With Amazon’s highly anticipated HQ2 announcement set to go public sometime before the end of the year, many are wondering how the Seattle area will be impacted by the big shift. There are still many unknowns, but even before the final decision has been announced, Amazon HQ2 is already beginning to tap the brakes on Seattle’s frenzied housing market.

“From my conversations, it seems that some would-be buyers are waiting on the sidelines for the announcement of where HQ2 will be located,” said Seattle Redfin agent Jessie Culbert. “If they work for Amazon now, they may decide to relocate to be closer to family and friends. If they don’t work for Amazon and plan to stay in Seattle, they may wait to see how additional inventory on the market could impact pricing.”

Over the past 10 years, Amazon has grown more than tenfold in the city of Seattle, from about 4,000 employees in its hometown to over 45,000. During the same time, the median home price in the city has shot up from $420,000 to $720,000 (according to the Northwest MLS) and home prices in the metro area as a whole have gone up 47 percent. That’s nearly twice as high as the national increase of 24 percent according to the S&P Case-Shiller Home Price Index.

Between 2008 and 2018, over 535,000 homes have sold in the entire Seattle metro area. For comparison, that’s 41 percent more than in the similarly-sized San Diego metro area. Much of this growth in the local housing market can likely be attributed to growth at Amazon.

Not every new Amazon hire in Seattle also buys a home in Seattle (or at all), but with an average salary of over $110,000, they could certainly afford to. If every new employee Amazon hired in Seattle over the past decade had bought a home in the city, they would have accounted for 38 percent of home sales in Seattle over the past 10 years.

Once Amazon announces the location of its HQ2 and begins hiring there in earnest, it will inevitably slow the Seattle housing market, at a time when inventory is already on the rise and a historic rental building boom is leading to a surging apartment vacancy rate.

“All of this is happening at a fascinating time for Seattle as we’re about five months past a period of frenzied multiple-offer and escalated-price scenarios,” added Culbert. “The market is already quite sedate compared to last fall, and any dramatic shifts prompted by Amazon HQ2 could have a significant impact.”

Amazon has said that HQ2 will “include as many as 50,000 high-paying jobs” and will be “a full equal to our current campus in Seattle.” Since current estimates put employment at their Seattle HQ at around 45,000, these statements imply that we can guess most of their new hiring in the coming years will be at HQ2, and growth at the Seattle HQ will slow significantly, gaining only around 5,000 additional jobs during the time it takes HQ2 to ramp up to 50,000.

In Seattle, the difference between a frenzied seller’s market with only one or two months of supply (calculated by dividing the number of homes listed for sale at the end of a month by the number of homes sold during said month) and a relaxed buyer’s market with five or six months of supply is just 300 to 600 sales per month. Amazon’s growth of 40,000 people over the past 10 years averages out to roughly 330 people per month–easily enough to dramatically swing the local housing market.

So what could Amazon HQ2 mean for Seattle? Let’s consider some hypotheticals on opposite ends of the spectrum.

Extreme scenario

At the most, let’s say that Amazon HQ2 rapidly overtakes the Seattle HQ, hiring at Seattle HQ drops to near-zero, and HQ2 draws half of the current Seattle employees away over the course of the next five years.

This scenario would result in a net outflow of 4,500 Amazonians per year leaving Seattle. If most of those people are also selling homes, that would be an average of 375 new listings every month. For context, the city of Seattle has seen an average of around 1,100 new listings per month over the last 12 months, so that would be a 34 percent jump, sending listings to their highest levels since 2009. If we add 375 new listings and cut around 330 sales per month, months of supply in Seattle would shoot up from an average of 1.1 over the past 12 months to well over 6 by the end of 2019.

Less extreme scenario

At the least, let’s say that Amazon slows hiring in Seattle to half of its previous level and 5 percent (one in 20) of Amazon Seattle employees decide to leave for HQ2, spread over the next two years.

If one out of every 20 employees at Amazon HQ decided to sell their home in Seattle and transfer to HQ2 over the next two years, that would result in around 94 additional new listings each month. Combined with a drop in sales due to decreased hiring at the Seattle HQ, even this scenario has the potential to shift the balance of the Seattle housing market into buyers’ favor by 2020.

It’s anybody’s guess…

If Amazon does slow hiring in Seattle as it grows HQ2, the local housing market won’t collapse, but we will definitely see a noticeable slowdown. Unless hiring by other local technology firms dramatically picks up, we can expect to see more listings, fewer sales, slower price growth and a relatively rapid move back to a more balanced market in Seattle over the next few years.

The post Amazon HQ2 Could Quickly Turn Seattle Into a Buyer’s Market appeared first on Redfin Real-Time.

The Redfin Scholarship is a way for Redfin to help students on their journey through higher education. The scholarship application period occurs twice yearly with awards given to a student in both the spring and fall. Here is the student essay that won the 2018 spring scholarship. Congrats Lauren LaCasse!

Essay Prompt: How do you think Gen Z and Millennials are changing the real estate industry? What do these generations value in housing that previous generations may not have?

Until recently, the American Dream has been overwhelmingly driven by consumerism, a lifestyle which encourages the acquisition of things, real estate included, in ever-increasing amounts. Under this ideology, people consume goods hoping to find happiness within them, a dangerous inclination. Fortunately, this paradigm is shifting as some Millennials and Gen Z wake up to the damaging effects of consumerism. Those seeking to be released from the shackles of consumerism are turning to minimalism, a lifestyle which encourages the removal of things that distract us from what we value most such as other people, places, activities and experiences. As the minimalist lifestyle becomes more popular among Millennials and Gen Z, the real estate industry will see a decrease in the ownership of traditional, long-term and stationary homes because these generations value mobility more than previous generations.

Living arrangements typically associated with the American Dream are becoming less suitable for Millennials and Gen Z as they adopt lifestyles geared towards minimalism. A traditional living arrangement as defined by previous generations is a house, relatively permanent and immobile, but with newer generations favoring lifestyles centered around travel and experience, these types of dwellings can feel rather restrictive. Although some members of these younger generations will continue to pursue traditional living arrangements, I predict the real estate industry will see a large increase in renting rather than ownership. Renting caters to a mobile lifestyle as it’s easy to relocate given the minimal commitment it requires. In addition, ownership of fewer things, as promoted by minimalism, requires less space and because of this, I predict the trend of small houses and mini houses will take root. These dwelling are typically between 400 and 1,000 sqft and some of them are constructed on trailers making them mobile and ideal for travel. As a result of the freedom found in renting and tiny houses, Millennials and Gen Z are likely to pursue these arrangements over traditional arrangements to suit an unconstrained way of life.

With their evolving values and ideals geared towards experiences rather than possessions, Millennials and Gen Z are likely to choose housing that enables an unrestricted and mobile lifestyle; Renting and small homes are both viable options. Although a permanent residence has been a long-standing housing standard in terms of the American Dream, these younger generations have the potential to revolutionize the real estate industry.

Student Biography

Lauren LaCasse was born and raised in Minnesota. She grew up near the Twin Cities and graduated from Roseville Area High School in the top 5% of her class. She is attending Hamline University, located in Saint Paul, to pursue further education.

The fall application period is from November 1 – January 31. Click here for more information.

The post Redfin’s Scholarship Winner Examines Gen Z and Millennials Impact on the Real Estate Industry appeared first on Redfin Real-Time.

While expensive coastal markets on the coasts like Seattle and San Jose are cooling off, with homes lingering on the market longer than this time last year as bidding wars become less common, some smaller, affordable inland metro areas are heating up. Atlanta, Akron, Ohio and Rochester, New York are a few of the metro areas where supply is shrinking, leaving more homes to go under contract within days, and for above-list price than a year ago.

To find the markets that are still heating up we ranked the top 25 metro areas with populations of at least 500,000 people according to three indicators of a competitive seller’s market, based on data for the four weeks ending October 14, compared with the same period a year earlier:

• Declines in the number of homes for sale (inventory)
• Increases in the share of homes going under contract within two weeks of their market debut
• Increases in the share of homes selling for more than their list price

Top metro areas where the market is heating up the most

Contrast the numbers above with markets like Seattle, San Jose and Portland, where inventory has been increasing by double digits, and the shares of homes going under contract quickly is shrinking. Homes in the metro areas that are heating up are also considerably less expensive than not only the hot coastal markets, but also than the national median price of about $300,000. Plus, except for Atlanta and Philadelphia, all of the heating-up metro areas are smaller, with populations under 2 million. Atlanta is also a top migration destination, moving up from #5 among long-distance Redfin.com user searches in the third quarter of 2017 to #2 in the third quarter this year.

“Competition in Wilmington has become fierce and often buyers have to offer over asking and compete against three to six other offers,” said local Redfin agent Claryssa McEnany. “I’m working with several buyers moving to the area from New Jersey who have expressed that they want to escape the higher property taxes that they can no longer fully deduct.”

Markets like Wilmington are still deep in seller’s market territory, “Too many sellers are staying put!” according to McEnany. “Buyers are motivated and want to move now but there just aren’t enough homes available.”

In the face of the inventory shortage that has been worsening since early 2016, some of McEnany’s clients are choosing to expand their search area or make more compromises to get into a home.

It’s likely that even if the real estate slowdown becomes more widespread, these inexpensive markets will continue to show strength thanks to their big advantage in affordability.

Featured photo: 305 W Hortter St., Philadelphia, listed by Redfin

The post Akron, Richmond and Buffalo Among the Eight Inland Housing Markets that are Heating Up as the Coasts Cool appeared first on Redfin Real-Time.

Have you ever watched a renovation show and loved the home so much you wished you could move right in?  Here is your chance!

This home in North Bethesda, Maryland, which just hit the market this week, will be featured in a new TV show on DIY Network called Best House on the Block. The show features Lauren and David Liess, a husband and wife design and renovation team, who update and transform cookie-cutter homes around the Washington, D.C. area.

The typical 50s rambler in the Randolph Hills neighborhood was completely overhauled for the show. Liess and her team created an open floorplan, doubled the size of the kitchen and reworked a staircase to a create an open and bright space. A wall of windows was added in the kitchen to add sight lines into the backyard, which backs up to a wooded park. The custom wood island and built in bookshelves add character and functionality. The exterior also got a facelift with new paint and landscaping that make the home stand out from the identical brick homes in the neighborhood.

You can see some of the highlights from the renovation in this trailer.

Homeowners David and Kelly said participating in the show required them to turn over complete trust in Lauren and her team. “We gave them an idea of our taste and aesthetic, but they made all of the decisions after that,” said David. “We were completely surprised and delighted with how it turned out. They completely nailed it.”

Since the renovation last year, the family has been loving the updates and entertaining friends in the space. They are moving to Cincinnati to be closer to family. Leaving the home is bittersweet, but they are happy a new owner will have a chance to enjoy the home and its designer updates.

In the market for a home in Maryland? This property is listed for $525,000. Tour it today with a Redfin Agent!

The post The ‘Best House on the Block’ Could be Yours! appeared first on Redfin Real-Time.

Potential Investors Are Looking for Homes to Rent to Amazon Employees

According to news reports, Amazon is narrowing in on Crystal City and Long Island City as locations for its HQ2 (or maybe HQ2s). Since news broke over the past weekend, Redfin agents in both regions are reporting a noticeable jump in calls, emails and tour requests from prospective homebuyers interested in homes in these neighborhoods.

