Redfin’s site is still sending out overdue listing alerts and tardily loading photos of listings but we hope that all those jobs run their course by Saturday morning. Until then, and probably for days to come, we will be carefully monitoring the whole Redfin system.

Next week, we may discuss here on this blog what went wrong and how we’re going to try to avoid the same problems in the future. For now, many thanks to all the engineers who worked ’round the clock since early Thursday to get us back online, and especially to the customers who patiently waited for that to happen. Thank you, thank you, thank you.

If you tried to check out the new Redfin yesterday without much success, please give it another shot now.

Unfortunately, our website was offline from about 6:40 AM PST until 9 AM PST and then intermittently until 2:20 PM PST because of the increase in the amount of data coupled with the load from the excitement of a new release.

We are deeply sorry about the inconvenience this outage has caused for the visitors of our website and our customers. We are also sorry for not communicating more clearly about the status of the outage and how it was impacting you.

While the website is now back up we are still working to resolve the root causes of the issue. Once we know what all went wrong we’ll update you by posting here on the blog.

Update: Friday, 9:00 AM PST As a result of yesterday’s outage we aren’t retrieving photos for new listings. We hope to start pulling listing photos later today. We’ll update this post when we do.

Update: Friday, 12:00 PM PST You may have noticed that the site, a few times today, has been unresponsive. We’re aware of the brownouts and are actively monitoring the situation and trying as quick as we can to get back to situation normal.

Update: Friday, 8:51 PM PST Good news! The site should be back to its old self and is running on full power, fast and stable. By tomorrow morning, we should have photos for all the new listings.

Sometime in the wee hours of the night last night, Redfin upgraded our website to show photos, prices, and all the gory details on every property sold for the past two years, in almost every area we serve. So far, we’ve loaded up 9 million photos of 1.4 million recently sold properties, quadrupling the amount of real estate information we store.

And since we turned on our data slurpers full blast for new past-sales records, the data will keep piling up: within 15 minutes of an agent’s taking a property off the market, you can expect to see the pictures and the price on Redfin’s site. This investment in near-real-time sales history continues Redfin’s multi-year journey into Freakish Depth, which is our strategy for taking property data to ridiculous extremes of accuracy, freshness and depth. We meet our customers exclusively via our website, and if the site isn’t trustworthy, why would anyone expect the service to be?

Yes, OK, You Do Have to Register…
The only hitch is that outside of the Seattle and Washington DC areas you need to register before going deep. OK, so requiring registration is not normally our style — we’re not looking to spam you or call you out of the blue — but there’s a reason for it. The Multiple Listing Services that share this data with us first want to make sure we’re not posting it everywhere willy-nilly, limiting it instead to the folks who are serious.

But It’s Worth It
Once you’re registered, you can do all sorts of fun stuff, like checking out all the $1M+ homes that sold last week in Los Angeles, San Francisco or Boston. Or do your own search on recent past sales: visit our search page and look underneath the Search Listings button for a More Options link.

Clicking that link opens a big search dialog where the options for searching past-sales records appear bottom left:

After you run a query on past sales, the map fills up with pretty baby-blue icons representing homes that recently sold. Just as with listings, pictures and basic details pop up to the right:

If you click through the thumbnail picture for more details, you get a staggering amount of detail on the property that just sold, usually all the information the seller’s agent provided when listing the house in the first place — which we then pair with parcel outlines, tax record, automated appraisals and all sorts of other goodies too numerous to include in the screenshot.

Before the upgrade, we only showed public records of recent sales: the most basic facts about the property’s bedrooms and bathrooms, the price, no pictures, all after waiting two to twelve weeks for the records first to get recorded by the county, then aggregated by a data-collection service and then syndicated out to sites like ours. What we have up today is a big improvement.

The Killer Application
But now that we’ve published a near-real-time feed of pictures and details of virtually every recent sale, there’s still the question of what you as a consumer can do with that data. And the first, most obvious application is a Comparative Market Analysis, or CMA. If you’re trying to price a property, you can usually establish a reasonable range by putting together a list of similar properties that sold in the area over the past month or two — use the photos to exclude all the dumps, unless you’re buying or selling a dump — with the same square footage plus or minus 10% — and usually the same number of bedrooms and bathrooms plus or minus one. Then take what each of the comparable properties cost per square foot and multiply it by the square footage of the property in question, sorting the resulting prices from high to low. This is the starting point for any real estate professional to think about a property’s price range.

