Redfin CEO: People are Lining Up to Sell Their House

I think listing consultations are up 19%, active listings are up 7%. So we have seen people lining up heading into the new year to get their property on the market. A year over year comparison that's up 19% has already accounted for seasonality. There are a lot of people looking to sell their homes and I think they're less opportunistic economically where they see some opportunity to pounce on demand or get higher prices and more just tired of waiting. Did you catch what he just said? Listings consultations are up almost 20%, 19% year over year. Now in 2023, December of 2023, so this was not this last December, but the previous December, Redfin came out and said, declining mortgage rates are luring sellers off the sidelines, paving the way for 2024 buyers. So they're saying, hey, increase in inventory is going to help with buyers. We know that's not really happening, but we'll get there in a minute. OK, here it is. Redfin has seen a double digit annual increase this week in homeowners contacting its real estate agents for help selling their homes. Now, if you remember, that was last year, not this last December, but the year before they were saying a double digit increase. Now, if we look at active listings, they grew pretty significantly in 2024. Now, Glen Kelman saying they have another double digit increase in listing consultations. So we're going to talk about that in just a minute. But let's listen to what Mike Simonson at Altos Research has to say. There were more new listings this week than in the same week for six or seven years. So it's hard to measure precisely with the holidays, but 32,000 is 33% more homes hit the market in the 52nd week of the year than in 2023. This is probably related to when the holiday hits on the day of the week. But the thing to keep an eye on each week in December is that we had more normal, much more normal levels of new listings each week in December. In the chart here, the gray lines are the previous years. The year normally starts at 20,000 to 30,000 range, single family new listings. This week, we're at 32,500. That's at the left end of the chart. In the post-pandemic era, the last three years, the most notable trend has been very few sellers each week, new listings each week. That trend has kept a lid on total inventory growth. But it seems to me that there are some early signals that that trend is changing, loosening up with gradually more sellers. Not a lot of sellers, it's not a flood, but 2025 looks less restricted than 2024 and certainly less tight than 2023. So each year brings more sellers as the world adjusts to higher mortgage rates. Now what's fascinating about this, when they talk about sellers, they seem confident that there are more sellers coming out of the woodwork. Okay, now if we look at our active listings for Nashville, we can see that 2024 had a much stronger inventory growth than 2023. But what's really striking about both Redfin and Altos, which by the way, they forecast a four, Altos I think is a 5% increase in sales price, and Redfin's a 4%, something like that. They're both low single digits, mid single digits increase in housing price. That's what they think for 2025. But both, when they talk about buyers, they become a lot less certain about what they think will happen. Let's continue with Altos, and then we'll go back and listen to what Glenn Kelman had to say. Underway. So, you can see why we're forecasting 2025 to have maybe 5% sales growth over 2024. But it's going to be fascinating to watch this home sales metric over the next month. How sensitive are home buyers to 7% mortgage rates and this latest affordability punch? Do we lose all of the sales momentum that we've seen lately? So, it's never a lot of sales momentum, but it has been growing. But man, it sure hurts to start the year with mortgage rates over 7%. So you can tell, he's uncertain about how this is going to shake out. He knows that affordability is a stretch. It's just so weird. I mean, aren't sellers buyers? I mean, is that what people say? It seems like there's a disconnect between sellers and buyers. And let me show you what I mean. Let's play the clip with Glenn Kelman, and you can see what he says about the buyers. It's just so fascinating to hear them talk. So when you have 4 million, 4.1 million existing home sales in the US over the past two and a half years, that is just a historically low number. I haven't seen that since 1997 when the population was 25% smaller. And I have never seen homebuyers act in the opposite direction of mortgage interest rates for more than a week or two. And here it's been probably six weeks where home buying demand has been fairly strong and interest rates have just gotten worse and worse. So something's got to give. Fair enough. So basically what you're saying is no immediate tailwinds yet for this momentum that we're just starting to see, this Trump bump? I mean, right now there's plenty of buyers in the market. It's just hard to