Document
false0001382821 0001382821 2020-03-18 2020-03-18
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) March 18, 2020

Redfin Corporation
(Exact name of registrant as specified in its charter)

Delaware
 
001-38160
 
74-3064240
(State or other jurisdiction of incorporation or organization)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)
 
 
 
1099 Stewart Street
Suite 600
 
 
 
 
Seattle
WA
 
 
 
98101
(Address of principal executive offices)
 
 
 
(Zip Code)

(206)
576-8333
Registrant's telephone number, including area code

 
(Former name, former address and former fiscal year, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
 
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
 
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, $0.001 par value per share
RDFN
The Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
 
Emerging growth company
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 



Item 7.01 Regulation FD.

On March 18, 2020, Glenn Kelman, our President and Chief Executive Officer, published an article at www.redfin.com/blog. A copy of the article is furnished as Exhibit 99.1 to this report.

Also on March 18, 2020, we announced that RedfinNow, our business that buys homes directly from homeowners and resell them to homebuyers, will temporarily pause making offers on homes.

Item 9.01 Financial Statements and Exhibits.
 
Exhibit Number
 
Description
 
 
99.1
 
 
 
104
 
Cover page interactive data file, submitted using inline XBRL
 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
Redfin Corporation
 
 
 
 
(Registrant)
 
 
 
 
 
 
 
Date: March 18, 2020
 
/s/ Chris Nielsen
 
 
 
 
Chris Nielsen
Chief Financial Officer
 

Exhibit

The Coronavirus’s Impact on Housing Is Now Nearly Nationwide

On Thursday, the housing market took a turn for the worse. A week ago, we reported that nationwide homebuyer demand had weakened meaningfully, but from high levels. We measure homebuying demand by looking at the annual growth rate in people going on their first home tours with a Redfin agent.

Growth in Home Buying Demand: Thirty to Zero in Two Weeks
This week, home-buying demand took a big hit, with year-over-year growth dropping from nearly 27% in January and February to 1% growth over the past seven days. There has in fact been a 1% contraction in demand over the past three days. This decline is unsurprising, now that governments in San Francisco and Philadelphia are telling residents to stay home. Traffic growth to Redfin’s website has also slowed from around 20% through the first two months of 2020 to high single digits over the past week.

Many Open Houses Canceled; Some Like a Disney Ride
Redfin has canceled open houses nationwide for public safety. One Redfin agent in Hoboken, New Jersey, Noah Goldberg, visited another broker’s open house that was letting small groups into the property, one group at a time. “There were six groups lined up on the sidewalk like a ride at Disney, and this was after the curfew announcement.” As of Tuesday, Noah said, demand was down: “Two weekends ago, coronavirus was something that was happening somewhere else. Now I have about half the activity I once did.”

Some Parts of the Country: Business as Usual
But that conclusion isn’t universal. On the same day, Tuesday, the manager of our North Florida business, MaryDell Penney, said that “the [Jacksonville] team says it feels like business as usual. We’ve got closings happening yesterday, today, tomorrow… nobody expressed interest in pulling out.”

Still a Sellers’ Market
Even where buying demand is falling, we believe that low inventory has limited some of the impact. Many agents we spoke to Tuesday morning still report bidding wars on listings. One Washington DC listing agent, Mary Bazargan, debuted three listings last week, two of which are already under contract. She has three listings scheduled to go on the market this week and two scheduled for next week. She said that she is “counseling my sellers that until we see less interest from buyers and touring activity dry up, we should move forward with listings. And we'll continue to evaluate.”

Industry-Wide, Listing Activations Up Slightly Over Past Seven Days
Our data indicates that Mary isn’t alone in her confidence. Since listing activations are a public event, we rely on our access to industry-wide MLS data rather than our own customer database. The number of listings activated marketwide over the past seven days increased year over year 0.5%; since most listings debut before, not after a weekend, this trend doesn’t reflect the anxieties that have blossomed in most of America since Friday. What’s genuinely surprising is the increase in listing activations among the hardest-hit cities in the U.S., up 9% year-over-year in the Seattle area for the past seven days, and up 6% in the Bay Area.

One Factor Limiting Our Own Homebuying Demand: No Ads
One minor headwind on Redfin’s customer growth has likely been our decision to stop buying ads except the custom digital campaigns we create for each listing customer; we aren’t spending money to promote our brokerage, but we’re still spending money to promote our customers’ houses. We stopped buying mass-media advertising on March 9, and stopped buying digital ads to benefit Redfin a week later.

One Factor Contributing to our Homebuying Demand: Video-Chat Tours
A tailwind that’s even smaller but still worth mentioning is that the fraction of our tour requests that are for video-chat tours has increased nearly four-fold over the past two weeks, albeit off a low base. Due to

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some heroic engineering efforts, we upgraded the website functionality for requesting video-chat tours last night.

Sales Are Still Pulling Through
Our industry has been rocked by rumors that courthouse closings would prevent sales from being recorded, but those rumors have all been, so far as we can tell, untrue. Most counties support electronic recordings. And customers who’ve agreed to buy or sell a home are so far sticking with it at about the same rates as last year. In 2008, when real estate was the reason the world was falling apart, all bets were off, and this was the part of our sales pipeline that really fell apart. This time around, it seems that buyers are happy to have found better shelter from the storm.

Mortgage Rates Actually Increased
One bullet that the government fired to help housing this week didn’t hit its mark. Even as the Federal Reserve has lowered the federal funds rate to zero, mortgage rates have increased about 30 basis points, from a low of nearly 3% in early March. Money has only gotten cheaper, but the people originating loans can’t keep up with demand; volume is so high that lenders are taking profits. One lender was quoted earlier this month telling his team to “kiss [their] families goodbye,” because they would be working around the clock refinancing people’s mortgages. Low mortgage rates are probably doing more for people who already own houses than people who want to buy them. This is my main frustration with monetary policy’s impact on housing: for years, it has mostly benefited the existing owner class, rather than expanding that class.

That’s the news from Redfin this week. Our chief growth officer, Adam Wiener, will write any future reports.

Redfin is publishing this housing-market update as a way to inform our customers, not our investors. Even though we’re notifying investors through a government filing about this customer update, we’re not updating, withdrawing, or affirming the first quarter financial guidance we issued on February 12, 2020. All data in this update is as of March 17, 2020.

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