Bidding wars aren’t fun, and we have no one and nothing to blame but the inventory shortage we’ve been seeing for the last several months.  We measure inventory based on months of supply (the number of homes for sale divided by the number of homes sold in a given time period).  Six months’ supply represents a balanced market, whereas anything less than that makes for a seller’s market.  In April, Baltimore County’s inventory weighed in at five months’ supply.

So what can you do to survive today’s market?  For sellers, pricing is key.  “If you price it to sell and it shows really well, it’ll be gone,” said Lynn Ikle, David’s agent. “If you think, ‘I’m going to take advantage of this market,’ and overprice it, it’s going to sit.”

For buyers, making the highest offer is important, but it’s all about knowing what the seller wants and giving it to them. Lynn’s clients buying in Stoneleigh recently beat out two other offers because they offered to let the sellers stay in the home for two months after closing—rent free.

We’ve got a slew of other bidding war strategies to arm yourself with, from offering all-cash when you can, to hand-delivering the offer complete with a personal letter explaining why you and your family are most deserving of the house. Read our blog post about how to win bidding wars and went to back away, join us for our next Competitive Offer Webinar on June 5^th, or get in touch with an agent to get started.

For a complete picture of the Baltimore and Washington, D.C. area markets’ most recent stats and trends, download the Redfin Market Reports here: Redfin-Baltimore-Real-Estate-Market-Report-April-2012; Redfin-Washington-Real-Estate-Market-Report-April-2012.

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – December data is released in February).

Here are the basic Case-Shiller stats for the Washington area* as of January:

Sixteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between December and January (one less than between November and December): Washington DC joined Phoenix and Miami with an increase. No data was available for Charlotte in January. Oddly, San Francisco had the largest drop at 2.5%.

Here’s a look at the latest local tiered data, back through 2000:

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:

All three of DC’s tiers rose in January. Month to month, the low tier was up 1.9%, the middle tier rose 0.9%, and the high tier increased 0.3%.

In this next chart, I’ve visualized the month to month trends of all twenty Case-Shiller-tracked cities. Green and above the horizontal axis if they were increasing in the month charted, red and below the axis if they were decreasing. I’ve excluded 2000 through 2004 since they looked largely the same as 2005 (mostly green).

Another gain here, with the best January showing since 2006, when 11 markets were increasing.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves:

Here’s our peak decline chart, in which we line up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.

Eight cities hit new post-peak lows in January: Tampa (not shown above) at 47.9% off peak, Atlanta at 37.4% off peak, Chicago at 35.9% off peak, Las Vegas at 61.6% off peak, New York at 25.3% off peak, Cleveland (not shown) at 22.4% off peak, Portland at 30.3% off peak, and Seattle at 32.4% off peak. The 10-city and 20-city composites both also hit new lows, both at 34.4% off peak.

Methodology: The Case-Shiller index tracks price changes in sets of homes of similar size and style to better determine changes in what people are willing to pay for the same home over time. If data is available from an earlier transaction for the same home, the two sales are paired and treated as a “repeat sale.” Repeat sales that are too far apart, sales between family members, lot splits, remodels, and property type changes (e.g. from single-family to condos) are excluded from the calculations. All remaining repeat sales are totaled together and weighted based on the time between each sale, then the data for the most recent three months is averaged together to create a given month’s index value (i.e. – September’s index represents the average of the data from July through September).

The three price tiers plotted in the charts below simply represent the top, middle, and bottom third of all sales, based on the initial sale price. In other words, if there were 3,000 sales in the three-month period, 1,000 of them would be in the low tier, 1,000 in the middle tier, and 1,000 in the high tier, by definition.

*[Case-Shiller defines Washington DC as the entire Washington-Arlington-Alexandria, DC-VA-MD-WV Metropolitan Statistical Area, which includes all of the District of Columbia and all or part of the following counties: Calvert MD, Charles MD, Frederick MD, Montgomery MD, Prince Georges MD, Alexandria City VA, Arlington VA, Clarke VA, Fairfax VA, Fairfax City VA, Falls Church City VA, Fauquier VA, Fredericksburg City VA, Loudoun VA, Manassas City VA, Manassas Park City VA, Prince William VA, Spotsylvania VA, Stafford VA, Warren VA, and Jefferson WV.]