Now you can take this on yourself, using the same data that agents have, even if later on you still want an agent’s help corroborating which comparables you picked and analyzing the results — Redfin agents put together CMAs every day, and don’t expect to stop any time soon. But even if you get a little help, it’s nice to be able to see for yourself what the agent can see, and to go as far as you like on your own.

The Other Big Feature… Trackbacks
The other big new feature in this release is blog trackbacks. Any time a blogger links to a listing on our site, we now link back to the blogger, so consumers can easily see what everybody on the Internet is saying about a house. If a blogger reviews a condo in a new development, any link to that listing on Redfin will generate a reciprocal link from the listing on Redfin back to the reviewer’s site, along with a snippet of text from the review.

Tying together everything that’s being said about a property can, we hope, socialize the lonely, scary process of buying a home, and it will almost certainly boost the quality and quantity of online discussion. The same trackback technology that almost overnight created the blogosphere’s ecosystem of criss-crossing links  can now nurture the growing number of real estate bloggers — many of them agents — who use Redfin and other brokerage sites as a reference for their real estate discussions.

For the industry, both of these features are a little bit daring. Real estate agents don’t like the idea of some crazy blogger trashing their listings, and most everywhere they have preserved the option for sellers to opt out of any type of blog integration or online commentary. We think opting out is a very bad move, just because social media drives traffic like nothing else to a listing — but we can’t argue with giving the sellers a choice.

Really, it’s impressive that we got this data at all. A long time ago and with plenty of the evidence to the contrary, we made a bet that the industry would become more open, that we could challenge the status quo as a broker without being squashed, that complying with local MLS rules would be worth the extra hassle so we could get information directly from other brokers. This turned out to be a very lucky bet.

You can argue that this version of Redfin would never have happened without last year’s Department of Justice settlement with the National Association of Realtors, which gave online brokers the right to share any data with our customers that an agent can divulge to a customer face to face. Both trackbacks and the newly available past-sales data would not have seen the light of day if not for this settlement. But the hole in that argument is that MLSs not even governed by the settlement nonetheless have agreed to many of the same terms.

We still have plenty of gripes, but the industry is changing for the better. So in addition to the thanks we owe to all the Redfin folks who worked on this gargantuan effort — hats off to the whole team —  we also wanted to thank the other brokers for agreeing to a more open data-sharing policy. We’re excited to see what consumers think of the new policy and the new site.

Update from Matt: When we first released the site this morning we experienced a lengthy site outage. We’re very sorry for the inconvenience.

Today we have a new version available that lets you search by address and MLS ID and adds the most requested search filters:

• Year built
• Lot size
• Days on Redfin
• Short sales
• Under contract

We also made the app much faster. Our super star developer Navtej came up with a new way to group the house icons on the map, improving the maps load time performance seven fold.

Go download the latest version of the app and let us know what we should add next!

Bonus video: Our search engineering manager, Sasha, recently sat down with Meredith from Google to talk about our iPhone app and mobile analytics.

And it’s a big mistake.

The National Association of Realtors, The National Association of Home-Builders and The National Association of Mortgage Brokers have poured everything they’ve got into the extension of this credit, sometimes arguing that it’s good for consumers, at other times cravenly acknowledging that it’s also a sop to a beleaguered industry. As a broker ourselves, and a consumer advocate, Redfin has every reason to agree with the NAR’s position.

But the truth is that the credit won’t make much difference for consumers. It solves the wrong problem. It spends  money we don’t have. And even if the credit is extended, enough home-buyers rallied for the original November 30 deadline that there will still be a December lull in demand.

It Won’t Make Much Difference
So first things first. The first-time home-buyer tax credit hasn’t been a major factor in the recovery. The Brookings Institute estimates that the credit increased demand among first-timers by only 15%, so that each incremental home sale has actually cost the government $43,000 or more. Our own experience suggest that this number is, if anything, low, as demand among first-timers has increased at Redfin only 11%. At least some of that increase is because, in the current market, 2^nd-time home-buyers can’t afford to sell their first home.

