What Happens to the Real Estate Market When Supply Falls for 25 Straight Months?

Home Prices Rose 7.1 Percent as Home Sales Stalled in October

Seattle, WA – November 16, 2017 (BUSINESS WIRE) (NASDAQ: RDFN) — Home price growth was strong in October, up 7.6 percent compared to a year ago, according to Redfin (www.redfin.com), the next-generation real estate brokerage. The median sale price was $288,000 across the markets Redfin serves. Sales were essentially unchanged from October of last year, down 0.1 percent. Home sales have declined year over year for the past four months.

Redfin

“Despite strong buyer demand, sales are sputtering due to low inventory,” said Redfin chief economist Nela Richardson. “The last time we saw a substantial increase in the number of homes for sale, Donald Trump was a candidate in a Republican field of 11.”

Nationally, the number of homes for sale plunged 12.2 percent, the sharpest year-over-year decline in inventory since 2013. There was a 3.1-month supply of homes in October. Less than six months of supply signals the market is tilted in favor of sellers. We have not seen more than 6 months of supply in any month since January 2012.

The low-inventory situation is particularly stark in West Coast markets. The San Jose metro area saw the steepest year-over-year inventory drop and the sharpest corresponding price increase. There were fewer than half as many homes for sale in October as there were a year earlier, sending prices up 19.2 percent to a median of $1.05 million. In San Jose the typical home that sold last month found a buyer in 12 days.

Just eight of the 74 metros Redfin tracks posted year-over-year increases in inventory. These rare supply gains were seen primarily in smaller markets in the Midwest and the South, including Austin, New Orleans, St. Louis, Dallas, and Nashville.

Nationally, the typical home spent 44 days on the market, five days fewer than last October. Last month, average sale-to-list price ratio was 98.2 percent, up from 97.9 percent a year earlier, and 22.5 percent of homes sold above their list price, compared with 21.5 percent in October 2016.

“The House of Representatives and Senate are debating tax reform proposals that could have a significant impact on homeowners, particularly in states with expensive homes and high property taxes like California, New York and New Jersey,” said Richardson. Both the House and Senate versions of the tax-overhaul proposal include some reduction of the state and local income- and property-tax (SALT) deductions, and the House version of the bill proposes changes to the Mortgage Interest Deduction.

Nick Boniakowski, Redfin market manager in Northern New Jersey, reports that the uncertainty is leading some prospective homebuyers to take a step back from the market while they wait to see what happens with the tax bill and how it could affect their budgets. Still, many are pressing forward with their home purchases, knowing the bills are subject to change and both the timeline and likelihood of passage are unclear.

“If either of the current bills were to pass, it’s likely that buyer demand would weaken in expensive, high-tax states, especially for homes at higher price points, though any market shifts will be gradual,” said Richardson.

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Other October Highlights

Competition

  • Seattle, WA was the fastest market with the typical home finding a buyer in just 10 days, down from 13 days a year earlier. San Jose, CA and Boston, MA were the next fastest markets with 12 and 14 median days on market, followed by Oakland, CA (15) and San Francisco, CA (15).
  • The most competitive market in October was San Francisco, CA where 78.6% of homes sold above list price, followed by 76.3% in San Jose, CA, 63.7% in Oakland, CA, 45.6% in Seattle, WA, and 42.8% in Tacoma, WA.

Prices

  • 9 metro areas had double-digit increases in the median sale price. San Jose, CA led the nation in price growth, rising 19.2% since last year to $1,049,000. Seattle, WA had the second highest growth at 16.5%, followed by Las Vegas, NV (14.6%), Oakland, CA (13.1%), and Salt Lake City, UT (12.6%).
  • 6 metros saw price declines in October. Prices in Columbia, SC declined the most since last year falling 5.4 percent to $139,000.

Sales

  • 7 out of 74 metros saw sales surge by double digits from last year. Camden, NJ led the nation in year-over-year sales growth, up 31%, followed by Baltimore, MD, up 19%. Tacoma, WA rounded out the top three with sales up 18% from a year ago.
  • Baton Rouge, LA saw the largest decline in sales since last year, falling 20.3%. Home sales in Fort Lauderdale, FL declined by 18.0%.

