Redfin CEO Glenn Kelman: “We are probably past peak Seattle.”

Bloomberg interviewed Redfin CEO Glenn Kelman at the GeekWire Summit today. Glenn had some interesting comments about the Seattle real estate market, Amazon, and the national real estate market.

Redfin CEO Sees ‘Moment of Reckoning’ in Seattle Real Estate Market

Many people in this middle-class town have now been priced out. We are probably past peak Seattle. For the first time this year we saw more people using our website to leave Seattle than to come to Seattle. It has been a moment of reckoning for this town… Some folks have said, ‘enough is enough.'”

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

38 comments:

  1. 1
    DavidE says:

    “We saw more people on our website to leave Seattle than to come to Seattle…” @ :022

    I think this is also a very significant finding by Redfin. Seattle used to be the fastest growing big city for several years. The word is getting out that:
    1. Traffic rivals NY and LA–it is not simply worth commuting here when you have to live in the suburbs because you are priced out of Seattle.
    2. Many employers like Amazon and Microsoft don’t given a damn about their employees. If you are American, you are very likely to be replaced by a visa holder. Having no personal life is a condition of employment in many cases.
    3. The weather does suck most of the year.
    4. The nearby hiking places are mostly packed, and outdoor activities are not as fun as they used to be around here. You have to have a pass or pay a fee even to enjoy nature.
    5. Most companies pay compensation that has not changed mostly since 2008, but the cost of living has skyrocketed. You could have better quality of life elsewhere, including a much nicer home for less than half the price of what you pay for a damp house in Seattle.
    6. Dating is a nightmare for many singles.

    All in all, more headwinds for Seattle housing.

  2. 2

    RE: DavidE @ 1 – as to #4, but for the charges the trails would be even more packed. I avoid the National Parks on the days they are free the same reason that I avoid gas stations when they are doing radio station promotions for cheap gas, or for the same reason I pay to use the I-405 Hot Lanes (or whatever they are called). Fewer people affecting my activities is a good thing that I’m willing to pay for.

    As to #6, dating issues, that’s probably true everywhere! ;-)

    I would add #7, a completely dysfunctional and pathetic city government that is managing to be so bad that it’s starting to adversely affect the lives of average citizens.

  3. 3
    Justin Pasqualini says:

    RE: Kary L. Krismer @ 2 – Kary can you elaborate on some of the specific issues with the city government? Just curious as someone currently considering moving there :)

  4. 4
    Rupert D says:

    Thanks to the Tim for posting the video. Obviously after watching it you can tell the Redfin CEO is politically and economically biased. I would characterize his remarks and the article title as disingenuous, hyperbole and sensationalism. He stated that Seattle is a “middle class town” and an “old logging town”. He further stated something like he would like to see “well divided prosperity”. He mentions that more people are leaving seattle than moving to seattle (housing too expensive), based on his web site stats, which indicates to me people trying to save money when selling (1% fee to selling agent vs. typical 2.5% or 3%). Who in their right mind would use a Redfin broker to buy a property? Also his remarks also are just to drive more people to his sight to increase business, as is true for most CEOs. More Seattle RE propaganda.

  5. 5
    The Tim says:

    RE: Rupert D @ 4 – You’re entitled to your opinions of course. FWIW, I know Glenn personally and he’s never disingenuous. He’s just sharing what he truly believes, not what he thinks will help Redfin or serve some other selfish purpose.

  6. 6
    Brian says:

    By Rupert D @ 4:

    Who in their right mind would use a Redfin broker to buy a property?

    Why wouldn’t you use a Redfin broker as a home buyer? You can get nearly immediate tours upon request and buyer refunds are nice. Their brokers work on salary and therefore don’t care how long you take or what price you buy at.

    This day and age, I hardly need the services of a traditional buyer’s broker anymore. I don’t need them to find properties for me, which was probably their largest use to buyers in the past. I know what I am looking for and can find all of the properties listed almost immediately on Redfin with highly filterable searching.

  7. 7

    RE: DavidE @ 1
    Quite a List DavidE

    Makes ya think.

