Did Redfin Just Announce That We're In A Crash?

Did Redfin just announce a crash?

Hey there, fellow real estate enthusiasts! Redfin just made an announcement that's got us a bit concerned - they're saying that home prices have fallen annually for the first time in a decade, and investors are pulling out of homebuying.
 

Now, before we all start panicking, let's take a closer look at what's going on.

Redfin is one of the best sources of real-time real estate data, thanks to their meticulous cataloguing and analysis of MLS data. They were the first to sound the alarm about the drop in home prices. This news comes after an earlier announcement about investors pulling out of the market.

 

Some of you might be thinking that the cause of the 2008 crash was predatory lending and subprime mortgages. But did you know that more than a year before the crash happened, investors had already started feeling the pressure and were beginning to pull out? It wasn't the everyday homebuyers who caused the crash; it was the investors and people with above-average credit scores who accounted for 70% of the foreclosures during the boom years.
 

Now, we can't predict the future, but if we look at past indicators of the most recent housing market crash - one of the worst in our history - they're starting to line up with what we're seeing now. This is a cause for concern, but it's not a reason to panic just yet.

Let's take a closer look at the signs. In the beginning of the last crash, one of the first things that happened was a drastic increase in the cancellation of buyer contracts for new homes. At its peak, roughly 50% of buyers who were under contract to purchase a new construction home terminated the agreement, sometimes walking away from earnest money.

Well, here's where things get a little unnerving - KB Homes, one of the largest builders in America, just announced that they had a record-breaking 68% of buyers cancel in Q4 of 2022 (for perspective, Q4 of 2021 was only 13%...).
 

That's a huge number, and it's hard not to draw parallels between what's happening now and what happened before the last housing market crash.

So, are we in the beginning of what could be as massive a correction as the one we experienced 15 years ago? It's hard to say for sure, but we're definitely keeping a close eye on things. What do you think? We'd love to hear your thoughts!
Real Estate in the News
-Redfin
 
Investors Are Buying Roughly Half As Many Homes As They Were A Year Ago
-Redfin
-RJ Talks
-Zillow News

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