Inventory

  • San Jose, CA had the largest decrease in overall inventory, falling 51.6% since last October. San Francisco, CA (-28.5%), Atlanta, GA (-27.8%), and Buffalo, NY (-26.7%) also saw far fewer homes available on the market than a year ago.
  • Only 8 of 74 metros posted inventory gains, these were primarily smaller metro areas in the South and Midwest. Raleigh, NC had the largest increase in the number of homes for sale, up 16.1% year over year, followed by Baton Rouge, LA (12.9%), Austin, TX (8.8%), New Orleans, LA (7.5%), St. Louis, MO (4.8%), Dallas, TX (4.1%), Nashville, TN (2.7%) and Allentown, PA (2.5%).

To read the full report, complete with data and charts, please visit the following link: https://www.redfin.com/blog/2017/11/market-tracker-october-2017.html

About Redfin

Redfin (www.redfin.com) is the next-generation real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer’s favor. Founded by software engineers, Redfin has the country’s #1 brokerage website and offers a host of online tools to consumers, including the Redfin Estimate, the automated home-value estimate with the industry’s lowest published error rate for listed homes. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 80 major metro areas across the U.S. The company has closed more than $50 billion in home sales.

Contacts
Redfin Journalist Services
Alina Ptaszynski
(206) 588-6863
press@redfin.com

Redfin Migration Report: Top Migration Destinations Include Nation’s Most Active Metros for Residential Construction

For the First Time, Nashville Ranks among the Top 10 Migration Destinations, at #8

Seattle, WA – November 8th, 2017 (BUSINESS WIRE) (NASDAQ: RDFN) Twenty-two percent of Redfin.com users searched for homes outside their home metro in the third quarter of 2017, according to the latest Migration Report from Redfin (www.redfin.com), the next-generation real estate brokerage. The number of long-distance searchers was up slightly from 21 percent in the second quarter and 20 percent in the first quarter.

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The analysis is based on a sample of more than one million Redfin.com users searching for homes across 75 metro areas from July through September. Redfin began systematically tracking homebuyer migration at the beginning of this year, so there is not enough historical data to determine if the current trends follow a seasonal pattern.

Nashville appeared among the top 10 migration destinations for the first time last quarter. Nearly a third of all users searching for homes in Nashville were searching from another metro the area, among which just over a quarter (25.6%) searched from New York.

“We help people from across the country search for homes in Nashville,” said Redfin Nashville agent Phillip Bernier, who has recently worked with buyers relocating from Chicago, San Diego and San Francisco.

“The cost of living is low and there is plenty to do downtown, but at the same time there is still a lot of natural beauty. You can be on a horse, on a lake or on a trail within a five-minute drive from downtown. The city is growing quickly. We have a running joke that the new state bird is the crane. If you look at the Nashville skyline, you can see 10 to 12 cranes at any given time.”

Another new trend revealed in Redfin’s third quarter migration analysis was that many of the cities experiencing a high net inflow of homebuyers were also places with higher than average rates of residential construction activity per capita.

Conversely, metros experiencing net outflow tended to have lower than average rates of new construction. According to a Redfin analysis of new construction data, nationally, there were 10.7 new residential housing units permitted to be built per 10,000 residents in September 2017.

Seven of the 10 metros with the highest net inflow had more permitted units than the national average. Nashville was also among the metros with the highest rates of new permit activity at 27 permitted new residential units per 10,000 residents. The metro areas poised to build the most new homes in the coming months are Houston, TX (10,000), Dallas, TX (9,400), Phoenix, AZ (7,800), and Atlanta, GA (7,700).

The third quarter also saw the continuation of several trends that dominated migration patterns in the first half of the year, including:

  • Affordable, mid-tier metros like Sacramento, Phoenix and Atlanta drew prospective homebuyers from expensive coastal cities;
  • The South and Sunbelt continued to see more incoming than outgoing searches; and
  • The Rust Belt cities of Detroit, Dayton and Milwaukee experienced a net outflow of user searches.