  8. 8

    RE: softwarengineer @ 7
    BTW I Just Saw This Now

    All the SB blogs also now get sent directly to Bloomberg headquarters….FYI.

  9. 9

    RE: Kary L. Krismer @ 2
    As Bad as the State Park Fees Are

    I actually like them compared to the City Lake Meridian Park across the street from me….the park is free but always FULL, unemployed and partially employed flood it all Summer the last decade. Ya pay the $30 State Fee and 7 miles down the road is Flaming Geyser State Park in Auburn….HALF EMPTY.

  10. 10

    Also From Bloomberg Today

    https://www.bloomberg.com/news/features/2018-10-04/the-big-hack-how-china-used-a-tiny-chip-to-infiltrate-america-s-top-companies

    Amazon is involved in the HACKING scheme too. Its horrifying. I’m looking at my Xfinity X1 microphone/hand set with distrustful eyes too. My gosh they have NWO surveillance electronics hidden everywhere now? What intellectual property secrets are sacred anymore in America?

  11. 11

    RE: Justin Pasqualini @ 3
    I Can Tell You About Signs at the Kent City Hall

    Warning us to ration water because of a fake water shortage in Kent.

  12. 12

    RE: Kary L. Krismer @ 2
    LOL Kary

    Dating issues have worsened since the mid-90s in Seattle. The big problem is money. Single women with kids can’t afford baby sitters like they could 10-20 years ago. The single men feel equality at the work place rightfully means equality on date expenses too…plus the single men can’t afford their half anyway…

    I watched Parents Without Partners completely disintegrate after 2005….no more chapters…gone

    I loved those dances with BYOB and parties….gone now forever….

    I did go to the Singles Resource Center dances in Tacoma….but the clients are mostly too old and no guests. I now meet women the old fashion way…conversation in public places. The website singles scams are a joke too….a bunch of users that never reply and aren’t active anyway….the live ones they just chat and never meet you. In 2000 the internet personals were hot, before it became a business. The

  13. 13

    From prior thread: By Jason @ 126:

    RE: Kary L. Krismer @ 125 – But there are a ton of quarters available in the marketplace, and they don’t have much utility outside of being a piece of currency.

    All correct, but my point of the $25,000 payment for a quarter is a irrational sales price does not indicate FMV. Buyers can end up paying more or less than FMV, depending on the circumstances.

    You can argue that the market is disfunctional or irrational, but of my friends who actually succeeded in buying a house in the last few years, the stories all seem to involve escalations and waived contingencies. It still seems to me like those transactions should count, since that seems to be the reality of the market.

    Count? They do count. What I’m saying is they drive up the median without affecting the overall FMV of properties. More on that below.

    It seems like you might be looking at FMV largely from the perspective of advising sellers on listing price. That’s obviously important, and I’m sure there’s a lot of thought that goes into it. As a potential buyer, I’m just interested in the final outcome, regardless of how the parties arrived at that spot.

    That’s part of it, and that’s important for both buyers and sellers. If a buyer has specific needs and those needs are hard to find, then there’s absolutely nothing wrong with paying over FMV to get the house if paying that amount is what is needed. But if it’s just because the buyer lost out on two prior sales and they are now desperate, that’s another matter.

    Now, as to the more of that from above. There are several things being discussed.

    1. My main point is that the bidding wars affected the median. Understanding what is happening with the median is important. You should not just accept that it went up or down without understanding why. So a few months ago when the median jumped a lot, I did some analysis and determined that it was because a higher percentage of sales were occurring in higher priced areas. That’s a mix change, not a value change. I haven’t noticed that type of change again, but I haven’t looked hard for it. But the reduced number and intensity of bidding wars is impacting the median.

    2. If the bidding wars were just in a few of the higher priced areas then it wouldn’t impact the median unless those areas had a higher number of sales. That’s because virtually all the sales in those areas are above median. What we had though was bidding wars across virtually every market in the greater Seattle area. So the prices on the all the areas was being driven up, and that affected the median.