Online views of homes currently for sale in Crystal City and Long Island City on Redfin.com have skyrocketed. In the first seven days of the month, views of homes for sale in Long Island City were up 648 percent compared to the same period a year ago. Views of listings in Crystal City increased 371 percent year over year.

Redfin agent Mara Gemmond has a two-bedroom condo with views of the Washington Monument and U.S. Capitol listed for sale in Crystal City. After being on the market for several weeks with moderate interest, showings have gone through the roof since Monday. “I believe there is a lot of interest from investors who want a property they can rent out to a future Amazon employee, or possibly use for corporate housing. Investors are betting that prices will rise quickly, and they’ll be able to rent or sell for a nice profit once Amazon comes to town.”

Mara described the situation as the start of a horse race, with buyers getting lined up and ready to go, just waiting for the gates to open.

Leslie White, an agent in Washington, D.C., received a call in mid-October from a buyer in the Midwest. “She plans to purchase a small condo in the District that she can rent out, but she’s only interested in buying if Amazon moves to the region.”

Leslie says, “While it’s still speculation at this point, some buyers are considering taking action before a formal announcement from Amazon to get ahead of the news and the increase in demand and prices that is likely to result.  At the same time, prospective sellers right now are weighing whether it makes sense to delay putting their home up for sale to see if they can get more for their home after Amazon makes its announcement.”

The post Views of Homes in Crystal City and Long Island City Spike After Amazon HQ2 News Reports appeared first on Redfin Real-Time.

The average price cut was $27,500, down from over $30,000 a year earlier

On a percentage basis, price drops were the smallest we’ve ever recorded in Seattle at 3.6%

Here’s another sign that the housing market in the Seattle area is rapidly cooling off: The portion of home sellers who dropped their list price hit a record high of 47 percent in October. During the same month a year ago just 33 percent of listings had a price drop.

Price drops typically level off in the late summer, but by July of this year they had already passed the October 2017 high and have continued to soar into the fall, reaching levels higher than any time on record in Redfin’s data back through 2010.

The market has slowed, and sellers are becoming acutely aware of it. However, even while the share of home-sellers dropping their prices soars, the size of those discounts has been shrinking. The average home price drop last month was $27,539, down from $30,242 a year earlier and dramatically below the all-time high of $46,164 in April.

October price drops averaged 3.6 percent of listing price, down slightly from 3.8 percent a year ago and the lowest level we’ve seen since at least 2010.

“The market is in a bit of a stalemate,” explained local Redfin listing agent Jessie Culbert. “It will be interesting to see if things shift now that the midterm elections are over and Amazon’s HQ2 announcement is official. Those have felt like blocking items but if they don’t shake things loose, we may be in for a longer period of flat sales.”

Typically the portion of home listings with price drops peaks each year in October, so it is likely that we will see this measure fall over the new few months. If it continues to climb through the fall and winter, that could be a strong sign that the market will be significantly softer in 2019 than it was in 2018.

The post Almost Half of Seattle-Area Homes for Sale Dropped their Price in October, but by How Much? appeared first on Redfin Real-Time.

Home Inventory Continues to Grow as Sales Decline 6% Year over Year

U.S. home-sale prices increased 4.5 percent in October compared to a year ago, to a median of $297,200. October’s year-over-year price increase marks a return to an overall healthy level of price growth after posting a 6.5-year low level of growth in September. Home prices typically decline from September to October, having fallen by an average of 1 percent between the two months over the previous eight years. This October however, prices increased nationally 2.4 percent month over month. Despite this national increase, just 32 of the 71 largest metro areas Redfin tracks saw home prices increase from September to October, which suggests that the monthly gain is due to the share of homes selling last month shifting slightly to more expensive areas rather than individual homes increasing in value.

However, evidence that the market is cooling down can be seen in price drops. In October 31.3 percent of homes for sale had at least one price drop of more than 1 percent. This is the highest share of price drops on record since Redfin began tracking this metric in 2010, and 6.3 percentage points above last October’s level of 25 percent. In Seattle, almost half of homes for sale had price drops, with an average price cut of $27,500, down from more than $30,000 a year earlier.

The number of homes for sale was up 1.3 percent from a year earlier. This was the highest level of inventory growth since September 2015. National inventory growth continues to be driven by big increases in softening coastal markets like San Jose (110.9%), Seattle (73.2%), San Diego (38.2%), and Boston (17.3%).

The number of homes newly listed in October rose 5.4 percent year over year, but the number of completed home sales continued to sink, dropping 5.7 percent from 2017. Home sales declined in 59 of the 71 largest metro areas that Redfin tracks.

Metro areas like Seattle, San Diego and San Jose, where high home prices mean that rising mortgage rates have the largest effect on affordability, are seeing the biggest increases in inventory coupled with decreasing sales. As of last week, the average interest rate for a 30-year fixed-rate mortgage had increased to a seven-year high of 4.94 percent. The biggest sales declines were in some of the most expensive metros, including Seattle (-19.6%), San Diego (-15.7%), and Honolulu (-22.9%).

“An increase in interest rates effectively makes home-buying more expensive because buyers have to pay higher monthly mortgage payments even if the sticker price hasn’t changed,” said Redfin chief economist Daryl Fairweather. “Some homebuyers are adjusting their price range down, and others are backing out of home-buying entirely–deciding that renting is a better deal. Sellers are now realizing buyer demand isn’t what it used to be and are dropping their prices. When buyers and sellers are on the same page, the market moves quickly, but since sellers were slow to react, we’ve seen a slowdown in the housing market.”

Across Redfin metros, the typical home that sold in October went under contract in a median of 43 days, two days faster than last year. This October, 20.3 percent of homes sold above the list price, down from 22.9 percent last October. The share of homes that went under contract within two weeks also fell, from 23.6 percent last October to 21.3 percent this October.

“Another factor we’re watching closely as we examine national housing market trends going into the end of the year is the devastation of the California wildfires,” Fairweather continued. “While the fires are disrupting many Californians lives and therefore any immediate home-buying plans, we’re already hearing from Redfin agents in Southern California that they expect homeowners and homebuyers to be resilient as they have in the face of past natural disasters, with renewed commitment to rebuilding and picking up where they left off with a home search. The fact is that rising mortgage rates and high home prices have a bigger long-term effect on the local housing market than the fires’ destruction.”

Other October Highlights

Competition

• Boston was the fastest market, with half of all homes pending sale in just 15 days, down from 14 days from a year earlier. Grand Rapids, MI and San Francisco were the next fastest markets with 16 and 17 median days on market, followed by Oakland, CA (17) and Omaha, NE (17).
• The most competitive market in October was San Francisco where 72.5% of homes sold above list price, followed by 55.6% in Oakland, CA, 55.4% in San Jose, CA, 39.2% in Boston, and 38.8% in Buffalo, NY.

Prices

• Knoxville, TN had the nation’s highest price growth, rising 16% since last year to $203,000. Grand Rapids, MI had the second highest growth at 12.8% year-over-year price growth, followed by San Jose, CA (11%), Las Vegas (10.8%), and Kansas City, MO (10.5%).
• 4 metros saw price declines in October including Honolulu (-8.6%), Baton Rouge, LA (-0.5%), Montgomery County, PA (-0.5%), and Hampton Roads, VA (-0.3%).

Sales

• 2 out of 71 metros saw sales surge by double digits from last year. Birmingham, AL led the nation in year-over-year sales growth, up 14.2%, followed by Louisville, KY, up 13.6%. New Orleans rounded out the top three with sales up 7.8% from a year ago.
• Honolulu saw the largest decline in sales since last year, falling 22.9%. Home sales in Seattle and Rochester, NY declined by 19.6% and 16.0%, respectively.

Inventory

• San Jose, CA had the highest increase in the number of homes for sale, up 111% year over year, followed by Seattle (73%) and Oakland, CA (42%).
• Philadelphia had the largest decrease in overall inventory, falling 24.7% since last October. Montgomery County, PA (-24%), New Orleans (-23%), and Camden, NJ (-21%) also saw far fewer homes available on the market than a year ago.

Redfin Estimate

• The median list price-to-Redfin Estimate ratio was 94.6% in San Francisco, CA, the lowest of any market. This indicates the typical home for sale in October was listed at a price 90.5% of its estimated value. Only 9.5% of homes in San Francisco, CA were listed for more than their Redfin Estimate.
• Conversely, the median list price-to-Redfin Estimate ratio was 102.3% in Miami, FL and 102.2% in West Palm Beach, FL, which means sellers are listing their homes for more than the estimated value in those metro areas. In Miami, FL, 82.7% of homes were listed above their Redfin Estimate, the highest percentage of any metro.

Below are market-by-market breakdowns for prices, inventory, new listings and sales for markets with populations of 750 thousand or more. For downloadable data on all of the markets Redfin tracks, visit the Redfin Data Center.

EDITOR’S NOTE: The Washington, D.C. and Baltimore metro areas were excluded from this report and analysis due to data accuracy issues. The issues stem from problems with the listings information that Redfin receives from the MLS. Redfin engineers are working with the MLS to resolve the issue, which does not impact the ability to view homes for sale in the Washington and Baltimore metro areas on Redfin.com.

Median Sale Price

Homes Sold

New Listings

All Homes for Sale

Median Off-Market Redfin Estimate

The post Nearly One in Three Homes For Sale in October had a Price Drop—Highest Level Since at Least 2010 appeared first on Redfin Real-Time.

We’re excited to announce the launch of Redfin Concierge service in the Seattle metro area! Redfin Concierge is designed for sellers who want more help preparing their home for the market. For a 2 percent listing fee, Redfin provides all of its standard selling services and, in addition, arranges and pays for services to get the home in shape to sell quickly, including deep cleaning, decluttering and staging.

Jessie Culbert, a Redfin agent in Seattle, believes Concierge will help sellers succeed in a shifting market. “Last year, the majority of homes in Seattle received multiple offers and sold quickly regardless of condition. That is no longer the case. Sellers recognize they will be more successful by investing in improvements and staging to put their home in the best light possible. As an agent, I always give my clients guidance on how to prepare their home for sale, but Redfin Concierge takes it a step further by handling all of those tasks directly. Redfin Concierge is a valuable and needed service in Seattle and one that I’m excited to be able to offer.”

How does it work?

A Seattle homeowner who is preparing to sell can choose from two options: Redfin’s 1 percent listing fee service or Redfin Concierge service for a 2 percent listing fee.  With Redfin Concierge, sellers get all the services, marketing and technology of our 1 percent service, and in addition Redfin will handle improvements to prepare the home to sell.

Concierge is ideal for sellers who have limited time to spend getting their home ready for the market. Determining which projects will yield the highest return, finding trustworthy vendors, gathering quotes, managing timelines and overseeing work is often stressful and time consuming. With Redfin Concierge, you sign off on the plan, give us the keys, and then rest easy with the knowledge that your Redfin Concierge is taking care of all the details.

If a seller decides to go with Concierge, the Redfin agent and concierge team will work with the seller to create a custom home improvement plan based on what the home needs to attract buyers and make the best debut on the market. Once the plan is approved, Redfin sources bids from vetted service providers and schedules and oversees work throughout the entire project.

