Redfin chief executive Glenn Kelman says that lagging home sales are expected to return in August and September, similar to the decline experienced in June of this year.
Redfin's quarterly earnings for the third quarter came in below previous projections, and Kelman explains that the forecast was pulled down after, “an unexpected drop in bookings growth over the past three weeks, slowing traffic growth in a weakening real-estate market.” Kelman added that for the first time in years, reports are coming in saying that buyer demand is dying down, especially in some of the largest markets including Seattle, San Jose, and Portland, Ore., MarketWatch reports. “We aren’t entirely sure how much of it is the market and how much of it is us because our guidance is based on a slowdown that only occurred in the last few weeks. It was a significant slowdown,” Kelman said.
“Well, first of all we haven’t competed directly with Zillow and its Instant Offers program in any market, we just don’t have overlapping markets. My expectation is that, it will be a price war,” he said. “We’ll probably put more pressure on sales volume than gross margin because rather than take more risk on a property and offer a price that we’re not sure we can beat when we flip the home, we would just have to step back and let someone else have that sale and take that risk.” Redfin, which went public just more than a year ago, has seen shares decline 26.1 percent this year, as the S&P 500 index has gained 6.9 percent. After its big fall earlier this week, Zillow has still gained 25.1 percent on the year, and has a market capitalization of $10.3 billion, about five times more than Redfin.