    3. If you had an area where virtually every sale was the result of a bidding war situation then those sales would indicate FMV, because that’s what the market would be in those areas. That’s the flip side of short sales not indicating FMV unless virtually all the properties in the area (or particularly condo) are short sales. And that could have been happening in some of the higher priced areas, but again, those areas don’t affect the median unless their percentage of sales rises (change of mix).

    So, in summary, a single sales price does not indicate FMV, particularly if it’s a crazy sales price. FMV is more hypothetical than real. Banks rely on appraisals for that very reason. They don’t want to loan money just because someone agreed to pay that much. They want an appraiser to estimate the value of the property.

  14. 14

    By Brian @ 6:

    By Rupert D @ 4:

    Who in their right mind would use a Redfin broker to buy a property?

    Why wouldn’t you use a Redfin broker as a home buyer? You can get nearly immediate tours upon request and buyer refunds are nice. Their brokers work on salary and therefore don’t care how long you take or what price you buy at..

    Two years ago I would have agreed with you, and back before then I even referred unrepresented buyers to Redfin. They were sort of the Starbucks of real estate, not the best but at least you knew what you were getting. Since then they’ve totally lost quality control and lost a number of their good agents. I don’t know why or otherwise have an explanation for it. To be clear though, I’m not saying they are worse than any other brokerage where quality control is lacking. I’m saying they’ve gone downhill in that regard and recommending Redfin is naïve as is recommending any other brokerage by name. It’s the agent that matters, not the firm.

    But as to your point, you’re fooling yourself if you think Redfin agents don’t care what you do. If they don’t close deals then someone is going to notice, unless Redfin is a very poorly managed company, which I don’t believe it is. The point is, Redfin cannot afford to be paying a salary to an agent who is not producing. If anything the pressure on a Redfin agent to get their buyers under contract is probably greater than a traditional agent, assuming the traditional agent isn’t in financial distress (which is another matter entirely).

  15. 15

    By Justin Pasqualini @ 3:

    RE: Kary L. Krismer @ 2 – Kary can you elaborate on some of the specific issues with the city government? Just curious as someone currently considering moving there :)

    Well beyond the homeless situation, and upzoning neighborhoods, there’s this:

    1. Forced a viaduct replacement on the state which was not only the most expensive but also had massive cost overruns and went way beyond schedule
    2. Has a DOT that is very dysfunctional
    3. Has an HR department that is stretched thin and very dysfunctional
    4. Used government resources to try to discredit someone who accuses the city’s mayor of sexual abuse
    5. Imposed gun/ammunition/sugar taxes which lead to fewer sales taxes collected (and the first two raised very little and only drive business out of the city)
    6. Passed ordinances which the state AG declared in advance to be illegal, which are then in fact held to be illegal
    7. Passed landlord legislation which was struck down on multiple grounds
    8. Repeatedly passing legislation proposed by special interest groups typically without amendment
    9. Passed a tax on jobs and then struck it down violating public meeting laws.
    10. Passed a clearly unconstitutional income tax
    11. Mismanaged retirement accounts
    12. Passed a law regarding Uber unionization legally suspect.
    13. Tried to break off from Wells Fargo, but then discovered no one else wants to do business with them
    14. Invested in a failing bike rental company which then failed, when multiple companies were willing to come in for free
    15. Drove most those multiple bike companies out of Seattle by increasing taxes on them
    16. Ordered streetcars too big for the tracks and facilities they would use
    17. Botched roll out of new building permit system, causing significant delays

    Note I am not mentioning drug injection sites because I think those are a good idea. Your opinion of those might be different.

  16. 16
  17. 17
    ess says:

    Re Kary:

    I would add #7, a completely dysfunctional and pathetic city government that is managing to be so bad that it’s starting to adversely affect the lives of average citizens.

    ——————————————————————————————————————————

    Of course a majority of Puget Sound residents live outside of Seattle. And it isn’t just because of expense that a majority of individuals have chosen to avoid Seattle.