Redfin pays for deep cleaning, decluttering and staging, all included in the 2 percent listing fee. Or if the home would benefit more from painting, landscaping or other light handiwork projects, the budget could go towards those items instead.

What are clients saying?

We first launched Concierge Service in Los Angeles and Washington, D.C. in November 2017 and expanded to San Francisco in February 2018. Sellers are thrilled with the service, but don’t take our word for it. Here’s what a few Redfin clients had to say about their experiences:

• Kate and Kendall, sold their Washington, D.C. row home. “With both of us working full-time and having an active family, we were happy to let Redfin shoulder the most onerous responsibilities to get our home ready to sell. Redfin Concierge was a relationship-saver. Knowing Redfin does this professionally, we put our trust in them, which eliminated a lot of errands and to-do lists and hard discussions about what should be fixed, how to do it and who to hire. Redfin took the guesswork out of it and helped manage the schedule. Everything happened really fast, which was important because we had already purchased our next home and didn’t want to carry two mortgages for long.” Learn more about the home transformation here.
  

• Samantha and Alexander, sold their Los Angeles condo: “[Our agent Laura] gave us suggestions of ways to prepare the unit to make it more appealing, and in trusting her alongside the Redfin concierge service they were all proven to be wonderful and accurate ideas…The price we got on our unit absolutely blew our expectations out of the water and we wholeheartedly believe that Laura was the key component in that. Nicole came on board with the Redfin Concierge service to oversee our unit being repainted, interiors cleaned and outdoor spaces power washed, and staged. Nicole and her team managed all of it with incredible professionalism and expert detail. Without a doubt, the changes made hugely impacted the value of the sale – and we owe Laura and Nicole for that!”
• Jill sold her San Francisco home: “Joanna and her team were personable, professional, proactive and communicative. They helped us all along the way in determining what we needed to do to stage and sell the house, as well as to line up all the contractors to do the work. It was an amazing experience.”
  

Interested in selling with Redfin? Visit www.redfin.com/why-sell/concierge to learn more about Redfin’s service and connect with a Redfin agent in your neighborhood.

The post Redfin Concierge Now Available in Seattle! appeared first on Redfin Real-Time.

Supply of homes priced $2 million or more fell 6 percent from a year earlier, as inventory overall inched up.

Luxury home prices rose 3.2 percent year over year to an average of $1.7 million in the third quarter of 2018. This is the lowest growth rate since the fourth quarter of 2016, when prices were up 1.1 percent from a year earlier. This analysis tracks home sales in more than 1,000 cities across the country and defines a home as luxury if it is among the top 5 percent most expensive homes sold in the quarter. The average price for the bottom 95 percent of homes was $343,000, up 3.6 percent in the third quarter compared to a year earlier, but the growth rate was down from 5.1 percent in the second quarter.

“A great deal of the slowing price growth among luxury homes can be explained by the stock market, a strong indicator of luxury homebuyers’ wealth, or at least their perceived wealth,” said Redfin chief economist Daryl Fairweather. “The stock-market fluctuations that began last quarter likely caused some uncertainty among wealthy individuals, which has made luxury buyers more sensitive to price. The swings many people have been watching in their stock portfolios have only grown more frequent in recent weeks, so we expect this trend of slowing luxury home price growth to continue at least into the end of the year.”

Luxury homes went under contract after an average of 65 days on market, eight fewer days than in the third quarter of last year, and tied with the second quarter for the fastest pace on record since Redfin began tracking this metric in the first quarter of 2009. The market for non-luxury homes also sped up in the third quarter, with homes spending an average of 49 days on market, nine fewer days than last year and two fewer than in the second quarter.

“We have seen homes go under contract faster every year since 2015. Buyers are able to look at more homes more quickly in part thanks to real estate technology. For example, a potential home buyer can use Redfin’s website to go on virtual tours, or immediately book a home tour using Redfin’s book-it-now feature.”

Luxury homes sold fastest in San Jose, California, where they found buyers in an average of 19 days, followed by Ashburn, Virginia (23); Oakland, California (28); Seattle (29); and San Francisco (44). Although the luxury market in these metro areas is moving more quickly than the rest of the country, luxury homes took four to 15 days longer to sell last quarter than in the second quarter in Ashburn as well as Oakland and San Francisco, where the overall market has been slowing for months. San Jose was flat from the quarter before. Out of the fastest markets, only Seattle saw sales of luxury homes speed up since last quarter.

Biggest Gains

Cities in Florida and Nevada saw some of the nation’s largest increases in luxury home prices in the third quarter. In West Palm Beach, Florida, the average sale price for a luxury home shot up 54.5 percent over last year to $1.7 million. Luxury home prices were up 29.6 percent in Reno, Nevada, 26.0 percent in Boca Raton, Florida, and 22.5 percent in Miami.

“There are a lot of people selling average/modest multi-million dollar homes in the Bay Area and buying true luxury homes in Reno,” said Redfin agent Jaime Moore. “Buyers coming from the Bay Area find themselves with strong purchasing power and are able to easily afford luxury homes in Reno.”

Biggest Declines

Florida dominated both the list of biggest gains and the list of the biggest declines. Average luxury price numbers are inherently volatile at the city level, since a few mega-mansion sales can dramatically skew the average in a single quarter. The average price for a luxury home fell the most in Vero Beach, Florida, down 46.1 percent year over year last quarter. During the same period, prices for non-luxury homes in Vero Beach grew 2.7 percent. Prices for high-end properties also fell in St. Petersburg, Florida, (-16.8%); Fort Lauderdale, Florida, (-16.4%); Sarasota, Florida, (-8.4%); and Delray Beach, Florida (-8.3%).

Number of Higher-Priced Homes for Sale: $2 million and Above

For luxury sales and home listing trends, we used a price cutoff of $2 million or higher, because just taking the top 5 percent of the market would result in sale and listing volume trends that were the same as the bottom 95 percent. The figures for inventory and sales are based on a different group of homes than for prices and speed, which was the top 5 percent of homes in each city by price.

Sales of homes priced at or above $2 million were up 3.2 percent in the third quarter, the ninth consecutive quarter of sales growth, but the smallest rate of growth since early 2016.

The number of homes for sale priced at or above $2 million fell 6.0 percent year over year in the third quarter of 2018 compared to a year earlier. The decline in inventory had inched close to zero in the second quarter, but fell again in the third quarter.

Interestingly, inventory of homes priced under $2 million is slightly increasing as of the third quarter, but the luxury market is still seeing a decrease in the number of homes for sale compared to a year earlier.

Most Expensive Sales

Curious about the most expensive homes sold last quarter? Take a peek at the top-10 most expensive sales and live vicariously through these new luxury owners:

1. The most expensive home sold in the quarter went for $35.8 million. The oceanfront home is a relatively modest 4,853 square feet and located in a gated community on Riviera Drive in Laguna Beach.
2. Laguna Beach is also the location of the second-most expensive sale in the quarter, coming in at $32.7 million. This Italian-style mansion is nearly 10,000 square feet and just up the street also on an oceanfront lot off Riviera Drive.
3. Did somebody mention Laguna Beach? Yup, the third-most expensive sale was just south of number one and number two, this 10,000 square foot modern mansion just up a rocky hillside from the ocean sold for $32 million.
4. “Canary Cottage” sits on the western edge of the Pebble Beach golf course on 2.2 acres overlooking the 18th hole. It sold for $28 million.
5. Going back to Southern California, the fifth-most expensive home was this 20,800 square foot Beverly Hills mansion that sold for $27 million.
6. The sixth-most expensive home was also in Beverly Hills. According to the listing, this “traditional estate” was “designed by Thomas Proctor to blend 1930’s period details.” It sold for $26.5 million.
7. Just two doors down from number four on the list, the seventh-most expensive home was this 2.7-acre Pebble Beach estate that sold for $25.3 million.
8. Number eight on our list is on Harbor Island in Newport Beach and sports a private dock that “can accommodate up to a 120 foot yacht” and “is configured to moor the world’s most elite watercraft.” It sold for $25 million.
9. The only home in the top ten not in California, number 9 is a corner townhouse in Manhattan’s Greenwich Village that sold for $24.5 million.
10. Number ten is yet another oceanfront estate in southern California. This one is a brand new 9,300 square foot mansion in Dana Point that sold for $23.5 million.

Visit the Redfin Data Center to find more housing market data for metro areas around the country.

Methodology

Redfin tracks the most expensive five percent of homes sold in more than 1,000 U.S. cities and compares price changes to the bottom 95 percent of homes in those cities. Analysis is based on multiple-listing and county recorder sales data in markets served by Redfin. To determine luxury market winners and losers, we looked at cities with at least 45 luxury sales in the quarter and an average luxury sale price of $1 million or higher. For inventory and sales, Redfin looked at homes priced at or above $2 million that were sold in the third quarter of 2018.

The post Luxury Home Prices Up 3.2 Percent Annually in the Third Quarter, the Lowest Growth Rate in Nearly Two Years appeared first on Redfin Real-Time.

The peak times for Redfin users to search home listings are from 9 a.m. to 5 p.m. on weekdays.

Searching for a new home is like a job. Maybe that’s why people most often do it while they’re at work.

The most popular time to search Redfin.com for homes for sale is Friday in the middle of the morning. According to data on Redfin user search activity, nearly 64 percent more people are on Redfin.com at 10 a.m. on Friday than any other time, on average. That peak percentage is followed closely by 11 a.m. on Monday, when about 61 percent more people than average are browsing the site. Redfin users are more likely to use the website during typical work hours, from 9 a.m. to 5 p.m. Monday through Friday, than any other time. The trend is especially strong in the morning hours.

On the other end of the spectrum, weekday evenings tend to be relatively unpopular times to search for homes. On Wednesdays at 9 p.m., for example, 7.4 percent fewer people than average are on Redfin.com. And as for weekends, the number of Redfin.com visitors from 6 p.m. on Friday to 7 a.m. on Monday never comes close to the weekday mid-morning rush. The most popular time for users to browse Redfin on weekends is Saturday at 10 a.m., when traffic is 22.4 percent above average, a number that’s still far from the Friday morning peak.

So, why are people spending their work hours looking at real estate listings? One possible explanation is the popularity of weekends for hitting the pavement and touring homes in person rather than through a computer or smartphone screen. Another reason could be the rise in real estate technology tools such as those offered by Redfin.

As one example, Redfin allows people looking for homes on its site to save searches, then sends notifications when new homes meeting their preferences hit the market or when there’s a price change. A serious homebuyer may receive several new notifications throughout a day—and when you’re sitting at work, with a computer on your desk and a smartphone in your hand, it’s hard to resist the temptation of clicking or tapping a link to your potential dream home.

The key word may be “potential.” Clicking a link to check out a new home that’s been listed in a user’s target neighborhood doesn’t mean she’s clicking on the “Start an Offer” button. But the data does suggest that Redfin users enjoy looking at pretty pictures of crown molding and hardwood flooring while sipping on a mid-morning latte at their desk.

The post House Hunting at Work: The Most Popular Time to Search for Homes is 10 a.m. on Friday appeared first on Redfin Real-Time.