The National Association of Realtors’ arguments in favor of the credit don’t make sense. When August sales volume slipped ever so slightly, the NAR was quick to blame the dip not on the seasonal tendency for many would-be home-buyers to hit the beach, but on the expiration of a credit that was still four months off. Even as the NAR warned that first-time home-buyers had begun to abandon the market, the same press release noted the percentage of first-time home-buyers had remained unchanged from July to August. A month later, when it was at least remotely conceivable that a September deal might not close before the November 30 deadline, the NAR reported that sales volume increased; that press release argued all the same for the extension of the credit.

It Solves the Wrong Problem
And the problem isn’t that there aren’t enough buyers. Between 1994 and 2005, the percentage of Americans who owned homes rose by almost 10%. Even after two years of record rates of foreclosure, the U.S. home-ownership rate is at 67.4%, whereas it was at 64% before the bubble. The government can stave off a further decline by extending this one-time credit, but with unemployment above 10%, it may just encourage people to buy homes they later can’t afford.

This isn’t to say that Redfin begrudges the folks who have been able to take advantage of the credit so far; far from it. And we’re certainly not against home-ownership. Helping people get a home is, for us, very fulfilling; it is more fulfilling for me than anything I’ve ever done professionally.

But that doesn’t mean we tell every Tom, Dick and Harry to buy a home. We have a fiduciary obligation to advocate fiscal responsibility, even — as we emphasize to every new hire — to dissuade home-buyers from a rash purchase. In this era of responsibility that was supposed to have been inaugurated after the credit crunch, it seems inarguable that people shouldn’t buy a home unless they can afford it on their own.

The Problem is Inventory, Not Demand
And we worry that these one-time government incentives have already lost sight of that principle. The major destabilizing force in real estate today isn’t a dearth of buyers. Credit or no credit, buyers would still be out in force, primarily because prices and interest rates are relatively low. The problem is foreclosures, which don’t just affect the temporary gyrations of home prices but fundamentally lower the value of the underlying asset, American real  estate.

Trust us on this one. Redfin tours a hundred foreclosed homes a day and most are absolute dumps. Ask any home-buyer what she worries about, and it isn’t that nobody will want to buy a house. It’s that delinquent loans are still piling up three times faster than banks can handle them. Nobody wants to buy a house only to find that foreclosures at fire-sale prices have ripped the bottom out of the local market again. The #1 way to stabilize the housing market is to limit the number of foreclosures being sold, not to increase the number of people who buy them.

A First-Time Home-Buyer Credit and The Time Machine
To that end, we have an alternate proposal. We still want to help first-timers, particularly those who don’t have a lot of money. But why not offer a first-time home-buyer tax credit to the real victims of the bubble, first-time buyers from 2006? The credit could be limited to help re-finance the predatory loans which overwhelmingly occurred in a one-year span between 2005 and 2006.

“What about moral hazard?” the suddenly Scroogey capitalists will argue. We say that these home-buyers have been through enough hazard. We treat the buyers of 2006 as if they  deserve whatever misery the bank can inflict on them, yet we eagerly court a new generation with a fresh set of one-time incentives that will yield a new set of fees.

It seems particularly heartless that we in the real estate industry would focus all of our attention on new home-buyers, when the folks now facing foreclosure were our customers only a few years ago. Instead of making the system more efficient or compassionate, we just try to feed the bloated beast by keeping the number of transactions in the U.S. too high.

We Can’t Afford It
And we can’t afford to do this. The primary factor driving affordability is not an $8,000 one-time credit, but low interest rates. At some point, government spending drives interest rates up. If rates increase from 5.3% to 6.3%, the real cost of a typical home will be almost $100,000  higher, credit or no credit. More important, we will have closed the one exit that folks facing foreclosure have been able to avail themselves of, re-financing.

It’s scary to think what the world will look like if that happens: foreclosures will get much worse, and inventory will climb even as demand drops. In such a scenario, the market could suffer a second steep drop, and the government, having exhausted its credit, will have fewer levers to pull it back.

But for now it’s easier simply to feed the beast. Just this once, let’s not do it.

Regards,
Glenn

Howdy Redfinnians!