    As per tunnel problems:

    What is even more pathetic about the tunnel replacement for the viaduct is how useless it will be. Not only does it bypass most or all of Seattle’s downtown, but the tunnel was intentionally designed to replace a three lane per direction viaduct with a two lane per direction tunnel as a result of anti-vehicle ideology, not as a result of lack of funds or the technological inability to construct a higher capacity tunnel. Just will make it even harder to drive to downtown Seattle.

  18. 18

    By ess @ 17:

    Not only does it bypass most or all of Seattle’s downtown, but the tunnel was intentionally designed to replace a three lane per direction viaduct with a two lane per direction tunnel as a result of anti-vehicle ideology,

    And that same ideology has lead to buildings being built with grossly insufficient parking.

    That reminds me of another. A recent news piece covered Census data indicating less bicycle ridership, both in absolute numbers and percentages, despite Seattle having spent millions to promote biking.

  19. 19

    From MarketWatch this morning. “Bond Market Bloodbath likely to hit mortgage rates soon. Another Test for the Housing Market”.

    https://www.marketwatch.com/story/mortgage-rates-tick-down-ahead-of-bond-market-bloodbath-that-sent-yields-surging-2018-10-04

    Just as with the last “Bubble Burst”, the cause will not be local. How each area reacts to the “not local” change will be based on local. But it’s coming regardless and not because of local factors.

    What we are experiencing now in this area is not unique to this area by any means. Bay Area, L.A. and most major city markets are all having the same market change. Basically any market that was influenced by multiple offers and bidding wars is in a slump, relatively speaking. And the worst is yet to come based on National and not local factors.

    Of course “Yields Disturb the Peace” in stock markets as well “U.S. stocks in broad retreat as S&P 500, Dow set for worst day in 3 months” Not adding the extra links as it interrupts the comment flow. But easy to google those for today.

  20. 20
    Rupert D says:

    Sorry but I have worked closely with CEOs and CFOs from two companies in a Investor Relations capacity and it’s their job and self motivation (stock options) to increase shareholder value any way they can. To think otherwise is being naive.
    b>RE: The Tim @ 5

  21. 21
    Dustin says:

    By Kary L. Krismer @ 18:

    By ess @ 17:

    Not only does it bypass most or all of Seattle’s downtown, but the tunnel was intentionally designed to replace a three lane per direction viaduct with a two lane per direction tunnel as a result of anti-vehicle ideology,

    And that same ideology has lead to buildings being built with grossly insufficient parking.

    In a city designed for and culturally oriented around mobility by vehicle! Seattle has a good bus system, but it still generally takes 75 to 90 minutes to travel from one end of the city to the other by bus, which, not to mention the inconvenience of finding and waiting for buses, most residents wouldn’t (and don’t) willingly accept. I’m all for expansion of Seattle’s mass transit systems, but even with increasing traffic we’re not yet to a point where commuting by vehicle is less effective or convenient than using mass transit – not even close.

  22. 22
    DavidE says:

    RE: ARDELL DellaLoggia @ 19

    And I would add to your great points that the international factors as well national factors will really hurt housing.

    Russia has liquidated half of its U.S. Treasury holdings and China is dumping treasuries. Many countries are bypassing U.S. dollar in bilateral trade agreements. We are seeing it in bond rates. The Fed started only a 19 billion dollar quantitative tightening yesterday, and look at the effects (with over a trillion to go)

    Tariff wars will be a factor; look at framing lumber prices. It amazes me that the gullible public thinks that the exporters pay the tariffs. Then they go to Wal Mart and wonder why their credit cards get charged more for the same items they bought a few weeks ago.

  23. 23
    Matt P says:

    By DavidE @ 22:

    RE: ARDELL DellaLoggia @ 19

    And I would add to your great points that the international factors as well national factors will really hurt housing.

    Russia has liquidated half of its U.S. Treasury holdings and China is dumping treasuries. Many countries are bypassing U.S. dollar in bilateral trade agreements. We are seeing it in bond rates. The Fed started only a 19 billion dollar quantitative tightening yesterday, and look at the effects (with over a trillion to go)

    Tariff wars will be a factor; look at framing lumber prices. It amazes me that the gullible public thinks that the exporters pay the tariffs. Then they go to Wal Mart and wonder why their credit cards get charged more for the same items they bought a few weeks ago.