You are about to embark on one of the most amazing and rewarding experiences that can ever come from spending money: buying a home. If you are buying a home in 2019, you should know that the entire process is not quick, but when all is said and done, there are few things more exhilarating than buying a house. This guide will help equip you with what you need to buy a house this year.

1. Check Your Credit Score

Before applying for a loan and certainly before ever making an offer on a house, you should know your credit score. Why is your credit score important? Well, it’s not only the difference between getting a low-interest rate on a home loan versus a high one, but it will also directly impact how much a bank or lender will actually loan you. There are several websites you can use to check your credit score, here are a few to consider: TransUnion, Equifax, Experian.

You can check your own score as much as once a day without affecting your credit, also known as a soft inquiry. Hard inquiries are when financial institutions check your credit score, typically when you’re applying for a loan or credit card. Hard inquiries lower your credit score a few points, so try to keep hard inquiries to a minimum.

2. Improve Your Credit Score

Maybe you just checked your credit score and realized it’s not as high as you had expected. Don’t worry, there are a few things you can do now that will help raise your credit score so you can capitalize on a great interest rate.

Though you can easily implement steps to help your credit score, fixing or raising a credit score doesn’t happen overnight. It’s imperative to start now so when you go to apply for a home loan your credit score will (hopefully) be where you want it. Here are three tips to help improve your credit score, and recommended by John Heath, Directing Attorney at Lexington Law:

• Obtain and Closely Review Your Free Credit Report: In order to improve your credit score, you first need to know what information is on your credit report. The Fair Credit Reporting Act (FCRA) gives you the option to obtain a free credit report from each of the three nationwide consumer reporting companies once every twelve months. Your credit report contains information including your current and past residences, how you pay your bills, bankruptcies, foreclosures and more. Obtaining and understanding the information on your credit report will help you know what you may need to address in order to improve your credit score.

• Use a Credit Report Repair Company to Dispute Errors: Your credit history is 35 percent of your FICO score, and according to a 2013 study by the Federal Trade Commission (FTC), more than 40 million Americans have something that is incorrect on their credit report. While a late payment or derogatory mark from a creditor may seem harmless, it can have long-standing consequences, in some instances staying on your report for seven years. If you have errors on your credit report, consider working with a credit repair company, who can navigate the complexities of credit repair, contact the credit bureaus on your behalf and help remove any errors as quickly as possible.

• Spread Credit Card Debt Across Multiple Cards: If any of your credit cards are close to the maximum utilization point, it will be a red flag to lenders, who see this as an indication that you could be having financial issues. If you have multiple cards, spreading the balance out between them could make sense. For example, instead of having one card that is 90 percent maxed out while two other cards have a zero balance, having a 30 percent balance on each card can help your credit score. Reducing overall debt is always the best option, but spreading out your balance can have a positive impact.

“Improving one’s credit score may take time, but it can be done. Bad credit is not irrevocable,” said Heath. “Developing good habits and repairing your credit report will help increase your credit score so you’re able to secure a home loan or a great interest rate with confidence.”

3. Know What You Can Afford

The best way to determine how much house you can afford is to simply use an Affordability calculator. Though calculators such as these do not necessarily account for all of your monthly expenditures, they certainly are a great tool for understanding your larger financial situation.

After you figure out what you can comfortably afford, you can then start online window shopping for houses and really begin to narrow down what you want in a house versus what you can afford. Are you looking at specific neighborhoods? How many bedrooms do you want? Do you need a large yard, big deck, swimming pool, man cave, she shed, etc?

Understanding what you can afford in the area you want to buy will help keep you grounded and focused on what you actually want in a house versus what might be nice to have.

4. Save Up For a Down Payment

Unless you want to pay Private Mortgage Insurance (PMI), you really want to save up for a sizable down payment. PMI is an added insurance charged by mortgage lenders in order to protect themselves in case you default on your loan payments. The biggest problem with PMIs for homeowners is that they usually cost you hundreds of dollars each month. Money that is not going against the principal of your mortgage.

How much should you save for a house? Twenty percent down is typical with most mortgage lenders in order to avoid paying for PMI. However, there are other types of home loans, such as a VA loan if you have served in the military and qualify, that may allow you to put down less than twenty percent while avoiding PMIs altogether.

As an added benefit to having a sizable down payment, you may also receive a lower interest rate that will save you tens of thousands of dollars in interest over time. So start saving now!

5. Build Up Your Savings

Lenders like to see a healthy savings account and other investments or assets (i.e. 401k, CDs, after-tax investments) that you can tap into during hard times. What they really want to see is that you are not living paycheck to paycheck. A healthy savings account and other investments are a good idea in general as it will help you establish your future financial independence, but it is also a necessary item on your checklist of what you need to buy a house in 2019.

6. Have a Healthy Debt-to-Income Ratio (DTI)

Another key component banks and other lenders consider when issuing loans, and at what interest rate, is your debt-to-income ratio. The debt-to-income ratio is a lender’s way of comparing your monthly housing expenses and other debts with how much you earn.

So what is a healthy debt-to-income ratio when applying for a home loan? The short answer is the lower the better, but definitely, no more than 43% or you may not even qualify for a loan at all. There are two DTIs to consider as well.

The Front-End DTI: This DTI typically includes housing-related expenses such as mortgage payments and insurance. You want to shoot for a front-end DTI of 28%.

The Back-End DTI: This DTI includes all other debts you may have, such as credit cards or car loans. You want a back-end DTI of 36% or less. A simple way to improve this DTI is to pay down your debts to creditors.

How do you calculate your DTI ratio? You can use this equation for both front-end and back-end DTIs:

DTI = total debt / gross income

7. Budget for Extra Costs

There are a lot of little costs that go into buying a house that are overlooked by new home buyers all the time. Though there are some things, such as sales tax and home insurance, that can be wrapped into a home loan and monthly mortgage, there are several little things that cannot be included into the home-buying package and need to be paid for out of pocket.

Though these items can range in price depending on the area, size and cost of the house your buying, here is a list of extra costs you should consider (not all inclusive):

• Home Appraisal Fee
• Home Inspection Fee
• Geological study
• Closing costs*
• Property taxes**
• Home insurance**
• Utility hookup/start fees
• HOA fees
• Home remodeling/updating
• Existing propane gas

*Closing costs can sometimes be wrapped into the home loan, depending on the agreement with your lender.

**Property taxes and home insurance can be paid separately or your lender could include it into your monthly mortgage payment.

8. Don’t Close Old Credit Card Accounts Or Apply for New Ones

Closing a credit card account will not raise your credit score. In fact, in some cases, it may actually lower it. Instead, try to pay down the balance as much as you can, while continuing to make your monthly payments on time. If you have an old credit card you never use anymore, just ignore it, or at least don’t close it until after you have purchased your new home.

Opening new credit cards before buying a home is also not a good idea. You don’t want creditors checking your credit or opening new cards under your name, as you may lose some points on your credit score.

The absolute worst thing you can do is max out one of your credit cards, even if the limit on the card is low. If you do, your credit score may plummet. Try tackling your credit cards by paying on the ones with the highest interest rate first, then as one gets paid off, focus on the next card until you’re free and clear.

9. A Solid Employment History

If you haven’t gotten the picture yet, lenders like consistency, including your employment history. Lenders like to see a borrower with the same employer for about two years.

What if you have a job with an irregular or inconsistent pay schedule? People with jobs such as contract positions, who are self-employed, or have irregular work schedules can still qualify for a home loan. A mortgage known as a ‘Bank Statement’ mortgage is becoming rapidly popular with lenders as more self-employed or what has been referred to as the ‘gig economy’ has taken off.

10. Know the Difference Between a Fixed Rate and an Adjustable Rate Mortgage

The difference between these two types of mortgage rates really lies within their names. A fixed rate loan is exactly that, an interest rate that will never change the moment it’s locked in. You will pay the same amount the very first month you pay your home loan and will continue to pay that same exact amount over the course of thirty years (or however long the loan term is).

An adjustable-rate mortgage (ARM) is typically a mortgage that starts out as a lower rate than fixed interest rates but then is adjusted each year typically resulting in a rate higher than a fixed rate. A 5-1 ARM is a popular mortgage offered by lenders, which is a hybrid between fixed and adjustable rate mortgages. Your mortgage would start out at a lower fixed rate for the first five years, then after that time period has elapsed, the rate would then be adjusted on an annual basis for the remainder of the loan term.

11. Follow Interest Rates

It is important to know what interests rates are doing. The big question is are they on the rise or are they falling?

When the economy is good the Federal Reserve typically raises the interest rate in an effort to slow down economic growth in order to control inflation and rising costs. When the economy is in the dumps the Fed does the exact opposite. They lower the interest rate in order to entice more people to make larger purchases that require loans (i.e. land, cars, and houses) to help stimulate the economy.

As new soon-to-be homeowners, it’s a good idea to know how the overall economy is doing, and more importantly, how it’s impacting the interest rates you’ll soon be applying for. In 2018, after years of bottom of the barrel interest rates, the Fed raised interest rates three times and is projecting to raise it three more times in 2019.

Why are small hikes in interest rates so important to you? To put it into perspective, even a one percent increase in your interest rate on a home loan is the difference of paying or saving tens of thousands of dollars in interest payments on your home loan over time.

12. Know How Much Time it Takes to Buy a House

The home buying process from start to finish is time-consuming and very relative to individual circumstances and the housing market in your area. However, there are some general universal constants that you can expect, such as a cash offer on a house is usually much quicker than a traditional loan, and if there is a perfect house in a good neighborhood and at a great price, you better expect competition and added time for a seller to review offers.

Depending on the housing market in your area and possibly which season you’re buying in, it can take you a couple of weeks to find a home or more than a year. But after you find your home you can typically expect the entire process from making an offer on a house to walking in its front door, to be as little as a few weeks to a couple of months on average.

13. Find a Knowledgeable Real Estate Agent

There are several ways to find a knowledgeable real estate agent. Many people rely on recommendations from friends and family, while others look to online reviews. While both of these scenarios work really well and can land you a great real estate agent, the reason these agents rise above the others as the best of the best or the crème de la crème is because of their intentions.

A good real estate agent isn’t trying to get you into a house as quickly as possible so they can earn a commission. Instead, you want an agent that will act as your guide through the home buying process, while having your best interests in mind. A good agent will be able to tell you straight if they think a house is a good fit for you, or if you should keep looking. They should also be expert negotiators so that you get the best deal possible.

14. Find a Mortgage Lender

There are a few things to keep in mind when researching a mortgage lender. The first thing that comes to most people’s’ minds is what mortgage rate can they get. You may have to shop around to find the best rate because lower the rate the more money you save.

Secondly, how does that mortgage lender rate compared to other lenders? By looking at positive and negative online reviews you can usually establish a theme pretty quickly of the strengths and weaknesses of the lender, and what you can possibly expect for a level of service down the road.

Ask the lender what their average length of time is to close on a house after the offer has been accepted?  A good lender versus a bad one can be the difference of moving into your new home two to four weeks earlier. You want to find out how streamlined their processes are.

15. Get Pre-approved

When being approved by a mortgage lender, you should be aware that there is a small but relevant difference between the typical fast preapproval for a home loan versus an underwritten pre-approval.

