Topic: Housing market has hit a ‘significant slowdown’ in recent weeks, Redfin CEO says (Read 169 times)

More than One in Four Home-Sellers Dropped their Price Last Month

Share of homes with price drops reached a record-high in September

Signs continue to point toward a changing market that’s letting homebuyers be more selective as supply constraints begin to ease in the hottest markets. As a result, sellers are feeling compelled to adjust their expectations — and their prices. In the four weeks ending on September 16, 26.6 percent of homes listed for sale had a price drop, the highest level on record since Redfin began tracking this metric in 2010. We define a price drop as a listing price reduction of more than 1 percent and less than 50 percent.



“After years of strong price growth and intense competition for homes, buyers are taking advantage of the market’s easing pressure by being selective about which homes to offer on and how high to bid,” said Taylor Marr, Redfin senior economist. “But there are some early signs of a softening market, and the increase in price drops may be another indicator that sellers are going to have trouble getting the prices, and the bidding wars, that they may have just months ago. Instead, many are finding their homes are sitting on the market without much interest until they start reducing their prices.”

According to a Redfin analysis of all homes actively listed on the MLS for sale in the markets where Redfin operates during the four weeks ended September 16:

• The share of home-sellers who dropped their price increased 4.8 percentage points from the same period a year earlier, when 21.7% of homes had a price drop.
• The share of homes with price drops has been posting year-over-year gains consistently since late March.
• Las Vegas (+12.3 points to 28.1%), San Jose (+10.7 pts to 25.7%), Seattle (+10.1 pts to 37.1%), and Atlanta (+9.0 pts to 27.9%) were among the markets that posted the biggest year-over-year increases in the share of homes with price drops.

The Redfin Housing Demand Index — a monthly indicator of homebuyer demand that was flat for the third consecutive month in July — also suggests easing inventory is giving buyers more room to carefully consider their purchases.

“In a market where we’re seeing more inventory, sellers may choose to use price reductions to continue to generate interest in their home for sale,” said Jessie Culbert, a Redfin agent who works with sellers in Seattle. “Ultimately, the market dictates the appropriate price for any given home. We use data and on-the-ground insight to recommend the initial price, but sometimes we just need more exposure to the market, or more time to hear feedback, and then we’ll work with our clients to adjust the price accordingly.”

https://www.redfin.com/blog/2018/09/more-than-one-in-four-home-sellers-dropped-their-price-last-month.html

Interesting, I kind of hope so since I am in the market to  buy something new.

Do you know how people avoid exchanges or crypto services which charge higher fees? That's one advantage which could make crypto financing more appealing. It would be much more appealing to buy real estate with crypto and avoid fees involved in converting crypto to fiat.

There are many newly made millionaires and billionaires in crypto who could afford to buy real estate outright. That is a logical market to tap.

Also there are many HODL'ers holding bitcoin and other crypto. They might be tempted to buy real estate if prices were lower and terms were better.

That is what I am trying to point out, because your earlier post :
Says otherwise of what you are trying to say now. Even if the buyers will wait and hold their money for awhile I don't think they will have a better deal if they do so as Real Estate properties are still increasing in terms of value.

Let say that you get the whole 200,000$ in the value of cryptocurrencies, why would the buyer still go in that option? What will be the advantage for this people opting to choose cryptocurrency based financing over the traditional banking based financing? I don't think it would be more affordable to the person buying as they still need to be financially capable of paying back those loans, or else they can be screwed over by choosing the more affordable option.

Bolded: unlike crypto markets, the price of real estate isn't determined by the price people are willing to pay for it. The price of real estate can increase while sales diminish.

For those thinking of buying real estate, it could be worth waiting awhile if a negative market correction occurs.

Au contraire. I believe there could be a market for crypto based financing. The rationale for it revolves around efficiency. It could cost upwards of 3% to 5% or higher to convert a crypto currency like bitcoin to fiat. Think of the price of a house which can easily reach $200,000. Converting crypto to $200,000 in fiat could cost more than $10,000 in conversion fees, without counting taxes and other costs.

There are consumers who could look at those prohibitive costs and simply refuse to pay them.

However if real estate were denominated explicitly in crypto and consumers could purchase real estate without paying 3% to 5% or higher in currency conversion, they might be willing to buy.

Crypto based financing would be more affordable and more appealing and it would be more likely to boost sales in real estate markets in comparison to current alternatives.

If you are looking for a decline in real estate value, I don't think it will happen soon as the article itself stated that the sold houses/property are still gaining value which means real estate properties are still a positive asset to own. The real estate market having a decline in sales means that they have exhausted most of the people who are wanting to have their own real estate property, we cannot assume that all people living in the US right now want to have their own house as they might be satisfied renting out an apartment or a condo unit to save as much income as they can.