    Fed has been shedding bonds since last year. They increased the rate this month, but it didn’t just start, but it is the reason bond yields have been rising for the past year and not because the fed raised rates.

  24. 24
    pfft says:

    By The Tim @ 16:

    RE: Kary L. Krismer @ 15 – Don’t forget this one: The City Knew the Bad Minimum Wage Report Was Coming Out, So It Called Up Berkeley

    The study was completely bogus and Berkeley caught them.

  25. 25
    pfft says:

    By Kary L. Krismer @ 18:

    By ess @ 17:

    Not only does it bypass most or all of Seattle’s downtown, but the tunnel was intentionally designed to replace a three lane per direction viaduct with a two lane per direction tunnel as a result of anti-vehicle ideology,

    And that same ideology has lead to buildings being built with grossly insufficient parking.

    That reminds me of another. A recent news piece covered Census data indicating less bicycle ridership, both in absolute numbers and percentages, despite Seattle having spent millions to promote biking.

    You are lying Kary. The study did no such thing.

  26. 26
    The Tim says:

    By pfft @ 25:

    By Kary L. Krismer @ 18:

    A recent news piece covered Census data indicating less bicycle ridership, both in absolute numbers and percentages, despite Seattle having spent millions to promote biking.

    You are lying Kary. The study did no such thing.

    Seattle bike commuting hits 10-year low, census data show

    This is a column that, frankly, I’d rather not write.

    Full disclosure: I bike in Seattle, and I think it’s a great way to get around the city without adding to air pollution and traffic congestion. So I wish I could report that bicycle commuting is trending upward here.

    But it’s not. In fact, census data released this month show that in 2017, bike commuting in Seattle fell to its lowest level in a decade.

    Last year, just 2.8 percent of workers who reside in the city of Seattle commuted to work by bicycle as their primary mode of transportation most days. That’s down from 3.5 percent in 2016, and 4 percent the year before, a statistically significant decline. And remarkably, you have to go all the back to 2007 to find a lower number — it was 2.3 percent that year.

  27. 27
    Matt P says:

    The problem is the weather. Biking in the rain and dark day after day just sucks.

    Fewer parking spaces are great though. Lowering parking is one of the best ways to force people onto public trans.

    I take the bus from Redmond every day to downtown Seattle. It’s less than an hour, sometimes 45 minutes and even less on return. I get to read as well, much more pleasant than driving. My route could use more buses though and fewer cars would make it better.

  28. 28
    pfft says:

    “Something to keep in mind about the census data is that it only pertains to commuting. It doesn’t capture those people who bike to school, to run errands or to meet up with friends. It doesn’t capture people who bike for recreation. So we can’t say that cycling is down overall in Seattle just based on the census.”

    Read the whole article people!

  29. 29

    RE: pfft @ 25 – Just STFU with your lying claims. You’re an ignorant ass.

    https://www.seattletimes.com/seattle-news/data/seattle-bike-commuting-hits-10-year-low-census-data-show/

    And the same comment would apply to your response to Tim and the minimum wage study. The UW study was correct and proper, your “peer review” nonsense notwithstanding.

  30. 30

    By pfft @ 28:

    “Something to keep in mind about the census data is that it only pertains to commuting. It doesn’t capture those people who bike to school, to run errands or to meet up with friends. It doesn’t capture people who bike for recreation. So we can’t say that cycling is down overall in Seattle just based on the census.”

    Read the whole article people!

    Oh, so now that you’ve actually read something, you change your tune a bit.

    Here’s a newsflash. That they didn’t cover something doesn’t mean those other things didn’t move in the same direction.

  31. 31
    pfft says:

    By Kary L. Krismer @ 29:

    RE: pfft @ 25 – Just STFU with your lying claims. You’re an ignorant ass.

    https://www.seattletimes.com/seattle-news/data/seattle-bike-commuting-hits-10-year-low-census-data-show/

    And the same comment would apply to your response to Tim and the minimum wage study. The UW study was correct and proper, your “peer review” nonsense notwithstanding.