The fast pre-approval usually encompasses a credit report and a loan officer review and can be done in less than a couple of hours. This basic pre-approval allows you to quickly know how much you can afford and then make an offer on a house that may have just come on the market.

The underwritten pre-approval usually takes about twenty-four hours and includes a credit report, loan officer review, underwriter review, and a compliance/fraud review. Though this process takes longer, your offer on a house is actually stronger. Eventually, if you’re planning on buying a house, you will have to go through the underwritten pre-approval process anyway, so it’s better to jump on it from the start.

16. Research Neighborhoods or Areas You Want to Live

There are many variables to think about when researching your future residents. The key to beginning your research is to determine those variables most important to you. Are you looking for a good school district, a large house, convenience to commuter options, or a specific neighborhood that is extremely friendly and ranks high on Walk Score?

Your real estate agent will most likely tell you to figure out your list of the things you absolutely want in a house versus the extra features that you would like to have, but wouldn’t deter you from a house if it wasn’t there.

Your list will help your agent narrow down the number of houses they’ll show you, saving you time by only showing you houses you’d actually be interested in.

17. Shop For Your Home and Make an Offer

Now that you know where you want to live and you’re pre-approved, the fun begins. You get to look at houses! Once you find the house you know would be a great fit for you and your family, you’ll want to make an offer.

There are numerous variables to consider and hopefully, your knowledgeable real estate agent will help you through this process. Understanding the market conditions, how houses have been selling in the neighborhood and at what price (above or below asking), and knowing if there are other competing offers will help you assess and determine how you’d like to make an offer.

Negotiating an offer on a house can be emotionally taxing, so do your research and rely on your agent’s advice so you come to the table prepared.

18. Get a Home Inspection

Congratulations are in order! The sellers have accepted your offer. Now you want to get the home inspected to make sure there are no underlying issues that could cost you thousands of dollars down the road, such as a bad roof or foundation. Usually, a home inspection is a contingency built into the initial offer, and your real estate agent will help you set this up. Though you can waive this contingency if you’re trying to make a competitive offer in a hot market. Just be aware that if you do waive a home inspection contingency, you may be taking on considerable risk.

There are several types of home inspections, but in general, a typical home inspection involves a certified inspector that will go in, around, under, and top of your house looking for anything that could be of concern. Though they will go into crawl spaces and attics as part of their inspection, they will not open walls to see if the plumbing or electrical is good. However, they look for signs that could possibly point to those issues.

Then they will put their findings into a nice little booklet for you with pictures that basically becomes a miniature instruction manual for your house. If there are fixes that need to be addressed, they will certainly let you know.

19. Have the Home Appraised

Home appraisals are an important part of the process because oftentimes house prices can quickly skyrocket when the housing market is hot, and banks do not like to loan out more money than what a home is worth. A home appraiser will not only tell you what the home is actually worth for the area and for the current housing market, but this appraisal will also directly affect the size of loan the bank will give you.

If the home appraisal comes back and states that the house is worth $300,000, but you made an offer of $310,000, the bank will most likely only lend you $300k. You will then either be stuck with paying the additional $10k out of pocket, or you may try to renegotiate the price with the sellers to see if they would be willing to come down. Or you may lose the house altogether.

Also, the mortgage lender will usually set up the home appraisal so you can take this time to focus on other home-buying tasks that need to be finished up.

20. Close the Sale and Sign The Papers

Congratulations, you’re a homeowner! Your real estate agent should help you map out the last details, such as when and where you should sign all the papers to take ownership of the house and, of course, the handing over of the keys. Welcome to your new home.

The post What You Need to Buy a House in 2019 appeared first on Redfin Real-Time.

Despite a cooling market, bidding wars remain the norm in hot California, Boston and D.C. zip codes

Thirty-two percent of offers written by Redfin agents on behalf of their home-buying customers in November faced competition (one or more competing bids), down from 45 percent a year earlier, marking an all-time low since Redfin began tracking this data in 2011. But homebuyers in coastal markets should wait before breathing a sigh of relief. Some zip codes in the markets that are cooling the fastest are still hotbeds for bidding wars. Topping the list are 94602 (Oakmore, Glenview and Lincoln Highlands) in Oakland, Calif., 20009 (U Street Corridor, Adams Morgan, Columbia Heights and Shaw) in Washington, D.C., and 92870 (Placentia) in Orange County, Calif., all with 85 percent or more of Redfin offers facing competition.

Zip codes where 70 percent or more of homebuyer offers written by Redfin agents faced competition over the past three months

*Some zip codes did not have a large enough volume of Redfin offers from Sept. – Nov. 2017 to calculate a reliable bidding war rate.

“There aren’t many homes for sale in and around the city of Boston right now,” said Redfin agent Luke Welling. “Bidding wars are still the norm in Arlington Heights, Malden, and the Somerville and Cambridge areas. Proximity to Boston and the local universities, coupled with highly rated schools in the surrounding towns make these neighborhoods sought-after destinations for many homebuyers. Buyers still need to make offers well over asking price to win a home.”

One previously red-hot market is notably absent from the list: Seattle. The only Seattle zip code where more than half of Redfin offers faced competition in the last three months was 98115, which encompasses the Seattle neighborhoods of Maple Leaf, Wedgwood, and View Ridge.

During the spring selling season earlier this year three out of four offers in Seattle faced competition. As of November only about one of every four offers in the Seattle area faced competition, one of the lowest rates among Redfin’s largest markets.

Here is the list of bidding war rates for each of the largest metro areas Redfin agents serve.

Philadelphia was the only metro areas where buyers faced significantly more competition in November 2018 than in November 2017. Philadelphia is one of the markets where inventory is shrinking and homes are selling faster and for more money.

The post Bidding Wars Plummet to an Eight-Year Low, but Buyers Still Face Competition Most of the Time in These Zip Codes appeared first on Redfin Real-Time.

Former American Homes 4 Rent Executive Will Help Grow RedfinNow Business

We’re thrilled to announce Aaron Noe has joined the company as national head of renovations for RedfinNow. RedfinNow buys homes directly from homeowners giving them a way to sell their home quickly with more certainty and less stress. RedfinNow then makes necessary repairs and resells the homes. Prior to joining Redfin, Noe was executive vice president of operations at American Homes 4 Rent, a national company specializing in acquiring, rehabilitating and managing single-family home rentals.

“As we grow the RedfinNow business, Aaron brings the operational chops to build our home renovations program,” said Quinn Hawkins, head of RedfinNow. “We’re excited about what we can accomplish by combining our experience with Aaron’s background in renovation and property management.”

At American Homes 4 Rent, Noe oversaw a portfolio of over 45,000 homes, which his team acquired, renovated and managed.

“I look forward to helping grow the RedfinNow business and using my experience and creativity to streamline our renovation process so that we can bring this convenient home-selling option to more consumers,” said Noe.

RedfinNow adds a home-selling choice to Redfin’s full-service brokerage service, which charges most customers a 1 percent listing fee for a full-service listing product. With RedfinNow, homeowners have been able to get an offer in as little as 48 hours, and receive their cash in as few as seven days after accepting the offer.

RedfinNow is currently available to homeowners in San Diego, Orange County and the Inland Empire regions of Southern California. RedfinNow is currently looking for talented individuals and subcontractors with home renovation experience to join the team. Learn more about RedfinNow at www.redfin.com/now.

The post Redfin Welcomes Aaron Noe as National Head of Renovations appeared first on Redfin Real-Time.

The smart home used to be the stuff of science fiction. Moviegoers watched as Tony Stark controlled his mansion with nothing more than his voice, or wished they could have the type of technology that made Batman’s life so amazing. These days, you don’t have to be a billionaire business owner or an eccentric crime fighter to create the ultimate smart home – tools like Amazon Alexa, Google Assistant, and the Apple Home Kit have put home automation within reach of nearly anyone.

Smart home technology uses artificial intelligence (AI) to talk to you, respond to commands, and answer questions. For instance, you can ask Alexa to “add bananas to the grocery list” or “tell me the score from last night’s game.” Smart hubs can also communicate with other internet devices, allowing you to control all your smart home gadgets simultaneously. They can turn down the thermostat, turn on the lights, scare away burglars, and even make you coffee.

Home automation is not only cool, its practical, sustainable and can even save you money by reducing your utility bill. When looking to automate your home, it’s important to consider the different types of smart home ecosystems, devices, and how they will work together to create a seamless experience.

What are the best smart home ecosystems?

Home automation systems typically have three components: the virtual assistant (the AI that converses with you), the speaker (hardware), and the phone app (where you control your devices). Each system has its own instructions for pairing devices, as well as the ability to set up an automation “flow” that performs a series of actions. It’s important to note that not all smart hubs support all smart devices and vice versa. To find compatible products, look in the product description for “Works with…” and make sure it works with your virtual assistant of choice.

Keep in mind all home automation products use bandwidth, so no matter which type of home automation system you choose, it is important to assess your current connectivity and network speed. Before starting, you will need to make sure the tablet or smartphone you are using is connected to the same Wi-Fi network as your home automation hub, and that the device you are adding is powered on.

Amazon Alexa ecosystem

Virtual Assistant: Alexa

Speaker: Amazon Echo

App: Amazon Alexa for iOS, Android, and Google Play

Alexa is Amazon’s virtual assistant, designed to answer questions, play music, read news, “talk” to your other devices, and more. Alexa is an industry leader, and with more than 7,000 third-party smart devices supported, it won’t be hard to find accessories that work with this option.

To ensure a device works with Alexa, be sure to look for “Works with Alexa” in the product description of the gadget you intend to buy. Once the two devices are connected to WiFi, simply tap Add Device from the Alexa app and it will pair them together. You can also use your voice to ask Alexa to discover new devices.

Alexa’s Routines feature makes it easy to automate a flow of actions across devices so they work together. For instance, you can create a group called “Upstairs lights” that will turn all the lights on and off simultaneously.

Google Assistant ecosystem

Virtual Assistant: Google Assistant

Speaker: Google Home

App: Google Assistant for iOS, Android, and Google Play

Google Assistant is built into Android phones, making it a seamless experience for Android users. Assistant can play music, get weather updates, take calls and control your other devices through the Google Home app. It can also answer almost any question because the technology is powered by the sophisticated algorithms behind Google search.

There are plenty of third-party devices that are compatible with Google Home/Assistant. Look at the label for devices that “Work with Google.” To sync devices with Google Assistant, make sure they are both connected to the same WiFi network. Then open the app, tap Home Control, and select the device you want to pair. Similar to Alexa’s Routines, you can create action flows in Google Home using the Actions feature, which groups connected devices to work together simultaneously.

Apple HomeKit ecosystem

Virtual Assistant: Siri

Speaker: HomePod

App: Home for iOS

HomeKit is powered by Siri, the familiar iPhone assistant. HomeKit has less compatible gadgets available than its competitors, partly because Apple’s encryption has made it closed to developers until recently. The extra encryption is a bonus for those concerned with privacy, but users report that it can be a headache to set up.

HomeKit has a Rooms feature that allows you to group devices by room, while the Automation feature allows you to create a flow of commands – for instance, turning on the lights and playing the music at the same time.

To sync devices with Apple HomeKit, open the app and click the plus sign to add a new accessory. You’ll need to scan the device’s QR code or enter it manually. Because of Apple’s encryption, it’s especially important to make sure the device you choose is HomeKit compatible.