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* Combined statistical areas with at least 500 users in Q3 2017
† Among the one million users sampled for this analysis only

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* Combined statistical areas with at least 500 users in Q3 2017
† Among the one million users sampled for this analysis only

To read the full report, complete with an interactive data map of metro-to-metro migration trends and full methodology, click here.

About Redfin

Redfin (www.redfin.com) is the next-generation real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer’s favor. Founded by software engineers, Redfin has the country’s #1 brokerage website and offers a host of online tools to consumers, including the Redfin Estimate, the automated home-value estimate with the industry’s lowest published error rate for listed homes. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 80 major metro areas across the U.S. The company has closed more than $50 billion in home sales.

Contacts

Redfin Journalist Services
Alina Ptaszynski
(206) 588-6863
press@redfin.com

Redfin: Inventory Shortage Hits the Luxury Market, Sending Prices up 4.9 Percent in the Third Quarter

Redfin economist says there is still strong buyer demand for high-end homes

Seattle, WA – October 26, 2017 (BUSINESS WIRE) (NASDAQ: RDFN) — Luxury home prices rose 4.9 percent in the third quarter of 2017 compared to last year, to an average of $1.71 million, according to the latest luxury market report from Redfin (www.redfin.com), the next-generation real estate brokerage. The analysis tracks home sales in more than 1,000 cities across the country and defines the luxury market as the top 5 percent most expensive homes sold in the city in each quarter. The average price for non-luxury homes was $336,000 in the third quarter, up 5.3 percent compared to a year earlier.

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A sharp decline in the number of luxury homes on the market likely contributed to the price increase. The number of homes for sale priced at or above $1 million fell 18.1 percent compared to the same period last year, marking two consecutive quarters of a decline in the number of high-end homes for sale.

The number of homes priced at or above $5 million saw a similar decline at 19 percent. This marked the first quarter in which luxury inventory fell year over year since Redfin began reporting on the luxury market in 2014.

“There is still strong buyer demand for high-end homes,” said Redfin chief economist Nela Richardson. “Despite declining inventory, luxury sales soared in the third quarter. Sales of homes priced at or above $1 million were up 11 percent from a year ago, while sales of homes priced at or above $5 million were up almost as much at 10 percent.”

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Luxury homes are also moving off the market faster, with the typical luxury home finding a buyer in 70 days, four days sooner than last year.

The city of Longmont, Colo., led the nation with the strongest year-over-year price growth in the luxury segment in the third quarter. The average price of a luxury property increased 34.7 percent compared to last year to $1.55 million. Strong luxury home price gains were seen in Fort Lauderdale, Fla., (+28.7%) and St. Petersburg, Fla., (+19.6%).

The average price for a luxury home fell furthest in the third quarter in the cities of Delray Beach, Fla., San Francisco, Calif., and Boca Raton, Fla., where prices fell 26.9 percent, 14.7 percent and 13.8 percent respectively compared to last year.

To read the full report, complete with city-specific data and charts, as well as a list of the five highest-priced home sales in Redfin markets in the third quarter, click here.

About Redfin

Redfin (www.redfin.com) is the next-generation real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer’s favor. Founded by software engineers, Redfin has the country’s #1 brokerage website and offers a host of online tools to consumers, including the Redfin Estimate, the automated home-value estimate with the industry’s lowest published error rate for listed homes. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 80 major metro areas across the U.S. The company has closed more than $50 billion in home sales.

Contacts

Redfin Journalist Services
Alina Ptaszynski
(206) 588-6863
press@redfin.com

Redfin New Construction Report: Under Building of New Homes and High Construction Costs Are Perpetuating Housing Shortage

Redfin releases new datasets on new construction prices, sales, inventory and building permits for metros and counties across the U.S.