    I won’t apologize for you guys not carefully reading enough.

    This is what you wrote Kary:

    “That reminds me of another. A recent news piece covered Census data indicating less bicycle ridership, both in absolute numbers and percentages, despite Seattle having spent millions to promote biking.”

    It only says that about people commuting by bike. It did not say that about ridership in general.

    “Something to keep in mind about the census data is that it only pertains to commuting. It doesn’t capture those people who bike to school, to run errands or to meet up with friends. It doesn’t capture people who bike for recreation. So we can’t say that cycling is down overall in Seattle just based on the census.”

    READ THE WHOLE ARTICLE AND DIGEST WHAT IT SAYS BEFORE ACCUSING ME OF SOMETHING.

  32. 32

    RE: pfft @ 31 – You pathetic troll. It’s not what the article said, and I already refuted your point on that in any case.

    You need to learn the meaning of the word lying. Is that too hard to do? Are you too stupid to understand a simple word like that?

    No need to answer. Those are rhetorical questions. And we all know the answer to them–well all of us but you.

  33. 33
    pfft says:

    The UW study was pure garbage kary. I am not surprised you can’t remember that because you couldn’t even correctly sum up an article that wasn’t that long.

  34. 34
    pfft says:

    By Kary L. Krismer @ 32:

    RE: pfft @ 31 – You pathetic troll. It’s not what the article said, and I already refuted your point on that in any case.

    You need to learn the meaning of the word lying. Is that too hard to do? Are you too stupid to understand a simple word like that?

    No need to answer. Those are rhetorical questions. And we all know the answer to them–well all of us but you.

    Kary the article talked about work commuting not bike ridership in general. read the article again for the first time. You can’t even draw the correct conclusions when I literally highlight the answer for you.

  35. 35

    RE: pfft @ 34 – I already knew that about the bicycle study because it’s been brought up before. Just because I don’t mention something doesn’t mean I didn’t know it. That’s sort of like just because the study didn’t include those other uses of a bicycle doesn’t mean the data is different for those other uses. This is pretty basic stuff for someone who has even two brain cells to rub together.

    And get off the minimum wage study. You’re the only one who believes that nonsense, but in any case you don’t need to repeat the nonsense over and over and over. I remember it. I actually rolled my eyes when I saw Tim bring up the minimum wage thing, because I knew you’d once again appear and repeat your nonsense on that topic.

  36. 36
    pfft says:

    By Kary L. Krismer @ 35:

    RE: pfft @ 34

    And get off the minimum wage study. You’re the only one who believes that nonsense, but in any case you don’t need to repeat the nonsense over and over and over.

    All my earlier points stand. not peer reviewed. new method. new method gets drastically outlier results. data is public. TOTAL GARBAGE! Berkeley even said so.

    It’s like if I was a baseball nerd and went to a conference and said my new secret method of evaluating baseball players says Babe Ruth is average but I won’t release anything about how I got to that conclusion.

  37. 38
    Paul says:

    By pfft @ 36:

    By Kary L. Krismer @ 35:

    RE: pfft @ 34

    And get off the minimum wage study. You’re the only one who believes that nonsense, but in any case you don’t need to repeat the nonsense over and over and over.

    All my earlier points stand. not peer reviewed. new method. new method gets drastically outlier results. data is public. TOTAL GARBAGE! Berkeley even said so.

    It’s like if I was a baseball nerd and went to a conference and said my new secret method of evaluating baseball players says Babe Ruth is average but I won’t release anything about how I got to that conclusion.

    Your earlier points don’t stand at all. I’m just a neutral observer here, but you should really admit that you stand corrected and move on. You’re behaving like a child.

    Redfin is a great way to buy a home. And yes their CEO is right — Seattle has peaked. I cannot find any indicators that price will go up. No new major job growth or employers moving in. Lack of affordability vs increasing interest rates. We can prop up the current price point, and it will rise heavily in the next cycle, but this cycle has peaked for sure.

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