The second piece of good news is that despite what you learned in Econ 101, low supply and high demand have not caused home prices to skyrocket.  In fact, they’ve remained fairly stable over the last year.  “In addition to lenders and appraisers being more conservative, the increasing trend toward all-cash deals we’re seeing is helping to keep local housing prices stable,” explains Redfin Fairfax agent Ana Ventura. “Cash is king, and buyers with cash enjoy price discounts. If a seller has a choice between a cash buyer (investor) or a buyer who is getting a loan, the seller will almost always choose the cash offer, even at a lower price.  Cash buyers can close quickly, usually in less than 30 days, and sellers don’t have to deal with appraisals or financing contingencies.”

For a complete picture of the Washington, DC area market’s most recent stats and trends, download the Redfin Market Report here: Redfin-Washington-Real-Estate-Market-Report-March-2012.

What’s changed?

The big change is that now you can have a one-on-one, personal relationship with your agent.  She meets you on your first tour, sees the home you love before writing the offer, negotiates your deal and hands you the keys once you’ve closed. She’ll get to know you personally and guide you at every step, backed by a team that’s always available to answer questions.

What hasn’t changed?

We keep hearing how important it is to have an agent that’s 100% on your side, paid on your satisfaction, not commission. It’s how Redfin has always done business, and that’s not changing. With our new service in DC, you get personal service backed by a team and online tools that keep you in the loop at every step.

What does this mean for my refund?

As a result, the commission refund we offer buyers will change from a flat 50% of our commission (with Redfin’s minimum $6,000 fee) to a range between 15% and 50%, depending on the list price of the home, with no minimum fee. Since the refund is now based on the list price instead of the sale price, we’ll always put the estimated refund amount in the upper-right corner of the listing page. Our fee for selling a home is still 1.5% of the home price.

If you’ve already contacted us to tour a home, talk to an agent or write an offer, we’ll either honor the old refund pricing, or give you the new pricing, depending on which gives you more money back. You just need to close on a home by June 29, 2012.

Why the change?

We talked to hundreds of customers and heard loud and clear that they wanted a more personal relationship with their agent. We launched the new service in Boston in June of last year. In its first six months, we saw a 38% year over year increase in the rate at which people bought a home with Redfin within 90 days of taking a first home tour with us. The average client satisfaction score also went up by more than 10% in Boston after the launch. So more people wanted to work with Redfin from start to finish, and those that did were happier that they did. People love getting personal service from agents who are not paid on commission, and saving money at the end of the process without compromising.

For more of the scoop on the upgrade, read the blog post or connect with a Redfin Washington DC agent who can show you how the whole process works. Check out the reviews of our DC-area agents and find the right one for you.

“Buyers don’t want to lose that ‘home of their dreams,’ so they are being very competitive with offers,” Tom said. They’re using strategies like waiving inspection and financing contingencies, offering all cash when they can, and letting the seller choose the settlement date.  ”Just last week, after withdrawing an offer on a home that had received 13 offers, several of which were all-cash and with escalations up to $50K more than asking, my client decided to go for another property. We offered list price plus competitive terms and gave the seller 24 hours to respond. We did this so the property would be less likely to get multiple offers, and sure enough, our offer was accepted!”

For a complete picture of the local market’s most recent stats and trends, download the Redfin Market Report here: Redfin-Washington-Real-Estate-Market-Report-February-2012. Want to know how the Washington, DC real estate market is doing compared with the rest of the country? Take a look at the Redfin Heat Index:

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – December data is released in February).

Here are the basic Case-Shiller stats for the Washington area* as of December:

Eighteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between November and December (one less than between October and November): Only Phoenix (for the third month in a row) and Miami saw an increase. This month Detrioit beat out Chicago and Atlanta for the bottom spot, falling 3.8% in a single month.