The data’s in for October, so it’s time for our high-speed, comprehensive summary of real estate trends. And the news is very similar to last month: prices are up for the third straight month, competition is increasing and sales volume resumed its march upwards. On the other hand, foreclosure data is mixed but still scary while mortgage rates are beginning to rise.

And Redfin is doing well! We expect record revenues in October — normally our best month is July — and more profits. November also looks good, but after that we expect our holiday sales to be slow, as always: the number of new Redfin clients signing up to see homes has been declining all month.

To juice up our winter numbers, we’ve got a big new release of the website coming next Tuesday, probably our most important of the year, so come back next week to see what we have wrought. For now, let’s dive into the data.

Prices Increase for Third Straight Month

The Case-Shiller data came out this morning for August, and it shows sizable price increases across all the markets we serve except Seattle, which is still toodling along in the doldrums. Most markets have increased for three or even four months. The Shamu of month-over-month price increases was in the Bay Area, at 2.6%.

As usual, we present Case-Shiller’s seasonally adjusted numbers to correct for the summer gains and winter losses that happen every year. Here’s a graph of how prices have gone up and down, starting in January 2000 when Standard & Poor’s baselines the Case-Shiller index for all markets at 100:

Competing Offers on the Rise

In our own little world, Redfin has started tracking the percentage of offers we handle every month that compete with other offers. This data set acts as a leading indicator of whether prices will go up or down on properties that won’t close for another 45 days. When more than one buyer is bidding on a property it usually sells for more than the asking price; when there’s only one buyer, it usually sells for less than the asking price. Sixty-one percent of the offers we worked on in September ended up facing competition, up from 52% in August.

The Bay Area was the most competitive market, particularly for homes under $500,000, where 92% of the offers we handled in September faced competition from at least one other offer. In Southern California, the numbers are very similar. The size of the sample for each market averages around 75 offers.

But Research Firm Says Bottom is Still Five Months Off

It all looks pretty bullish, huh? Don’t get too excited! A research report published by First American CoreLogic — and touted by the Wall Street Journal — predicts that nationwide U.S. housing prices won’t bottom out until March 2010, based on the assumption that Congress won’t extend the $8,000 first-time home-buyer tax credit beyond the November 30 deadline. But now it seems that prospects for an extension of the federal credit are good. An additional credit for Californians is also being considered by that state’s Assembly.

The Number of Homes Sold in August Increases

And the volume of home sales continues to increase. After crying a river last month over the depressing effects of waning government subsidies, the National Association of Realtors now reports that existing U.S. homes sales in September increased 9.4% year over year, with inventory falling 7.5%. The strongest growth in sales volume was in the West at 13%, and the weakest was in the Northeast at 4.4%. In just one month, September sales volume in California increased 1.0%, with the median price increasing 0.8%. Meanwhile new housing starts increased nationwide in September just a bit, at 0.5%, but building permits fell 1.2%.

Foreclosure Data Mixed, But Still Scary

What has been preventing any type of serious price recovery has been the seemingly bottomless pit of foreclosures. And the problem may be getting worse. Nationwide, foreclosure filings increased 5% in July – September as compared to April – June. But the most recent data is a little better, showing a 4% decrease in September from the month prior. Bank re-possessions increased 21% in the third quarter as compared to the second. It seems like the banks are getting more aggressive about clearing their books of bad loans, either by re-negotiating the loans or foreclosing.

In California, mortgage default notices declined for the second straight quarter, by 10.3%. The median month that a California loan in default first originated has only moved forward one month, from June 2006 to July 2006 — the worst loans came in mid 2006 — so the pig is moving pretty slowly through the python. There’s still a lot of bad inventory out there, and it seems like traditional home-owners are scared to compete with the banks. Distressed homes accounted for 29% of September transactions.

Mortgage Rates Fairly Low, Probably Headed Up a Bit

But enough about prices. A bottoming of prices — whether temporary or long-term — only accounts for part of the increase in demand. The other big factor is interest rates. After drifting down for six weeks, interest rates ticked up last week, with the average for a 30-year fixed-rate loan reaching 5.34%, still lower than the 5.36% we reported last month. For folks who don’t plan on staying more than five years in a property, adjustable rate mortgages were very low (4.69% average rate); but watch out for those — we still worry you could get trapped in a loan when rates take off.