Seattle, WA – October 25, 2017 (BUSINESS WIRE) (NASDAQ: RDFN) The average price of a new construction home that sold from July through September was $374,000, according to a new quarterly analysis on the new construction market from Redfin (www.redfin.com), the next-generation real estate brokerage. Redfin found new construction homes sold at an average premium of $87,000 in the third quarter compared to existing homes. New home prices were up 3.3 percent year-over-year compared to existing home prices, which grew by 7.9 percent in September.

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In conjunction with the release of its inaugural quarterly report on new residential construction, Redfin is making monthly data on new home prices, sales and inventory, as well as building permit data from the U.S. Census, available on its Data Center. The downloadable datasets are available at the national, metro and county levels, going back to 2012, and will enable consumers, researchers and the media to study the new construction market, analyze average construction costs and compare the number of units built per capita across regions. Redfin will update the Data Center and report on new construction trends on a quarterly basis.

The Redfin analysis found new homes represent a growing share of the market over the past five years—rising from one in 13 homes for sale in September 2012 to one in eight homes in September 2017. However, housing starts—the number of new residential homes that have begun construction—are still 22 percent below their long-term average.

Single-family building permits, which offer a look at the new home pipeline, were up 9.7 percent year-to-date through September compared to last year. More than three-quarters of the nearly 100 metro areas Redfin tracks had positive growth in the first eight months of the year in single-family permits compared to last year. New permits for multi-family units (buildings of five or more units, including both apartment and condo developments) were down 3.6 percent year to date.

“After almost a decade of underproduction, we are finally seeing a slow, steady increase in single-family housing starts, up 9 percent from a year ago,” said Redfin chief economist Nela Richardson. “But high building costs are limiting the construction of homes that today’s buyers can afford. This is why even in the midst of extreme inventory shortages for existing homes, new homes are sitting on the market instead of selling.”

The national average cost to a builder constructing a new home—which includes the estimated cost of labor plus materials—was $240,000 for single-family units in August this year, which is the highest since the Census began reporting this in 1988.

Construction costs are rising in part because the availability of construction workers is still 25 percent below the peak in 2006 and there is also less competition among homebuilders. Housing material costs have also been rising, with lumber prices recently hitting their highest level on record since January 2003.

“We would love to build more affordable starter homes, but when high-end homes cost the same to build and are far more profitable, we lose the incentive to build smaller units,” said Isaac Stocks of Azure Northwest Homes, a Seattle-area home builder.

Metro-Level Highlights for New Construction in the Third Quarter:

  • Nashville, TN had the highest portion of new home sales over the last three months, with 24 percent of all homes sold being new construction. Raleigh, NC and Austin, TX each followed closely behind at 23.2 percent and 18.9 percent, respectively.
  • The four metro areas with the lowest shares of new construction sales were all in New York and New Jersey led by Buffalo, NY at just 0.8 percent of home sales followed by Camden, NJ (1.5%), Hudson Valley, NY (1.6%) and Rochester, NY (1.6%). Six of the following seven lowest-ranked metro areas were in California—each with under one in 40 home sales being new construction.
  • The metro areas with the highest year-over-year price growth per square foot for new construction sales last quarter were Birmingham, AL (21.9%), Hudson Valley, NY (21.0%) and Long Island, NY (17.4%). The California Bay Area metros of San Francisco and San Jose each posted negative price growth per square foot for new construction homes—falling 6.2 percent and 4.2 percent year-over-year.
  • The estimated cost of constructing a new unit during the months of June, July and August this year was the highest in Long Island, NY at an average of $451,000 per home. Honolulu, HI ($451,000), Tucson, AZ ($272,000), and San Francisco ($269,000) rounded out the top four for average cost per unit permitted.
  • Austin, TX, Raleigh, NC and Nashville, TN are building the most homes per capita at 29, 28 and 27 units per 10,000 residents, respectively. In contrast, Allentown, PA and Long Island, NY had far fewer new homes in the pipeline at only 0.5 and 1.1 units permitted per ten thousand residents respectively.
  • A look at the total volume of building permits reveals that the metro areas poised to build the most new homes in the coming months are Houston, TX (10,000), Dallas, TX (9,400), Phoenix, AZ (7,800), and Atlanta, GA (7,700).
  • Those with the largest year-over-year increase in units permitted include Oakland, CA (142%), Riverside-San Bernardino, CA (96.7%) and Tacoma, WA (76.9%).