What are the best smart home devices?

Smart home devices/accessories/gadgets are designed to work with a smartphone app and pair with your home ecosystem of choice. There are plenty of smart home accessories on the market today to suit a variety of household functions, including entertainment, cooking, pets, security, energy conservation and more.

Best smart home devices for entertainment

Since most modern TVs, stereos, and entertainment devices are already WiFi-enabled, your living room is a natural place to start building your smart home ecosystem. There are plenty of smart home devices to tie your home entertainment experience together, like the Sonos Soundbar, a smartphone-controlled speaker that sits right under your TV. Pair it with subwoofers for a truly immersive home theatre system.

Speaking of home theatres, Samsung offers surround sound systems that are WiFi-enabled. Roku players are streaming devices you connect to a TV with HDMI, enabling you to stream content from Hulu, Netflix, HBO etc. Imagine walking into your living room and saying, “Alexa, play Game of Thrones,” and having your TV and surround sound turn on instantly to start streaming. Family movie nights just got better.

Best smart home devices for cooking

Imagine waking up to a pot of freshly brewed coffee every weekday, ready before you’re even out of bed. This dream can be reality with a smart coffee maker by WeMo. Just auto-program it to brew at the same time every morning and enjoy snoozing an extra 15 minutes.

Sure, Alexa can make you a grocery list on command, but there’s nothing worse than being at the store and not being able to remember if you’re out of eggs or milk. Enter the Smarter FridgeCam – a camera that lets you see the contents of your fridge from anywhere via an app on your smartphone. Smart technology at its finest.

Love cooking, but hate taking out all your measuring tools? The Drop Scale measures ingredients for you to make following recipes a breeze. If you’re more of a one-and-done person when it comes to meals, consider the smart crock pot that cooks your meal while you’re out at work. This device lets you change the settings on your crock pot from anywhere via a smartphone app.

Best smart home devices for pets

Smart technology isn’t just for humans. Self-cleaning litter boxes like Litter-Robot separate the waste from the litter and monitor your cat’s litter box usage through an app. Set automatic feeding schedules for your dog or cat with the Smart Feed, which you control through your phone (no Alexa integration yet).

Let your dog come and go with ease (and keep the cat in) with the Petsafe smart door, a doggy door that opens via a small “key” you attach to your dog’s collar. Smart collars like the LINK AKC are GPS-enabled to track your dogs location from an app, giving you ultimate peace of mind.

Best smart home devices for security

Protect your home, inside and out, with smart home security gadgets. Systems like Simpli Safe come equipped with motion sensors and alarms to scare off intruders. When the security system is triggered, it alerts you via a phone app and begins recording, catching criminals on camera. Burglars beware!

Speaking of cameras, the Logitech Circle camera helps you keep an eye on your front porch and make sure packages don’t get stolen. It can also be used indoors to make sure your small children, pets, etc. stay safe.

Forgot the keys? It’s no problem with a smart lock like the August, which lets you lock and unlock the door remotely, gain keyless entry, grant guest access and more.

Best smart home devices for saving energy

From light bulbs to thermostats, these energy-saving smart home devices keep you comfortable while saving money on your electric bill. No more unplugging your appliances when you leave for the day – smart outlets turn on and off automatically, saving electricity when not in use.

A smart thermostat (like the Nest) programs itself based on your schedule and adjusts the temperature accordingly. Downstairs always cold? It can heat and cool individual areas depending on where you spend your time. Smart thermostats are environmentally friendly and pay for themselves relatively quickly.

Turning off the lights when you leave a room is an easy way to conserve energy, but it’s hard to remember in practice. Enter the smart light switch, which controls the lights automatically. Similarly, smart bulbs like the Philips Hue light bulb make it easy to turn on all the lights at the same time, and can even change colors on command.

Automate your existing shades and blinds with the SOMA Smart Shades. This device is controlled through an app, where you slide your finger to the desired amount of coverage. Or, just use your voice to tell Siri to “close the blinds.” Voila!

Basement prone to flooding? A smart water sensor like the GROHE detects water leaks early, preventing flooding and costly structural damage to your home.

Smart home security and privacy

Is your smart device eavesdropping on you? Users have raised concerns about data collection from the companies that manufacture smart home devices, especially since their privacy policies are somewhat vague. Amazon says they do “not use customers’ voice recordings for targeted advertising,” and Google emphasized they only store voice recordings after the device has been intentionally triggered. Still, watchdog groups are pushing for more transparency and regulation for voice-enabled smart home hubs.

Like any device that relies on internet access, smart home gadgets are susceptible to attacks, including password stealing, cryptocurrency mining and other nefarious activities. Fortunately, you can take precautions to greatly reduce the risk and keep your devices secure:

• Make your passwords difficult. Use alternating numbers, capitalized letters, and symbols to make them hard to guess and don’t use the same passwords on different sites.
• Frequently update your software or set it to update automatically.
• Consider creating a guest WiFi network that separates your smart devices from your personal computers to increase security.

There are all sorts of gadgets, accessories, and assistants on the market today. Devices that were once clunky and unintuitive can now operate seamlessly through a smartphone app. From coffee makers to light bulbs, it makes you wonder – what will they automate next?

If you’re looking to upgrade your home’s IQ, start by choosing one or more smart devices, a smart hub, and then sync them together to create the ultimate smart home ecosystem. You’ll be talking to your house and impressing your guests in no time. The future is here.

Do you have a smart home? What is your favorite smart home device? Comment below.

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Prices post sub-4% growth for third consecutive month

Balance of supply and demand is shifting toward homebuyers’ favor in markets like San Francisco, Seattle, Denver, Dallas, and Portland, Oregon

U.S. home-sale prices increased 3.3 percent in November compared to a year ago, to a median of $298,800. November marked the third straight month of annual home price gains under 4 percent after a 77-month-long streak of annual home price gains exceeding 4 percent.

“The tide has turned,” said Redfin chief economist Daryl Fairweather. “Sellers are now competing for buyers, but they haven’t all realized it yet. Sellers who have adjusted their price expectations downward are still finding plenty of willing buyers. Sellers holding out for high prices are contributing to declining home sales and growing inventories. We see few signs that buyers are likely to reward their patience.”

The number of completed home sales fell faster than it has in over two years, down 8.3 percent from November 2017. Home sales declined in 65 of the 74 largest metro areas that Redfin tracks.

The only metro areas that saw more than a 5 percent year-over-year increase in sales in November were New Orleans (+9.4%), Tampa (+7.2%), Long Island (+7.1%), and Orlando (+6.5%).

Mortgage rates, which were a full point higher in November 2018 (4.9%) than the 2012-2017 average (3.9%), may be putting a damper on sales.

As home sales continue to decline, the number of homes on the market is on the rise, shifting the balance of supply and demand back toward buyers’ favor. The number of homes for sale in November was up 4.9 percent from a year earlier. This was the highest level of inventory growth since June 2015, and the eighth straight month that the year-over-year figure increased. However, the national figure masks a wide variation among individual metro areas, with inventory skyrocketing in places like San Jose (+123.2%), Seattle (+96.5%) and Oakland (+60.3%) but still falling fast in other areas such as Philadelphia (-24.0%), Camden (-19.8%) and New Orleans (-19.1%). Nationwide, the number of homes newly listed in November rose 0.3 percent year over year.

Across Redfin metros, the typical home that sold in November went under contract in a median of 44 days, two days faster than last year. Earlier this year the fastest markets saw homes go under contract in less than 10 days, but spring’s fastest markets are slowing down the most this fall. This November, 19 percent of homes sold above the list price, down from 22.2 percent last November. Meanwhile the share of homes with a price drop declined slightly from an all-time high of 31.2 percent in October to 24.6 percent in November. The share of homes that went under contract within two weeks also fell, from 26.9 percent last November to 24.5 percent this November.

Other November Highlights

Competition

• Boston was the fastest market, with half of all homes pending sale in just 17 days, up from 15 days from a year earlier. Grand Rapids, MI and Oakland, CA were the next fastest markets with 19 and 21 median days on market, followed by Indianapolis (22) and Omaha, NE (22).
• The most competitive market in November was San Francisco where 60.9% of homes sold above list price, followed by 48.7% in Oakland, CA, 45.2% in San Jose, CA, 37.7% in Tacoma, WA, and 37.0% in Buffalo, NY.

Prices

• Las Vegas had the nation’s highest price growth, rising 11.9% since last year to $277,620. Birmingham, AL had the second highest growth at 11.4% year-over-year price growth, followed by Tacoma, WA (11.3%), Knoxville, TN (11.2%), and Omaha, NE (10.6%).
• 3 metros saw price declines in November including Honolulu (-3.4%), Oxnard, CA (-2.5%), and San Francisco (-0.7%).

Sales

• 0 out of 73 metros saw sales surge by double digits from last year. New Orleans led the nation in year-over-year sales growth, up 9.4%, followed by Tampa, FL, up 7.2%. Long Island, NY rounded out the top three with sales up 7.1% from a year ago.
• Honolulu saw the largest decline in sales since last year, falling 25.8%. Home sales in Detroit and Seattle declined by 21.7% and 21.2%, respectively.

Inventory

• San Jose, CA had the highest increase in the number of homes for sale, up 123% year over year, followed by Seattle (96%) and Oakland, CA (60%).
• Montgomery County, PA had the largest decrease in overall inventory, falling 26.4% since last November. Philadelphia (-24%), Camden, NJ (-20%), and New Orleans (-19%) also saw far fewer homes available on the market than a year ago.

Redfin Estimate

• The median list price-to-Redfin Estimate ratio was 94.6% in San Francisco, CA, the lowest of any market. This indicates the typical home for sale in November was listed at a price 90.7% below its estimated value. Only 9.3% of homes in San Francisco, CA were listed for more than their Redfin Estimate.
• Conversely, the median list price-to-Redfin Estimate ratio was 102.4% in Miami, FL and 102.2% in West Palm Beach, FL, which means sellers are listing their homes for more than the estimated value in those metro areas. In West Palm Beach, FL, 85.5% of homes were listed above their Redfin Estimate, the highest percentage of any metro.

Below are market-by-market breakdowns for prices, inventory, new listings and sales for markets with populations of 750 thousand or more. For downloadable data on all of the markets Redfin tracks, visit the Redfin Data Center.

Median Sale Price

Homes Sold

New Listings

All Homes for Sale

Median Off-Market Redfin Estimate

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Online views of homes in Long Island City and Crystal City soared, but Amazon’s plans for a major new office in Nashville didn’t have any impact on search activity in Music City.

When Amazon announced plans for a major new operations office in Nashville, online views of local home listings on Redfin.com stayed about the same as they’ve been throughout 2018. The flatness is notable compared with the massive spikes in Long Island City and Crystal City, where Amazon will open its second (and third) headquarters.

Reports of Amazon’s plans to add more than 25,000 jobs apiece to Long Island City and Crystal City first emerged on November 5, and Amazon confirmed the news on November 13, adding the bit about the Nashville operations office. In the seven days ending on November 7, views of homes for sale in Crystal City on Redfin.com jumped 302 percent year over year.  For Long Island City, growth in search activity peaked during the seven days ending on November 13, soaring 1,947 percent. But for downtown Nashville, which will be home to more than 5,000 new Amazon jobs, online views of listings hardly changed at all the week of the Amazon announcement—search activity for the neighborhood was down 9.7 percent year over year in the week ending on November 7 and up 3.4 percent in the week ending on November 13. Small fluctuations like that are in line with search growth patterns since the beginning of the year.