55% of Bankrate’s panel of mortgage experts think that rates will go up, mostly because the federal government is losing its appetite for the mortgage-backed securities that banks use to unload risk.

That’s it! Another month is in the books. Any questions, just drop me a line. We love to hear from you, and we’re always thankful for your support.

Happy Halloween!

Glenn

We’ll send out a full report on market conditions later today.

Our latency is usually no more than 15 minutes, so we apologize for these delays. This is not a problem with CARETS, it’s our issue. We should have things fixed in Southern California by Saturday night.

UPDATE, 11/24 @ 6:30pm: We restored our normal listing update latency at 11am Saturday morning.

Digging into the numbers, for the first four weekends after we launched it, iPhone traffic was a little under 5% of our website traffic. Our app was then featured on the App Store’s New and Noteworthy section and mentioned in the NY Times. This temporarily bumped up our downloads almost ten fold. With many more people downloading the app, traffic on the iPhone has soared to be 8-10% of our website traffic for the last two weekends.

Don’t have an iPhone and wondering what the fuss is about? We have a few screencasts up on YouTube.

And congrats to Redfin data engineer, Arthur Patterson who got up on stage last night at the 5th Avenue Theatre and proposed to his girlfriend!

Starting out as an entrepreneur, I once tried to hire an engineer who was so engrossed in the brain-teasers we had given him that he never noticed my nose had begun gushing blood in the middle of our interview (I had actually walked into a wall while gesturing wildly to my partner and mouthing “Let’s hire this freaking guy!!!”).

But since then, I’ve come to learn that there is something far, far worse than people who aren’t Math Olympians. There are people who don’t do the right thing, or care about others. No matter how hard somebody works, if his values are messed up, he’s useless to us. In fact, worse than useless: he screws up the whole company’s reputation.

So Redfin is taking a more balanced approach to the talent-at-any-cost mentality that drives most startups, by emphasizing values too. Starting today, Terrell Owens couldn’t get a job here. This isn’t an easy change for me; I still spend four days every fall rifling through the Stanford computer science resume book looking for the 25 highest GPAs so I can beg them to work for us (Rebecca Illowsky, you made the wrong choice!). But what I like about values-based hiring is this: anyone can have the right values. It’s just that many don’t.

The choice is yours.

Lots of people work for just a paycheck, doing only what is expected of them, with none of the gumption to understand what’s really going on and to make things better. They view any form of idealism with suspicion or embarrassment, and they try so hard to be official and corporate that they can’t have a good time. Many call themselves professionals, but never profess to put their clients’ — or anyone’s — interests ahead of their own.

We want to avoid hiring those people. Which will be tricky, as Redfin has begun to grow very quickly, hiring agents in every market we serve.

So a few weeks ago, Redfin pulled together folks from across the company — agents, field agents, engineers, executives, product managers, even customers — to talk about what we valued in one another. And then we talked about how we’d act if that’s what we really valued. Here’s what we came up with:

Julie Brown and Ann Rhoades, who built the customer-service organizations at Southwest and JetBlue, flew out from New Mexico to help us get through our spats and funks.

The fur really flew. We put in stuff like caring and balanced that would never have occurred to an Ahab like me, even though I could have cried hearing colleagues say how far from those values we had sometimes strayed. We stuck with idealistic terms like mission-driven despite some concerns that it was kind of a wussy value for a company that needs to turn a profit (giving people something to believe in is the only sustainable way to turn a profit).

We ditched scrappy at the last second because it reminded people of either a cartoon dog or a drunken runt who starts a fight.

And we tried to avoid the usual corporate baloney, though anything that just hangs on the wall sooner or later starts to smell that way. The only way to keep it fresh is to call out the values every day, guiding how we hire, pay and promote folks within Redfin, how we build our website and serve our customers.

Hopefully, you’ll keep us honest. If a website feature isn’t beautiful, if it isn’t does make you smile, if we aren’t completely transparent with data, call us on it. If we don’t put the customer first, and rally to get the job all the way done, scream it from the rooftops (or maybe just send us an email). The reason we published our values is so we can be accountable for upholding them. That, and to hear what you think of ‘em too… have at it!

Thanks to all the customers and employees who helped us work this out. And thanks to Janelle Saylor for suggesting this Liberace photo to personify our headline values of Wow and Fire (or was it Genuine)?