Also I don't think cryptocurrency based financing could be a solution for their problem, because most of the debtors who are availing that kind of loans are also liquidating it back to Fiat. Maybe some of their sold properties might be already bought in this kind of financing and they just don't know about it yet. Also to top it off they must be qualified or in other words financially capable of paying back that loans first before availing that kind of financing solution.

....

This could signal a long term decline for sales in real estate markets.

For those thinking of buying real estate, it could be worth waiting awhile if a negative market correction occurs.

Real estate sellers could adopt crypto currency based financing sooner than expected if they become desperate for sales.

Its long been known that fewer consumers are able to afford real estate as wage growth fails to match inflation. This was offset to a degree by real estate development and new home construction failing to keep up with population growth, which in turn made living space a scarce commodity. Foreign investment also provided a boost to real estate sales with many foreign nationals desiring legal immigration into the USA.

Is this a significant slowdown which will have long term negative impacts on the value of real estate in the USA?

Or is it merely a cyclical phase which will be replaced by price growth at a later date?

What do people think about this?

Redfin stock dives after top exec says sudden downfall is expected to continue in August and September

The housing market hit a sudden and “significant” slowdown in the past few weeks that could continue in coming months, Redfin Corp.’s chief executive said Thursday afternoon.

The real-estate brokerage and website company announced second-quarter earnings Thursday afternoon that beat expectations, but the company’s third-quarter forecast came in short of what Wall Street was projecting. On a conference call to discuss the results, Chief Executive Glenn Kelman reported that Redfin had pulled down its forecast after “an unexpected drop in Redfin’s bookings growth in the past three weeks, slowing traffic growth in a weakening real-estate market.”

Redfin RDFN, -22.39%  stock, which fell in extended trading after the forecast was made public, saw that decline accelerate to a loss of almost 10% after Kelman spoke Thursday afternoon, but he did not hold back. He said a decline in U.S. home sales in June was expected to reappear in August and September after a slight relief in July, specifically calling out difficulties in markets on the West Coast that have driven home sales higher in the past few years.



“For the first time in years, we are getting reports from managers of some markets that home buyer demand is waning, especially in some of Redfin’s largest markets,” Kelman said, specifically calling out Seattle, Portland and San Jose as areas where inventory was still tight but did not seem to be pushing prices higher still.

“June sales were down in these markets by double-digits and inventory was up also by double-digits,” he said of the West Coast cities. “The trend is continuing in July and reports are now coming in from Washington, D.C.; Boston; Virginia and parts of Chicago as well that homes there are getting harder to sell.”

Both existing-home sales and new-home sales declined in June, but price gains on the homes that did sell actually accelerated, according to CoreLogic’s Home Price Index for June, which was released earlier this week. Other trackers like the S&P/Case-Shiller national index show decelerating price increases, but were still reflecting double-digit price increases in the San Francisco and Seattle areas. Pending-home sales were also lower than the previous year in June, according to the National Association of Realtors, the sixth consecutive month that metric trailed the previous year.

Redfin’s position as a website used by those who may not be actively looking to buy a home, and a brokerage that actually works with those who are buying and selling, gives it a unique perspective on the housing market. Kelman was clear that he was basing his fears on elements from both, as slowing traffic growth and worrisome rates of closing sales in three of the past four weeks caused the cautious guidance and warning.

“We aren’t entirely sure how much of it is the market and how much of it is us because our guidance is based on a slowdown that only occurred in the last few weeks. It was a significant slowdown,” Kelman said. “It may be that we have a good week this week and a good week next week and we can outperform it. But we are seeing a significant change.

“My guess is that only some of it is driven by the environment. It is definitely changing.”

Despite the concerns, Redfin announced that it is expanding its Redfin Now service that buys and sells houses, which Goldman Sachs analysts have called a “necessary” step for the company as startups using the so-called iBuyer approach proliferate. Goldman downgraded Redfin and rival Zillow Group Inc. ZG, -3.89%  in June.

Zillow also had issues after its earnings report earlier this week, falling 16.3% Tuesday after also announcing a forecast that was weaker than expected. Zillow also has an “iBuyer” program called Instant Offers, and one analyst asked Kelman about what effects greater competition in buying and selling homes between the two online real-estate titans could have.

“Well, first of all we haven’t competed directly with Zillow and its Instant Offers program in any market, we just don’t have overlapping markets. My expectation is that, it will be a price war,” he said. “We’ll probably put more pressure on sales volume than gross margin because rather than take more risk on a property and offer a price that we’re not sure we can beat when we flip the home, we would just have to step back and let someone else have that sale and take that risk.”

Redfin, which went public just more than a year ago, has seen shares decline 26.1% this year, as the S&P 500 index SPX, -0.71%   has gained 6.9%. After its big fall earlier this week, Zillow has still gained 25.1% on the year, and has a market capitalization of $10.3 billion, about five times more than Redfin.

https://www.marketwatch.com/story/housing-market-has-hit-a-significant-slowdown-in-recent-weeks-redfin-ceo-says-2018-08-09