Redfin CEO and Others Pull Back on Housing


How often to you hear a real estate broker bash housing?

For me it's twice in two days.

I had a chance today to sit down this morning, via satellite, with the CEO of online real estate brokerage Redfin, Glenn Kelman, who is one of the few people actually making money in the housing market these days.

"The real estate market is like a fat man that can't get up," Kelman begins. "The U.S. government has modified loans, extended tax credits, lowered interest rates; we've fired a lot of our guns, and at this point the market is just going to have a long slow period of decline."

Kelman is not alone in his ruminations. A new report from Macro Markets, which surveys a diverse group of economists, real estate experts, investment and market strategists, found 56 percent projecting negative home price growth for 2010. That number was 40 percent last month, so obviously less optimistic. The group predicts 10.5 percent appreciation in the next five years, and while that's actually down from the 12.4 percent prediction in May, it does translate into about $1.7 trillion in increased aggregate household wealth by the end of 2014. Again, just predictions.

But here are some facts:

"The day after the tax credit ended, traffic to our web site dropped like a rock," says Kelman. "People stopped signing up for tours, people stopped writing offers."

So where do we go from here?

Post-tax credit?

It's very nearly impossible to predict.

"Either way, the distortion of steroid shots into the marketplace has only made long term planning and thus efficiently allocated capital that much more difficult to coordinate," says Miller Tabak's Peter Bookvar.

Analyst Dan Oppenheim at Credit Suisse, like all his comrades, missed the call on new home sales, looking for a 26 percent decline, which was lower than consensus calls but not as low as the nearly 33 percent drop the Commerce Department reported today. He says, "We don't think we've seen the full extent of the weakness yet, even after this significant drop in May sales." His June survey shows a further decline in buyer traffic over the past three weeks.

Did I mention mortgage applications are on the slide again? Yep, even though they bounced up for some reason the previous week, both purchase apps and refi's were down again last week.

Oh, and one more thing from my California housing guru, Mark Hanson, who led his note today with words used by my kids when they see cauliflower:

"Of criminal note: A stand-out in today's report was that April's Southern sales results were revised down from 26k to 17k completely eliminating the March to April new home sales gain that was celebrated so greatly by the market last month. This is the very same mystery gain I was pounding the table over. On a percentage basis the West was revised down even more, from 11k to 7k."

  • New Home Sales at Record Low As Tax Credit Expires

Questions? Comments?