Here’s a look at the latest local tiered data, back through 2000:

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:

All three of Washington’s tiers fell in December. Month to month, the low tier was down 0.8%, the middle tier fell 1.0%, and the high tier decreased 1.4%.

In this next chart, I’ve visualized the month to month trends of all twenty Case-Shiller-tracked cities. Green and above the horizontal axis if they were increasing in the month charted, red and below the axis if they were decreasing. I’ve excluded 2000 through 2004 since they looked largely the same as 2005 (mostly green).

Tiny improvement, better than a year ago, but worse than December 2009, when 5 cities saw an increase.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves:

Here’s our peak decline chart, in which we line up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.

Four cities hit new post-peak lows in December: Tampa (not shown above) at 47.5% off peak, Atlanta at 36.0% off peak, Las Vegas at 61.4% off peak, and Seattle at 31.9% off peak. The 10-city and 20-city composites both also hit new lows, both at 33.8% off peak.

Methodology: The Case-Shiller index tracks price changes in sets of homes of similar size and style to better determine changes in what people are willing to pay for the same home over time. If data is available from an earlier transaction for the same home, the two sales are paired and treated as a “repeat sale.” Repeat sales that are too far apart, sales between family members, lot splits, remodels, and property type changes (e.g. from single-family to condos) are excluded from the calculations. All remaining repeat sales are totaled together and weighted based on the time between each sale, then the data for the most recent three months is averaged together to create a given month’s index value (i.e. – September’s index represents the average of the data from July through September).

The three price tiers plotted in the charts below simply represent the top, middle, and bottom third of all sales, based on the initial sale price. In other words, if there were 3,000 sales in the three-month period, 1,000 of them would be in the low tier, 1,000 in the middle tier, and 1,000 in the high tier, by definition.

*[Case-Shiller defines Washington DC as the entire Washington-Arlington-Alexandria, DC-VA-MD-WV Metropolitan Statistical Area, which includes all of the District of Columbia and all or part of the following counties: Calvert MD, Charles MD, Frederick MD, Montgomery MD, Prince Georges MD, Alexandria City VA, Arlington VA, Clarke VA, Fairfax VA, Fairfax City VA, Falls Church City VA, Fauquier VA, Fredericksburg City VA, Loudoun VA, Manassas City VA, Manassas Park City VA, Prince William VA, Spotsylvania VA, Stafford VA, Warren VA, and Jefferson WV.]

Later this spring, we’ll add the stagers, landscapers and handymen used by sellers to get their home on the market.

Our goal is to ensure our customers get the best service at every step of a deal, by bringing together the best local team and holding that team accountable for the best result.

The Goal: Better Service
Unlike Angie’s List, Open Book is completely free. And unlike Yelp, it’s completely focused on the folks who serve our customers when buying or selling a home.

There are no kickbacks from anyone we include or recommend. In fact, there’s no revenue model at all for Open Book, not now nor in the foreseeable future.

The goal is simply better customer service. The best real estate agent in any market is good because of her own skills, but also because of her team, and her ability to hold that team’s feet to the fire when a loan or a listing is on the line.

As Redfin’s online traffic and transaction volume grows, our influence over all the folks who provide real estate services grows too. We want that influence to lead to better performance across the board for our customers.

This means that our focus is quality, not quantity. We don’t want to be the phone book, showing every lender or inspector in town. We want to be a reliable guide to the partners you should actually use, in any market we serve.

Today, people mostly take their agent’s recommendation for an inspector or a lender. But we think customer recommendations are important too, in finding an inspector who will tell you when to walk away from a crumbling house, or a lender who will steer you toward a cheaper loan, even if it pays him less.

This is crucial information, which is why Open Book, while intended for our own customers, is available to everyone browsing our site.

Our Advantage: Redfin-Certified Reviews
No one else could build such a reliable reviews site for real estate vendors.

