammamish: 16.4%
• Mercer Island: 11.3%
• Newcastle: 10.8%
• Redmond: 8.5%
• Bellevue: 8.2%
• Vashon: 7.9%

Within Seattle, the side of Queen Anne facing Lake Union (11.0%) will be hit hard too.

Over the next few weeks, Redfin will track whether closed sales are declining in these areas, so we’ll keep you updated on how the projections compare with reality.