tell whether they're going to pull the trigger. So it's easy to look at homes. It's harder to make offers, especially when rates are above 7%. So I don't know if you caught that, but his uncertainty about buyers is pretty distinct and it's pretty wild to think about that. They seem so much more confident talking about listing growth than they are talking about buyers jumping into the market. And this creates a gap between sellers and buyers. In other words, there's more sellers than buyers. When there's more sellers than buyers, you have an accumulation of active listings. You also have a scenario which prices could drop, right? Because if prices drop, then people can come back in. So I'm not saying that prices will drop, but I'm just saying it's very interesting. Here in Nashville, we have contract volume. It's down almost 10%. When we look at active listings, our active listings are up 13% to start the year. We have more active listings, we have more options, and we have fewer people buying right now. Now it is year over year. I get that it's the first week of January, but the point is that we're starting the year off soft with higher mortgage rates. Now before you make a conclusion that this is everywhere in Nashville, it's not. Let me show you this map. This map is all the areas that had at least 21 transactions last year and the year over year change. The green of this is where prices increased, and the red is where prices decreased. So I kind of got bothered by the whole idea that prices were up, prices weren't up, it's a mix issue, nobody can really say whether or not prices were truly up. I mean, I couldn't. And so I thought, well, maybe we're just doing it wrong. And so what I did was I took all the neighborhoods that I track and I eliminated any that were less than 21 transactions. And then I said, okay, highlighted by color, is it year over year higher than it was last year? And by the way, this is price per square foot. So this is fairly normalized. And so price per square foot, is it higher or lower than it was the previous year? Now, of the 300 neighborhoods that made it through onto this map that you're seeing, 200 of them were green. In other words, 200 had an increase in price, while 100 had a decrease in price. So prices dropped in one third of the neighborhoods, even as prices moved up. But in two thirds of the neighborhoods, prices increased. So you can see why if you lived in a neighborhood where prices dropped in some pretty significantly, that dark red is areas where prices dropped pretty significantly, 10% in some of these neighborhoods. We had 10% just on the north side of Nashville. We had another in the Fisk area where prices dropped almost 10%. Now, if you're in these areas, tell me, you tell me what you see. Here we had a Greenhills. Prices dropped in the Greenhills area in the area around 4% to 5%. Tyne Boulevard, this is like Forest Hills area, right before you get to Forest Hills. Prices dropped almost pretty significantly. So you can see some areas, prices are going up. Some areas, prices are dropping. Come down into Williamson County, there was a lot more increase. West Haven increased about 4% over the year, which is pretty wild because you remember I was so bearish on it a year ago. Here we have some other areas that increased 8% and 12%. Forest Crossing, this area right here, increased 10%. So you can see some areas, look at Highlands of Lab Park, they've had such a hard time. They dropped 25% year over year and now they're down 1%, so it's stabilized a lot. You can see the area just south of Thompson Station, it's been very hot down there, very hard to buy and you can see prices have been going up. But the point is, is that prices are up in a lot of neighborhoods in Nashville coming into the year, even as active listings have been up. Of course, when you look at the individual counties, Williamson County, that was the Franklin area that I showed was so much green in that area, active listings are down 5%. When you look at contract volume, contract volume for Williamson County is up. So the opposite trend in Williamson County is happening. It's a much more bullish trend in Williamson County, whereas if you go in Davidson County, by the way, Rutherford, look at that, down 18% for contract volumes. They're starting a very, very low place in Rutherford County. Look at Davidson County, down 13% to start off the year in contract volume. If we go over to the active listings, Davidson County is up 22%. Davidson County is up so much in inventory, even though there were some neighborhoods that were soft, some neighborhoods that were positive, pretty wild. At Rutherford County, look at that, Rutherford County is up in active listings. So Rutherford County, Davidson County seem to be having similar trends, they're driving up inventory because they're some of the larger counties, more populated counties, 2,000 options coming into the new year and contract volume is down pretty wild. Now, here's the thing, and you all know I've said