Because we honcho a transaction the whole way through, hundreds of times a month, we know which inspectors and lenders our customers are using. Redfin’s online Deal Room, for tracking who is supposed to do what to close on time, stores information about thousands of vendors in a big database.

And we already survey every customer, deal or no deal, so it’s easy to ask each customer about his lender, inspector or stager. This means that we can validate every review, to avoid the bogus reviews from vendors’ friends and competitors that plague most review sites.

At some point, we’ll probably solicit reviews from the general public, but we’ll always highlight the reviews that came from actual customers, just because we can verify that the customer did in fact use the vendor she’s reviewing.

Our Investment: Redfin-Certified Partners
As with our brokerage, we aren’t just offering technology; we also offer a human touch. The inspectors, lenders and stagers who get the best reviews qualify for an additional level of certification, as Redfin partners.

Redfin has hired a team of former Redfin agents to interview potential partners, briefing each one on Redfin’s mission and our service expectations. We then monitor the partner’s performance. The ones that make the grade are certified as official Redfin partners. In Open Book, a tiny Redfin ribbon appears beside their profiles.

These are the folks our agents are most likely to recommend to our customers.

Over time, we’ll ask each certified partner to deliver premium service to our customers. This may entail attaching digital photos to an inspection report, or offering to refund the inspection fee if an unexpected repair crops up within 60 days of the closing.

We expect to drive plenty of customers toward our partners; if history is any guide, we’ll have to be careful to ensure no one gets overwhelmed.

And of course we’ll also be careful to strike a balance between ensuring our partners build a profitable business, and giving Redfin customers premium service. Inspectors, stagers and lenders who want to apply to be a certified partner can email us at openbook (at) redfin (dot) com.

Where We’re Starting: Washington DC and the San Francisco Bay Area
For now, the reviews are available only in the Bay Area and Washington DC.

To find Open Book, just click the “Buying” link at the top right of any page on Redfin.com, and choose “Open Book” from the menu. As we capture more reviews in the coming months, we’ll launch Open Book in more markets, for a wider range of services.

What Tom is seeing fly off the shelves are new construction condos.  They are typically priced a little higher, but still competitive with the resale market, so buyers are willing to pay a little more for a brand new home. “Small boutique buildings, like 1793 Lanier Place NW, are so hot on the market that they are selling out before buyers have a chance to go see them.”

Speaking of heat, January was unseasonably warm for home tours as well.  According to Tom, “buyers didn’t ease into their home search this winter like they normally do.”   In fact, Redfin DC agents took buyers on 43% more tours this January than they did in December, and more tours than any month last year.  “The demand is certainly alive and well, but we’re all still waiting to if the sellers follow suit and supply some more options for all the buyers out there.”

For a complete picture of the local market’s most recent stats and trends, download the Redfin Market Report here: Redfin-Washington-Real-Estate-Market-Report-January-2012. Want to know how the DC real estate market is doing compared with the rest of the country? Take a look at the Redfin Heat Index:

The Redfin Heat Index (Beta) uses listings, sales, and price changes to determine the relative “heat” of a given real estate market. We set a baseline Heat Index of 75.0 at 6.0 months of supply and +5 % price change year-over-year.
Every percentage point increase in prices above the 5% baseline will increase the heat index by two points, every percentage point decrease in prices below the 5% baseline will decrease the heat index by two points.
Every one month of supply increase above the 6.0 baseline will decrease the heat index by seven points, every one month of supply decrease below the 6.0 baseline will increase the heat index by seven points.
Here’s the formula:

• MOS = Months of Supply: End of Month Inventory / Closed Sales in the Month
• $YOY = Year-over-year change in the median price per square foot.
• Heat Index = ((MOS – 6.0) * 7) + (($YOY – 5%) * 2) + 75

What the heck is going on in Fairfax this season?  This has been a strange season all around, not just for housing.  “Winter never really came, and when we ask our clients why they’ve chosen to buy or sell now, they tell us ‘2012 is my year,’” Rob Wittman, Northern Virginia agent told us.  Well, apparently there’s a lot of 2012 to go around. January saw buyers come out in droves with lots of bidding wars, so sellers who are pricing on the high side may have the right idea.  There are about 2 months of inventory currently on the market, meaning it’s a seller’s market, as Rob says, “the buyers we’re working with are still looking for the right home at a good price, so homes will still sit on the market if they are overpriced.”

