Redfin Corp Stock Price, News & Analysis

Redfin reported a significant slowdown in the housing market for November 2022, with home sales falling 35.1% year-over-year, marking the steepest decline since 2012. The median home sale price rose only 2.6%, the lowest increase since May 2020. New listings dropped 28.4% year-over-year, while overall supply increased by 4.6%. Despite early signs of demand returning due to falling mortgage rates, total sales remain low. The average 30-year fixed mortgage rate was recorded at 6.81%, up 3.74 percentage points from last year, impacting buyer activity.

In October, all-cash home purchases in the U.S. reached 31.9%, marking the highest percentage since 2014, up from 29.9% a year prior. This increase is attributed to affluent buyers wanting to avoid high mortgage rates, currently above 6%. FHA loans also gained popularity, representing 14.6% of mortgaged sales, the highest in nearly two years. Notably, cash purchases surged in Riverside, CA (38%) and Cleveland (47%). Conversely, the Bay Area saw the lowest all-cash rates, at 14.3%.

Redfin reports that in the three months ending in November, 24.1% of homebuyers sought to relocate to a different metro area, matching a record high. Rising mortgage rates and inflation are impacting budgets, leading to a significant drop of over 30% in home sales year-over-year. Sacramento emerged as the top destination for relocation, while migration flows to popular areas like Las Vegas and Miami are decreasing. The trend reflects a shift towards more affordable locations as remote workers adjust to economic pressures.

Redfin's Homebuyer Demand Index has increased by 10% and mortgage-purchase applications have risen by 14% since October's lows. The decline in mortgage rates to 6.31% from a peak of 7.08% is driving this uptick, saving typical homebuyers over $200 monthly. However, year-over-year metrics indicate a significant drop in demand, with pending home sales down more than 30% and homes selling at the slowest rate in two years. The median home-sale price only rose 1.4%, the slowest growth since the pandemic started.

Redfin reports that only 3.4% of U.S. homeowners who purchased in the last two years would be underwater if home prices fall 4% by the end of 2023. The report indicates a typical home bought during this period would still gain approximately $27,000 in value. Areas such as Sacramento and Phoenix have higher risks of underwater mortgages, while Florida homeowners face the least risk. Despite potential price declines, a foreclosure crisis is not expected, though middle-class homeowners may see significant wealth loss.

The median asking rent in the U.S. rose by 7.4% year-over-year to $2,007 in November, marking the slowest growth rate in 15 months. This trend indicates a cooling rental market, with rents decreasing in 14 major metro areas, including Milwaukee (-13.1%) and Houston (-6.3%). Contrarily, Raleigh, NC saw the highest rent increase at 21.8%. Experts predict continued cooling in rent growth, which may contribute to reduced overall inflation and potentially lower mortgage rates, attracting more homebuyers to the market.

Redfin's Homebuyer Demand Index increased by 5% this week amid declining mortgage rates. The total number of homes available rose 15% year-over-year, marking the largest increase since 2015. However, new listings saw a decline of over 20%, indicating hesitant buyers. The average time a home was on the market increased to 37 days, the highest in recorded history. Though mortgage rates lowered to 6.33%, monthly payments remain 38% higher than last year.

Home prices decreased in 11 major U.S. metros, the first annual drop in Phoenix since 2015.

Redfin's 2023 Housing Market Predictions indicate a challenging year ahead, with home sales expected to decline by 16% to 4.3 million, the lowest since 2011, primarily due to high mortgage rates and affordability issues. Mortgage rates are forecasted to drop to 5.8% by year-end, offering some relief. Home prices may decrease by 4%, marking the first annual decline since 2012. Despite these trends, a surge in foreclosures is unlikely due to strong homeowner equity and a stable job market.

Redfin has become the first real estate site to showcase zoning and land use details on over 70 million home description pages across the U.S. and Canada. This feature, developed through a partnership with Zoneomics, offers users insights into local zoning laws, helping them understand property usage regulations. It includes a zoning summary and a list of permitted and conditional land uses. The feature aims to provide consumers with essential real estate data, enhancing the homebuying experience. It is available for nearly 3,900 cities and will expand to mobile platforms soon.