To read the full report, complete with data visualizations and downloadable datasets click here.

About Redfin

Redfin (www.redfin.com) is the next-generation real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer’s favor. Founded by software engineers, Redfin has the country’s #1 brokerage website and offers a host of online tools to consumers, including the Redfin Estimate, the automated home-value estimate with the industry’s lowest published error rate for listed homes. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 80 major metro areas across the U.S. The company has closed more than $50 billion in home sales.

Contacts

Redfin Journalist Services:
Alina Ptaszynski
(206) 588-6863
press@redfin.com

Redfin: Home Sales Fell 8.1 Percent in September, Third Month in a Row of Declining Sales

Lack of Inventory Stifling the Market Despite Still-Strong Demand

Seattle, WA – October 19th, 2017 (BUSINESS WIRE) (NASDAQ: RDFN) — Home sales fell 8.1 percent compared to last year, the largest decline posted since July 2016, according to Redfin (www.redfin.com), the next-generation real estate brokerage. Meanwhile price-growth is strong, up 7.6 percent in September to a national median sale price of $288,000 across all markets Redfin serves.

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Nationally, the number of homes for sale plunged 10.9 percent, continuing the 24-month streak of declining inventory. The number of new listings in September fell 7.7 percent from a year ago, leaving 3.3 months of supply. Less than six months of supply signals the market is tilted in favor of sellers.

The median days on market ticked up to 42 in September from 39 in August. The market was still five days faster than last September. The average sale-to-list price ratio was 98.4 percent and 23.6 percent of homes sold above their list price in September.

Weather took its toll in several markets, with Hurricane Irma in Florida and Harvey in Houston. Real estate activity was put on hold as communities dealt with the storm and its aftermath. As a result of hurricane-related disruptions, Redfin expects real estate activity to be more volatile than normal in these markets.

Home sales in Miami, Fort Lauderdale, West Palm Beach, Jacksonville, Orlando and Tampa all declined by more than 15 percent compared to last September. Miami sales took the biggest hit with a year-over-year decline of 38.4 percent. In Houston, home sales tumbled more than 25 percent in August, but recovered in September, and were essentially flat (0.2%) compared to a year ago.

“The housing market is running on fumes due to low inventory,” said Redfin chief economist Nela Richardson. “September marks the first time since 2014 that we’ve seen three consecutive months of year-over-year sales declines. The inventory shortage is most severe for affordable homes. There has not been an increase in homes priced under $260,000 in two years.”

In September, new listings from homes priced in the lowest tercile of the market (under $260,000) were down 14.9 percent year over year. Inventory for the middle tercile of new listings, priced between $260,000 and $470,000, was down 4.7 percent year over year. The only inventory increase was for listings above $470,000, up 2.3 percent from a year ago.

“The good news is that so far markets affected by Hurricane Harvey, like Houston, are rebounding in terms of sales quickly,” said Richardson. “That bodes well for Floridian markets.”

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Other September Highlights

Competition

  • Seattle, WA was the fastest market, with nearly half of all homes pending sale in just 10 days, down from 12 days from a year earlier. San Jose, CA, Boston, MA, and Portland, OR were the next fastest markets at 14 median days on market, followed by Oakland, CA (15).
  • The most competitive market in September was San Francisco, CA where 71.7% of homes sold above list price, followed by 71.6% in San Jose, CA, 64.6% in Oakland, CA, 47.7% in Seattle, WA and 42.7% in Tacoma, WA.

Prices

  • San Jose, CA had the nation’s highest price growth, rising 16.3% since last year to a median of $1 million. Tucson, AZ had the second highest growth at 15.8% year-over-year price growth, followed by Tacoma, WA (14.5%), Las Vegas, NV (14%) and Seattle, WA (13.3%).
  • Just 3 metros saw price declines in September: Camden, NJ (-6.4%), Baltimore, MD (-3.1%) and Newark, NJ (-2.7%).

