Redfin Publishes Ranking Of Real Estate Markets Most To Least Vulnerable To Another Housing Bubble
SEATTLE, April 12, 2013 /PRNewswire/ -- Technology-powered real estate broker Redfin (www.redfin.com) today released a ranking of U.S. real estate markets based on vulnerability to a new housing bubble. While the overall housing market is hot and getting hotter, the analysis concludes that it is not currently in a bubble. This conclusion is based on trends from the peak in 2005 and 2006, compared to those in spring 2013.
"Nationwide, we're not in a bubble," said Redfin CEO Glenn Kelman. "Too many sales have been all-cash for people to get in over their heads, and sales volume is still nearly 40% below the 2005 peak. But markets like Washington DC and Los Angeles, where prices have increased more than 25% faster than incomes since 2000, could be vulnerable as interest rates increase over the next year. Just in the past few weeks, we've seen buyers using more aggressive loans, appraisals getting looser, and almost every sale turn into a bidding war. Even as the investors who were so active in 2012 start to pull back, others willing to pay more seem to be taking their place."
Rising home prices and very high demand are making the market feel "bubbly," especially in Washington DC, Los Angeles, San Diego, and San Francisco. However, in most cities across the country, the important factors that create a true bubble are missing. For example, home prices are rising, but not faster than incomes. Homes for sale are at record lows, and sales volume is average. Nearly half of all homes are paid for in cash. In contrast, during the bubble of 2005-2006, there was an abundance of listings, and record numbers of sales. More than a quarter of homes were bought with no down-payment.
| The Bubble of 2005/2006 |
Spring 2013 |
| High price-to-income (PI) ratios |
Low to average PI ratios |
| Lots of new listings |
Record low new listings |
| Record high sales volume |
Average sales volume |
| Extremely easy credit |
Relatively tight credit |
Following is a ranking of most bubbly to least bubbly real estate markets in America, with Washington DC, Los Angeles, San Diego, and San Francisco leading the pack. These markets have high price-to-income ratios, a high percentage of multiple offers, rapidly-selling inventory, and average sale-to-list ratios close to or above 100 percent.
| Market |
Froth Factor (Market Ranking) |
Price-to- Income Ratio, January 2013 vs. January 2000 |
Ratio of Sale Price to List Price, March 2013 |
Flips: % of Homes Sold in March 2013 that Had Already Been Sold Once In Past 18 Months |
% of Redfin's March Deals Involving a Bidding War |
% of March Listings Under Contract Within Two Weeks of Debut |
| 1 |
26% |
98% |
11% |
71% |
43% |
|
| 2 |
26% |
100% |
10% |
91% |
52% |
|
| 3 |
13% |
99% |
11% |
91% |
50% |
|
| 4 |
12% |
104% |
10% |
93% |
60% |
|
| 5 |
9% |
94% |
6% |
68% |
9% |
|
| 6 |
8% |
99% |
8% |
60% |
41% |
|
| 7 |
6% |
97% |
11% |
74% |
3% |
|
| 8 |
4% |
100% |
12% |
74% |
48% |
|
| 9 |
0% |
100% |
12% |
46% |
52% |
|
| 10 |
-4% |
99% |
10% |
36% |
37% |
|
| 11 |
-8% |
97% |
3% |
50% |
- |
|
| 12 |
-10% |
98% |
7% |
46% |
28% |
|
| 13 |
-14% |
101% |
10% |
- |
14% |
|
| 14 |
-17% |
97% |
7% |
51% |
12% |
|
| 15 |
-20% |
99% |
18% |
50% |
24% |
|
| National |
- |
5% |
99% |
10% |
76% |
35% |
To read the full report, which describes the market-specific trends of each city named above, click the following link. http://blog.redfin.com/blog/2013/04/the-2013-real-estate-bubble.html.
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate broker that represents people buying and selling homes. Founded and run by technologists, Redfin has a team of experienced, full-service real estate agents who are advocates, not sales-people, earning customer-satisfaction bonuses, not commissions. Redfin's online tools feature all the broker-listed homes for sale, as well as for-sale-by-owner properties that don't pay brokers a commission. Because Redfin is a brokerage and a member of the multiple listing services (MLSs) in each market it serves, Redfin's website and mobile apps show all the agent-listed homes for sale, and does not show any homes as active that are already off the market. The company serves 21 U.S. markets and has closed more than $8 billion in home sales. In 2012, Redfin was named one of The DIGITAL 100: World's Most Valuable Private Tech Companies by Business Insider. Follow us on our blog (blog.redfin.com), Twitter (@redfin), and Facebook (facebook.com/redfin).
SOURCE Redfin
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