this, I've said it almost every video for the past three weeks, this is all really pressed. You heard both Glenn Kelman and Mike Simonson talk about 7% mortgage rates. It's not so much 7% mortgage rates as it is year-over-year mortgage rates, in my opinion. Okay, the mortgage rates are higher than they were last year, demand is softer in aggregate. Now, as we go into the spring, I do believe we'll see soft demand with these 7% mortgage rates. I believe it'll be soft. Now, what I'm looking for is this ramp up right here, you can see 2023, boom. Okay, 2024, it was a little more muted, and now here we are right here in 2025, I believe it'll be kind of underneath this green ramp up, so it'll ramp up a little bit slower. If mortgage rates just stay right at 7%, we'll probably go higher in May or June, because that's where mortgage rates peaked this last year. So if they just stay flat, they'll peak. But there's one thing eating at me, you guys know that I've been very, very concerned about rates continuing to go up, and I still think that there's a possibility that they could, but this has me thinking that there may be a possibility they could tank too. And look, if mortgage rates tank, I know you guys are like, oh, please let mortgage rates drop. I'm telling you, if mortgage rates drop, what do you think is going to happen to this under contract? See, there's a lot of buyers sitting on the sidelines. It could get chaotic quickly. So I don't know what's going to happen. I really don't. But if mortgage rates drop, I feel very strongly that the home buying market in Nashville will heat up very rapidly. I feel like it's very interest rate sensitive at this point. Let me read you this. China, their 10-year yield has been in free fall, absolutely in free fall. It's dropped a full 100 basis points, 1%. A year ago, we were at 2.6% on the Chinese 10-year yield. Now we're at 1.6%. It is dropping pretty rapidly. You can see it's in free fall. Look what Anna Wong has to say about this, though. She says, this development makes the relentless increase in US long-term yields in the last three months particularly puzzling. We should have seen more safe haven effects. Her point is that she's surprised that the 10-year yield hasn't dropped. She's surprised. And what's interesting about this is she's basically saying she's surprised mortgage rates haven't topped. If mortgage rates drop, this market will change, at least how it is right now. I would just be shocked if mortgage rates drop and it doesn't change. And look, I know there are people out there saying, oh, mortgage rates will drop. It'll unlock the market. Prices will drop. People come back in. And I'm all about those theories. I have no idea if that'll happen. I personally have a hard time seeing that happen. But look, I am not telling you what will happen. What I'm great at telling you is what is currently going on. I'll tell you before anybody. I'm telling you that contract volume in Nashville is down 8%. You'll probably hear about this in February or March. You're not going to hear about it for another month or two. It's just the way it is. I'm great at telling you what's happening now. I do not have any idea what's going to happen with prices. I can tell you that if 10-year yield tanks like what Anna Wong's talking about, that I just don't see how it doesn't push up prices and make it more of a seller's market here in Nashville. Maybe I'm wrong. Maybe it will unlock the market. My personal opinion is the market is on its way to being unlocked as mortgage rates stay at 7%. We're going to see a massive growth in inventory. Those new no sellers come back online and buyers are constrained. Once again, I see plenty of inventory. I think we could see capitulation because by the way, guys, we had a pretty record year of canceled expired listings. It wouldn't shock me at all if all of this leads to a softening market on prices. I personally think that's what's needed. I think prices need to drop. I'd be happy. I would be ecstatic if prices dropped. It does feel like we're moving into a soft 2025. It does feel softer this year in my personal opinion. Why? Actual listings are up, contract volumes down, mortgage rates year over year higher. That's pretty much it. Now, what does that lead to? That's going to lead to more accumulation of active listings, lower demand, and potentially a buyer's market for 2025. I would love to see that happen. I think if rates drop, that can change very quickly. And personally, we're going to watch this ramp. If it ramps up past there, we're going to watch it closely. This ramp right here is so important. It's going to tell us the tone of the market we're going into for the first half of the year. And we'll pick up on it fairly quickly. So keep an eye on this contract volume as it ramps into January. It's going to start ramping here in the next week. It'll be fun to watch. With that, I hope you all have a great rest of the day. And I look forward to seeing you next Saturday. Have a good weekend.