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Will the Busy Real Estate Market Last?

Yesterday I had a quick cup of coffee with Glenn Kelman, president and CEO of Redfin, an online real estate brokerage, and Karen Krupsaw, the company's manager of the DC-area market. And while they said business is way, way up this spring ("our best May and June ever," according to Kelman) he expressed some concern about whether it would stay that way going into fall.

"I'm worried that a lot of inventory is going to hit," Kelman said. He added that lenders are so overwhelmed with refinance applications and the processing of their foreclosed inventory that some have had to delay foreclosures and evictions. He said he wonders about the potential for further job losses and a surge in the supply of listings. "Some of this strong demand could go away just as the foreclosure wave hits the market," he said.

But he stressed that many of the people working for him strongly disagree. They're telling him they're incredibly busy with serious buyers. Krupsaw is among those more optimistic than her boss. She said that in the entire DC area, the number of listings on the market has gone down, and a lot of listings draw multiple offers. And those sales prices will favorably affect the appraisals of other homes when they come to market. Krupsaw said things are particularly strong in the District, Arlington and Alexandria.

The last word from Kelman: "I've been in this business long enough to say I can't call it."

How would you call it? Will there be a flood of foreclosure inventory
hitting the market later this year? Will demand taper off?

By Elizabeth Razzi  |  June 3, 2009; 6:00 AM ET
Categories:  Foreclosure , The economy , The market  
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Next: Come n' Get Yer Foreclosures!

Comments

We're hardly out of the woods yet...Real Estate people are going to say whatever they can to get people to 'believe' that things are getting better.

We still have a lot of ARMS that will reset and we are just going to start seeing all the forclosures hit that were delayed by the Administrations programs to halt foreclosures by months. Now that period is over, get ready for more.

On top of that, we have even begun to see the commercial real estate disaster that hitting. Condos, apartments, malls...all buildings that can't be paid for and there's a lot of them.

This mess will NOT be resolved anytime soon and anyone with an ounce of common sense knows that it will take YEARS (most likely into 2011-12) for us to even work our way through the absurd amounts of inventory that were created by false demand.

Housing is STILL too high, especially in the DC area. Condos are overpriced, houses are overpriced. Do yourself a favor and use the 2000 baseline that the WP posted for prices and see how much things accumulated all due to false and corrupt appraisals, lending to those that couldn't afford it and creating demand that wasn't real so people could plunder the hard earned money of others.

2000 is your baseline. Those are the prices we need things to get back down to to have realistic growth and affordable mortgage payments.

Posted by: cavatellie | June 4, 2009 1:44 AM | Report abuse

As regards the national RE market in general, cavatellie is correct. As regards the DC market proper, Krupsaw is correct.


"Do yourself a favor and use the 2000 baseline that the WP posted for prices and see how much things accumulated all due to false and corrupt appraisals, lending to those that couldn't afford it and creating demand that wasn't real so people could plunder the hard earned money of others."

You're forgetting the 800-pound gorilla in the room: gentrification. No way on earth house prices in Columbia Heights, Mount Pleasant, Capitol Hill, or the areas around H Street are reverting to 2000. It's a pipe-dream.

If you're looking at exurban areas like PWC or PGC, you are probably correct. But it's kind of ridiculous to refer to "DC real estate market". It doesn't exist any more than the "Eastern time-zone real estate market" exists.

Posted by: antontuffnell | June 5, 2009 10:04 AM | Report abuse

My take, as a would-be buyer. First, reporting that Redfin agents say this is one of their best years ever is somewhat meaningless considering how new they are as an operation (best year out of 3, and nobody knew who we were back then?). They had better be having a good year or they're going to fail. Period.
More importantly, the appearance of strong demand seems fake to me. I've seen plenty of houses - but very few voluntary sales (i.e. foreclosures, estates aren't voluntary). And those forced sales are a totally different beast. Of the voluntary ones, a fair number seem to draw interest, have multiple bids, all those things that look like a healthy market. But, I would argue that is only because there are so few houses like that. How do you have a large inventory and bidding wars? By having good homes and trash on the market. In other words, it's not strong demand but weak 'desirable' supply. I suspect prices are being propped up by this supply effect. Which has good and bad qualities. It looks to me like a lumpy, prolonged process before things are right again.

Posted by: damnpost1 | June 6, 2009 7:35 PM | Report abuse

I wonder when the media will start turning a critical eye towards statements from Kelman. Their business in Seattle, their biggest and most important market, is way, way down. Of course business is up here in DC, since they are new to the market.

Last time I checked, Mr. Kelman has been in the business since 2006. He has never held an active real estate license nor transacted business as a broker. Curious for him to imply that he has been in the business long enough for anything.

Posted by: BobG3 | June 9, 2009 1:09 AM | Report abuse

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