In the HQ2 locations, user activity dropped in the weeks following the announcement, although online views of listings in Long Island City remained somewhat elevated into the beginning of December. For the week ending on December 6, search activity was up 22 percent annually in Crystal City, and it was up 205 percent in Long Island City.

One possible explanation for the discrepancy between growth of online views of home listings in the HQ2 locations and Nashville is the simple fact that Music City is getting fewer new Amazon jobs. But the impact on Nashville’s job market is still large: Amazon’s plan to bring more than 5,000 jobs to the city is the single largest jobs announcement in Tennessee’s history, per reports.

Another likely reason is that Nashville has been one of the most popular destinations for people in other parts of the country looking for homes on Redfin.com since at least late 2017. On Redfin.com, a third of searches for homes in Nashville last quarter were from users outside the metro, consistent with last year’s level.

“Up to this point, all the growth has happened without even a hint of Amazon,” said Mel Priess, a Redfin market manager in Nashville. “Over the last three or four years, I’ve had people flocking here from California, the East Coast and Chicago. Coming from those more expensive housing markets, buying a home in Nashville feels like a windfall. And it doesn’t come with a sacrifice on lifestyle, as our area is packed not only with music and history, but also trendy neighborhoods, beautiful waterfronts and open spaces to enjoy nature.”

Rising home prices over the last five years reflect the increasing homebuyer demand in Nashville. In November 2013, a typical home in the metro area sold for $190,000; by November 2018, the median price had risen to $285,000. But even with the 50 percent jump in home prices over the past five years, Nashville remains a relatively affordable market; nationally, the typical home sells for $300,000. Pair that with a booming job market—Nashville’s unemployment rate is 2.9 percent, compared with 3.7 percent nationally—no state income tax and relatively low property taxes, and it’s no surprise that so many people are moving to Nashville from pricier coastal markets.

Amazon’s entry into Nashville may not cause a spike in people looking at listings in the short term, but it reflects the city’s reputation as a robust job center and may help the city maintain a strong real estate market over the next several years. Scott Mosley, a Redfin agent in Nashville, said the market is already hot and predicts it will only get hotter as Amazon moves in. He has already helped some Amazon employees looking at homes for sale in the area, and investors are expressing interest, too.

“I have investment clients from outside the state calling me and saying, ‘Hey, that’s great news about Amazon; I need to buy more properties,’” Mosley said. “I think once there’s an actual footprint, when people can see where Amazon is going to be, that’s when people will buy homes. … There’s going to be a big wave.”

As for Long Island City and Crystal City, the jump in online views of home followed by a leveling off was to be expected, according to agents in the region.

Dave Diedrich, a Redfin agent in New York, said some agents in Long Island City were driving potential buyers around by the busload right after the HQ2 announcement—but now some people are backing off.  “Everyone got really excited about the impact this could have on the market, but now they’re looking at the prices, which are already too high for some people,” he said.

And in the Crystal City area, agents are starting to see some nuance when it comes to Amazon’s effect on the region. Redfin agent Mara Gemond said that in Crystal City itself, interest from real estate investors is still relatively high. But potential buyers who would occupy homes themselves are searching in the larger Arlington, VA area in neighborhoods like Ballston and Rosslyn, which are both about five miles away from Crystal City.

Gemond also said some potential buyers are worried about the impact Amazon will have on home prices in the area, including Crystal City itself and the surrounding regions. “I hosted a home-buying class last week, and about three quarters of the attendees said they’re concerned about being priced out of the market due to Amazon’s arrival,” she said.

The post In Already-Hot Nashville, Amazon Announcement Didn’t Boost Homebuyer Interest appeared first on Redfin Real-Time.

Slowing price growth and a growing percentage of price drops are other signs that the regions’ real estate markets may finally be cooling.

Signals are emerging that the party may be coming to an end for home sellers in San Jose and Seattle, which have been two of the hottest seller’s markets in the country for the last few years. In the San Jose metro area, inventory in November was up 123.2 percent year over year, and in the Seattle metro it rose 96.5 percent. Those are by far the largest inventory jumps in all the metro areas Redfin tracks. Oakland experienced the third biggest inventory bump, with a 60 percent increase. National inventory was up 4.9 percent year over year, marking the highest level of inventory growth since June 2015.

And although home prices in both areas were up slightly in November, the bump was significantly smaller than it’s been in recent years. In San Jose, the typical home sold for $1,087,500 last month, a year-over-year gain of 1.2 percent—the smallest price increase in the area for the last six years. As recently as March of this year, prices were up 34 percent annually. The story is similar in Seattle, where the median sale price in November was $548,000, up 4.4 percent annually. That’s the smallest price increase in the area since February 2015, and it’s a continuation of a decline in price growth that started at the beginning of this year.

Jessie Culbert, a Redfin agent in Seattle, said the increase in inventory is likely due in part to interest rates, which have been on a general upward trajectory in 2018, hovering below 5 percent over the last few months. “Rising interest rates mean that homebuyers can afford less house now than they could for the same monthly payment a few years ago, when rates were lower,” Culbert said. “Rates are still historically low, but there’s some sticker shock, particularly for first-time homebuyers who were watching the market over the last few years.”

Buyers in San Jose and Seattle are also getting some relief when it comes to homes selling above list price. San Jose experienced the biggest drop of all the regions Redfin tracks, and Seattle came in second. In San Jose, 76.1 percent of homes sold above list price in November 2017—a year later, in November 2018, the share had declined to 45.2 percent of homes. And in Seattle, 43.3 percent of homes sold above list price in November 2017, then dropped to 21.7 percent by November 2018.

The San Jose region, one of the most expensive in the country, is also experiencing the biggest year-over-year increase in price drops. Last month, 31.6 percent of active listings in San Jose had price drops, compared to 14.4 percent a year earlier. In Seattle, 36.4 percent of listings experienced a price drop last month, up from 28.6 percent in November 2017, a difference that’s more in line with other metro areas across the country.

Another sign that the Seattle market may finally be cooling slightly is a falling rate of bidding wars. As of November, only about one of every four Redfin offers in the Seattle metro area faced competition, one of the lowest rates among Redfin’s largest markets. Back in the spring, roughly three-quarters of Redfin offers in Seattle were part of bidding wars. About two out of every five Redfin offers in the San Jose metro faced competition last month.

The post Home Supply Up 123% in San Jose, Nearly 100% in Seattle, Leading the Nation’s Biggest Inventory Increase in 3 Years appeared first on Redfin Real-Time.

Builders are lowering prices and offering complimentary upgrades and other incentives to lure Dallas-area buyers.

Newly built homes sold for a median of $381,000 in the third quarter, $83,000 more than the typical existing home. Prices of new homes were up 2.4 percent last quarter from a year earlier compared with a 4.2 percent increase for existing homes, based on data from all the metro areas Redfin tracks. Despite the fact that prices for both new and existing homes continued to rise, both grew at a moderating rate as sales flattened and inventory finally began to pick up in the third quarter.

The chill in the market for new homes is in line with housing as a whole as buyers seem to have reached their limit after more than six straight years of annual growth in home prices and mortgage rates reaching their highest averages since 2011.

“Compared with traditional home sellers, builders are often able to adjust more quickly to changing market conditions because they are all business, with levers ready to pull in order to  move their inventory and maximize profits,” said Redfin chief economist Daryl Fairweather. “By contrast, homeowners are often driven by emotion and may value their homes based in part on sentiment or how much they need to make on the sale in order to buy their next home. All this can make the realization that you need to drop your price a tougher pill to swallow.”

Sales of both new and existing homes were essentially flat year over year in the third quarter. The number of new homes sold dropped just 0.1 percent, while existing home sales increased by 0.5 percent. New construction accounted for 7.7 percent of all homes sold in the third quarter, a share that’s about on par with the level of 7 to 10 percent it has consistently posted since Redfin began collecting the data in 2012.

The supply of new-construction homes, which had been falling in the first half of the year, increased 2.8 percent year over year in the third quarter. That’s the biggest annual jump in new construction inventory since January 2017. Existing-home supply crept just above negative territory for the first time since late 2015, posting a 0.4 percent year-over-year increase last quarter compared to the 10.6 percent decrease from the third quarter of 2016 to the third quarter of 2017. It’s worth noting that the inventory growth rates for new and existing homes are trending toward convergence, posting the smallest gap (2.4 points) since at least 2012 when Redfin began tracking these metrics.

One explanation for the rising inventory and slow increase in prices is that buyers in the overall market are reaching their price limit, and because new homes tend to be more expensive, they’re backing off those options first.

Raleigh, North Carolina—where new homes made up a higher share of sales last quarter than in any other market in Redfin’s analysis—is one example of a place where new-home prices are growing out of reach for many prospective buyers. “New construction is even less affordable than it used to be for first-time homebuyers,” said Julie McGee, a Redfin market manager in North Carolina, noting that she started seeing the trend earlier this year.

And well into the fourth quarter, Redfin agents are noticing more new homes on the market, partly because there are typically fewer sales in the fall and winter months. But in some areas, builders are dropping prices and offering incentives for agents and buyers who are showing interest in new construction.

“Although the market is still technically better for sellers, it’s shifting to favor buyers more than it has in years. With more to choose from, buyers focused on new construction are becoming pickier as they look for a good deal,” said Connie Durnal, a Redfin agent in the Dallas area. To attract those buyers, builders are reducing prices—although Durnal pointed out that some prices for new homes were so inflated earlier in 2018 that the drops are simply bringing them down to a reasonable level—and offering financial extras such as closing costs and free design upgrades.

In the Dallas-Fort Worth metro area, the median sale price for a new home in the third quarter was $343,900. Durnal said she has seen builders reduce prices more often in the last three months than ever before in her career, sometimes by up to $50,000.   

“They’re offering incentives to get homebuyers to go to them rather than the builder across the street,” Durnal said. “I’ve seen builders offer up to $20,000 in additional upgrade allowance. That’s extra money the buyer can spend at the builder’s design center, upgrading things like countertops and appliances.”

Builders are also offering incentives to agents who bring buyers. In just the past few months, for the first time, Durnal has seen builders offer everything from three-year leases on Mercedes to Super Bowl tickets to Louis Vuitton purses.

For more information on new construction for the third quarter of 2018, Redfin has put together a collection  of statistics from the new construction section of its Data Center, which is publicly available.

National new construction trends in the third quarter:

• For new homes, the median price per square foot was $170, an annual increase of 3.4%. The numbers are similar for existing homes, which clocked in at $177 per square foot for a 4.2% increase. (Price per square foot isn’t necessarily a direct comparison for new and existing homes, as new homes are often located in less expensive neighborhoods away from city centers.)

• New listings for new construction was up 1.9% annually. For existing homes, new listings rose by 3.9%.

• For all types of residential construction, building permits were up 2.3% annually. For single-family homes, they were up 4.2%. The number of building permits submitted has been on the rise since Redfin started tracking this type of data in the beginning of 2012.