For a complete picture of the local market’s most recent stats and trends, download the Redfin Market Report here: Redfin-Washington-Real-Estate-Market-Report-January-2012. Want to know how the Washington DC area real estate market is doing compared with the rest of the country? Take a look at the Redfin Heat Index:

The Redfin Heat Index (Beta) uses listings, sales, and price changes to determine the relative “heat” of a given real estate market. We set a baseline Heat Index of 75.0 at 6.0 months of supply and +5 % price change year-over-year.
Every percentage point increase in prices above the 5% baseline will increase the heat index by two points, every percentage point decrease in prices below the 5% baseline will decrease the heat index by two points.
Every one month of supply increase above the 6.0 baseline will decrease the heat index by seven points, every one month of supply decrease below the 6.0 baseline will increase the heat index by seven points.
Here’s the formula:

• MOS = Months of Supply: End of Month Inventory / Closed Sales in the Month
• $YOY = Year-over-year change in the median price per square foot.
• Heat Index = ((MOS – 6.0) * 7) + (($YOY – 5%) * 2) + 75

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – November data is released in January).

Here are the basic Case-Shiller stats for the Washington area* as of November:

Nineteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between October and November (the same as between September and October): Only Phoenix saw an increase, for the second month in a row. This month Chicago bumped Atlanta out of the bottom spot, falling 3.4% in a single month.

Here’s a look at the latest local tiered data, back through 2000:

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:

All three of Washington’s tiers fell in November. Month to month, the low tier was down 3.5%, the middle tier fell 0.7%, and the high tier decreased 0.4%.

In this next chart, I’ve visualized the month to month trends of all twenty Case-Shiller-tracked cities. Green and above the horizontal axis if they were increasing in the month charted, red and below the axis if they were decreasing. I’ve excluded 2000 through 2004 since they looked largely the same as 2005 (mostly green).

Just five months ago, all twenty cities saw month to month gains. Now just one is not the red.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves:

Here’s our peak decline chart, in which we line up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.

Four cities hit new post-peak lows in November: Tampa (not shown above) at 47.4% off peak, Atlanta at 34.8% off peak, Las Vegas at 61.1% off peak, and Seattle at 31.0% off peak.

Methodology: The Case-Shiller index tracks price changes in sets of homes of similar size and style to better determine changes in what people are willing to pay for the same home over time. If data is available from an earlier transaction for the same home, the two sales are paired and treated as a “repeat sale.” Repeat sales that are too far apart, sales between family members, lot splits, remodels, and property type changes (e.g. from single-family to condos) are excluded from the calculations. All remaining repeat sales are totaled together and weighted based on the time between each sale, then the data for the most recent three months is averaged together to create a given month’s index value (i.e. – September’s index represents the average of the data from July through September).

The three price tiers plotted in the charts below simply represent the top, middle, and bottom third of all sales, based on the initial sale price. In other words, if there were 3,000 sales in the three-month period, 1,000 of them would be in the low tier, 1,000 in the middle tier, and 1,000 in the high tier, by definition.

*[Case-Shiller defines Washington DC as the entire Washington-Arlington-Alexandria, DC-VA-MD-WV Metropolitan Statistical Area, which includes all of the District of Columbia and all or part of the following counties: Calvert MD, Charles MD, Frederick MD, Montgomery MD, Prince Georges MD, Alexandria City VA, Arlington VA, Clarke VA, Fairfax VA, Fairfax City VA, Falls Church City VA, Fauquier VA, Fredericksburg City VA, Loudoun VA, Manassas City VA, Manassas Park City VA, Prince William VA, Spotsylvania VA, Stafford VA, Warren VA, and Jefferson WV.]