Sales

  • Home sales in Miami, FL and Fort Lauderdale, FL declined by 38.4% and 32.4%, respectively, as Hurricane Irma ground the market to a halt.
  • 12 of 74 metros saw sales increase from last year. Camden, NJ led the nation in year-over-year sales growth, up 8.8%, followed by Honolulu, HI, up 7.8%. Detroit, MI rounded out the top three with sales up 4.8% from a year ago.

Inventory

  • San Jose, CA had the largest decrease in overall inventory, falling 51.7% since last September. Rochester, NY (-27.3%), Buffalo, NY (-26.9%) and Oakland, CA (-26.5%) also saw far fewer homes available on the market than a year ago.
  • Salt Lake City, UT had the highest increase in the number of homes for sale, up 39.6% year over year, followed by Baton Rouge, LA (34.0%) and Tulsa, OK (13.8%).

To read the full report, complete with data and charts, click here.

About Redfin

Redfin (www.redfin.com) is the next-generation real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer’s favor. Founded by software engineers, Redfin has the country’s #1 brokerage website and offers a host of online tools to consumers, including the Redfin Estimate, the automated home-value estimate with the industry’s lowest published error rate for listed homes. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 80 major metro areas across the U.S. The company has closed more than $50 billion in home sales.

Contacts

Alina Ptaszynski
(206) 588-6863
press@redfin.com

Redfin Housing Demand Index Virtually Flat from July to August Due to Continued Inventory Shortage

The number of Redfin customers touring and writing offers was basically even from July to August, but increased year over year

Seattle, WA – September 28th 2017 (BUSINESS WIRE) (NASDAQ:RDFN) — The Redfin Housing Demand Index remained virtually flat, up slightly from 126 in July to 127 in August, according to Redfin (www.redfin.com), the next-generation real estate brokerage. Still, the Demand Index increased 27.7 percent year over year. The Demand Index is adjusted for Redfin’s market share growth.

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The Demand Index is based on thousands of Redfin customers requesting home tours and writing offers. A level of 100 represents the historical average for the three-year period from January 2013 to December 2015.

Across the 15 metros covered by the Demand Index, there were 13.9 percent fewer homes for sale in August than there were a year prior, and there was a 2.7 percent decline in new listings. August marked the 27th consecutive month of year-over-year inventory declines in these markets.

“High consumer confidence and low interest rates have powered homebuyer demand, but too-low inventory has constrained home sales all year,” said Redfin chief economist Nela Richardson. “The Federal Reserve is now setting the stage for a slow, steady increase in mortgage rates in October by beginning to sell its mortgage portfolio. Fall buyers are likely to face slightly higher financing costs in addition to strong price growth.”

The seasonally adjusted number of buyers requesting home tours and writing offers remained flat from July to August, decreasing 0.8 percent and increasing 0.1 percent respectively. Compared to last year, 42.3 percent more buyers requested tours in August and 8.2 percent more wrote offers.

At the metro level, Oakland had the largest Demand Index increase in August, up 29 percent from July and 43 percent year over year. Inventory was down 30 percent year over year and new listings fell 5.3 percent.

“August has traditionally been one of the slowest months in Oakland for homebuyer activity as people go on vacation and finish up their family activities before the kids head back to school,” said Redfin Oakland agent Tom Hendershot. “This year, August demand has really ramped up compared to July, and we expect September to be a very active month as long as more new inventory hits the market.”

To read the full report, including metro-level demand data and charts, click here.

About Redfin

Redfin (www.redfin.com) is the next-generation real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer’s favor. Founded by software engineers, Redfin has the country’s #1 brokerage website and offers a host of online tools to consumers, including the Redfin Estimate, the automated home-value estimate with the industry’s lowest published error rate for listed homes. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 80 major metro areas across the U.S. The company has closed more than $50 billion in home sales.

Contacts

Redfin Journalist Services:
Jon Whitely
(206) 588-6863
press@redfin.com