• The rate of building permits per 10,000 people was up 2% year over year.

• New homes were typically on the market for 85 days, down from 94 days the year before. Existing homes were on the market for 35 days, down annually from 38 days.

Metro-level highlights for new construction in the third quarter:

• In Raleigh, NC, 27% of all homes sold were new construction, the highest share of any metro area in the country. That’s followed by Nashville, where 24% of homes sold were new, and Austin, which clocks in at 21%. The top 14 areas for this metric are all in the South.

• New Jersey, New York and California are on the other end of the spectrum. Camden, NJ had the smallest portion of new construction among all homes sold, at just 1.2%, followed closely by Buffalo, NY at 1.3%, and Rochester, NY at 1.6%. In California, five areas (San Jose, Oakland, San Diego, Orange County and Ventura County) rank in the bottom 11.

• The rate in building permits declined in a majority of markets year over year. Honolulu, Little Rock and Milwaukee experienced the largest drops, coming in at 68.3%, 67.7% and 67.1%, respectively.

• Not all markets are seeing a drop in building permits. In Fort Myers, FL, building permits were up significantly more than any other metro area on an annual basis, with a 94.3% jump, followed by San Jose (46.8%) and Tucson (45.3%).   

• The metro areas with the biggest year-over-year increase in price per square foot for new construction are San Jose (35.8%) and Las Vegas (22.4%), followed by San Francisco (20.3%) and Rochester, NY (19.1%).

• Honolulu saw the most significant drop in price per square foot for new construction, declining by 22.2%. Pittsburgh comes in second with an 8.1% decline, followed by Hudson Valley, NY, with a 6.3% drop. 

For a closer look, Redfin is making available a downloadable set of monthly data on new construction prices, sales, inventory and other new residential market statistics. The dataset goes back to 2012.  

The post Sales of New Homes Flatten as Supply and Prices Post Modest Growth in the Third Quarter appeared first on Redfin Real-Time.

We predict that the housing market will continue to cool into the first half of 2019. Inventory will rise back up to 2017 levels, and price growth, while likely still positive, will be the lowest we’ve seen since 2014 or possibly even 2011. Investors and house-flippers will back away from the cooling market, and real estate companies that buy homes from consumers to quickly sell at a profit (including our own RedfinNow) will face their first serious test. Tech companies and local governments will continue to go head to head on local housing issues.

Prediction #1: The housing market will continue to cool

Over the first half of 2019, home-price growth will stay slow. Our forecasts have price growth settling around 3 percent, which would be the slowest price growth we’ve seen in years. As recently as the first half of this year, prices were still growing 7 percent, and price growth has reliably exceeded 5% since the start of 2015. There’s quite a bit of uncertainty around our price forecast; there’s a real chance prices could fall below 2018 levels, putting up negative growth for the first time since 2011.

Sellers will have to adjust their price expectations as buyers grapple with rising mortgage rates and already-high home prices. Metros that saw the most price growth in the first half of 2018 will experience the biggest slowdowns in price growth in the first half of 2019. Seattle, San Francisco, San Jose, Portland, San Diego, Los Angeles, Denver, and Honolulu are a few of the metros where we expect demand to cool the most. “A few weeks ago I helped my home-buying customers get a bid accepted that would have gone straight to the bottom of a pile of offers earlier this year,” said San Francisco Redfin agent Anna Coles. “The offer for a house in desirable Parkside was below list price and included a financing contingency, which allows the buyers to back out of the contract without forfeiting their earnest money deposit on the off-chance their loan doesn’t get approved. The norm for the past two-plus years had been that buyers had to waive standard protections like this in order for a seller to consider their offer, but this is just one sign that buyers may face less competition heading into 2019.”

On the flip side, we expect home prices to continue to grow at a strong pace in a handful of small, affordable, inland markets like Buffalo, Rochester and Greensboro, where the market is still heating up.

We’re going into 2019 with a 5 percent greater supply of homes for sale than we had going into 2018, which is the highest growth we’ve seen since September 2015, but home sales were down 8 percent since last year in November. A still-growing economy and increased access to credit will support more home buyer demand, but higher interest rates will make home-buying more expensive, so it’s hard to say whether home sales will stay down or rebound next year.

Prediction #2: Homeownership rates will continue to rise

Whether total home sales go up or down, more homes will be sold to people who plan to live in the home as opposed to investors, which will cause the homeownership rate to rise. In 2019, homebuyers will enjoy more inventory and less competition from speculators and house-flippers, which will lead to more people enjoying the benefits of homeownership. Homeownership has been consistently growing from its post-recession valley of 63 percent in 2016 to above 64 percent this year. We predict the homeownership rate will grow more rapidly in 2019.

Prediction #3: It will cost more to borrow, but more people will have access to credit for home-buying

Homebuyers have already seen mortgage interest rates increase in 2018, and the Fed’s most recent comments indicate that it will continue to raise rates perhaps twice or more in 2019, which will push the average 30-year fixed mortgage rate up to about 5.5 percent by the end of the new year. This increase from the sub-5 percent level where rates have been hovering in recent months would mean about a $100 increase in monthly mortgage payments on a $300,000 home by the end of 2019.

Lenders will also feel the effects of rising rates, which will increase their costs of lending and dampen demand for their services. This will motivate lenders to expand their customer base to low-income borrowers and first-time homebuyers. But of course, lenders will charge more for these loans–both to cover the risk of lending to borrowers with less-than-perfect credit and to cover their own costs of borrowing.

Prediction #4: A cooling housing market will dampen economic growth only slightly

In 2018, economic growth was the strongest it has been since early 2015. However, residential investment, which includes money spent on construction, renovations, and real estate commissions, and typically makes up about 15 to 18 percent of economic activity, declined slightly in 2018. In 2019, the economy will most likely grow, but a cooler housing market will contribute less to the overall economy. Even if residential investment were to fall by 10 percent, which has only happened three times in the last 40 years, total economic activity would be impacted by 1 to 2 percent. That isn’t enough to cause a recession as long as the rest of the economy keeps growing.

There could be some spillovers from the cooldown in the housing market to consumer spending. When homeowners see homes sitting on the market longer and sellers dropping their prices, they feel less wealthy. Rising interest rates will also impact more than just home sales. It will be more expensive to finance a car loan, take on credit card debt, or refinance a mortgage to take out equity, which will also weaken consumer spending.

Prediction #5: Fewer homes will be built, but more builders will focus on starter homes

In 2019, homebuilders will be more cautious about building during a cooling market and focus on building starter homes that are easier to sell than luxury homes. We have already seen the per-unit value of single-family residential building permits flatten, and we predict per-unit values of building permits will decline in 2019. Another factor in 2019 will be low unemployment, which will finally cause wages to rise for low-income workers. This will impact both the supply of and demand for housing. On the supply side, higher labor costs will limit the number of homes built. Meanwhile, higher wages will be a boon to demand for starter-homes among working-class Americans.

“When we decided to plan our first new construction development, we found a niche in the $300,000 price range in Dallas, where there is a great deal of activity among national and local builders, but almost all of it focused on the high end,” said Pushban Rajaiyan, the lead developer on Brentwood Court by Havendale Homes, a townhome community now available for pre-sale. “It was important to us to offer homes built with high quality materials but for an affordable price and in an area where residents can enjoy nearby amenities and short commutes. Just in the past few months we’ve already begun to see other builders catch on to this unmet need in the market, with other affordable, starter-home options coming available to local buyers soon.”

Prediction #6: Institutional buying faces its first serious test

If home-buying demand falters due to higher interest rates and stock-market volatility, the trend toward instant offers from institutional homebuyers could face its first serious test, a test of pricing algorithms as much as companies’ appetite for risk. Armed with billions in capital, competitors from Opendoor to RedfinNow to Zillow to Offerpad to Knock have been vying with one another to buy homes from consumers and then sell those properties at a profit, with i-buyers’ combined share of U.S. home sales growing rapidly. The question investors are asking is whether instant offers will now be significantly lower, to compensate institutional buyers for the market’s recent uncertainty, and whether homeowners will accept the offers, just to avoid those same uncertainties themselves. Institutional buyers who made money from nearly every sale in a rising market with low interest rates could start to face losses, or may demonstrate more discipline than other housing investors. In 2019, we’ll find out. If i-buying works in a bear market as well as it has in a bull market, instant offers could become a major, permanent sector within the real estate economy. If it doesn’t, a lot of money is going to sink into the sand.

Prediction #7: Tech and local government will go head-to-head on housing

Cities have been struggling with the double-edged sword of tech-company-driven prosperity and inequality. Tech companies bring highly skilled workers to cities and pay them handsomely. This is why 238 cities vied for Amazon’s HQ2. But, shortly after the HQ2s were announced, residents of Long Island City began protesting, advocating for more housing investment to avoid displacing existing residents. Crystal City has planned ahead with 4,000 new housing units, but Amazon plans to hire 25,000 people there. Growing cities will have to start building more housing now if they don’t want to face the affordability and homelessness problems that established tech hubs like Seattle and San Francisco are currently facing.

This article reflects the beliefs of our economics team about the overall housing market. It’s not intended as historical information or future guidance to the investment community and shouldn’t be relied on for those purposes.
To find out which of our predictions in this article come true, and which predictions turn out to be incorrect, follow the Redfin Blog for real-time research on the housing market.

The post Redfin’s 2019 Predictions: Housing market will be coolest we’ve seen in years, but homeownership will continue to rise appeared first on Redfin Real-Time.

Buyers in every part of the city get a major reprieve, but one in three South Seattle offers still face competition

As the share of Redfin offers facing competition plummets to an eight-year low nationally, the Seattle metro area has seen a particularly spectacular decline in bidding wars, falling from 75 percent of all offers local Redfin agents wrote earlier this year to just 19 percent in the first half of December. The flip inside the city limits was even more dramatic, falling from 81 percent of Redfin offers facing a bidding war in February to just 10 percent in the first half of December.

Every part of the city has rapidly cooled off this year. Even North Seattle neighborhoods that had 90 percent of offers facing competition in the first quarter have fallen to just 28 percent in the fourth quarter through December 15.

The steep fall in bidding wars is a good news / bad news type of situation. Good news for buyers, bad news for sellers.

“The last time I had multiple offers on a condo was in May,” said Redfin agent Jessie Culbert. “Sellers are learning that expecting a bidding war on their home is no longer a reasonable assumption, so they’re more often pricing where they’d be happy to receive one offer at list price, versus pricing lower and hoping for an escalation. For buyers, the home-buying process isn’t as frenzied as it was at the beginning of the year, with more time for the decision-making process and more opportunities to preserve financing and inspection contingencies.”

Of course, even though bidding wars have fallen off a cliff this year, that doesn’t mean they have gone away completely. In South Seattle nearly a third of offers (29%) are still facing competition, down from almost two thirds (65%) in the first half of the year.

”There are still a few particularly popular or well-priced homes receiving multiple offers or being snapped up quickly, so I’d caution buyers to not get too complacent,” warned Culbert.

It’s likely that December will be a low point for bidding wars until next fall. The rate of bidding wars typically spikes as soon as the calendar turns over to a new year, so expect this measure to begin climbing again in just a few weeks, but unless something unexpected happens, we probably won’t see a return to the highs of the last few years.

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