Too Many Sellers? A Closer Look at Redfin's Story
Jun 15, 2025
A lot of people are saying the real estate market is doomed. 🤯
By now, you've probably seen the chart from Redfin that's gone viral (below):
It shows a huge imbalance in the market where they calculate we have 500,000 more sellers than buyers currently.
Of course, everyone seeing it is concluding that this is a bad omen for the real estate market.
And the chart feels correct (especially in Florida) because we see the rise in inventory and slowdown in closings.
But is it really accurate? Let's look a little closer...
Nobody reads the fine print (except me). 🤷♂️
Getting a doctorate is essentially becoming an expert in fine print.
You're trained to think critically about arguments being made, the way they're being supported, and the accuracy of conclusions.
When I see any article like this, the first thing I look at is how they calculated their numbers.
Here's what Redfin says (at the very bottom of the article):
Methodology
The number of sellers in the market is simply active listings, or the total number of homes actively for sale at any point during a given month. Active listings data come from the MLS.
Because there is not a similar metric measuring how many buyers are actively in the market, we developed one. We took active listings and pending sales from the MLS to estimate what fraction of homes on the market will sell within a given month. Analogously, we estimated what fraction of buyers on the market will find a home within a given month using Redfin data on the typical time from first tour to purchase. The ratio of these two data points approximates the ratio of buyers to sellers in the market. We then multiplied that ratio by the number of active listings to get the estimated total number of buyers in the market. Note that our estimate of buyers is not based on Redfin traffic or customer acquisition data, and the purpose of this analysis is to measure the number of buyers and sellers in the housing market as a whole. All metrics that go into our calculation of the number of buyers and sellers in the market are seasonally adjusted.
If you actually made it to the bottom of the article and looked at that, you probably felt your eyes glazing over quickly and looked for literally anything else to do. 🥱
Here's a quick summary of how they came up with their number of buyers:
Compare how many homes typically go pending in a month, factor in the typical time it takes for buyers to go from first showing to contract, and then apply a ratio of these to active listings.
On top of that, they seasonally adjust the numbers to smooth them out which is kinda like putting ranch on a dish to "enhance" the flavor.
What you need to know about these numbers. 🚨
If you'd like a video version, click below 👇
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There's a few important points we need to consider before getting too carried away:
- ⛓️💥 Their calculation of buyers is flawed.
It's based on circular logic that uses listings to approximate buyers. Changes in the time it takes for people to buy a home and the number of homes for sale influence the resulting number of calculated buyers. While some sellers are also buyers, there are plenty of buyers that are independent of active listings. Plus, there are a large number of buyers who are pre-approved and on the sidelines waiting for an opportunity that aren't factored in here. We have more purchase mortgage activity in 2025 than we did in 2024 which concretely signals a bigger buyer pool than Redfin is calculating. - 🤔 A big proportion of sellers aren't actually sellers.
We all know that there are a lot of homes listed on the market, but not in the market. They're "let's see if someone will buy this" prices which is drastically different from the 2008 "I'm being forced to liquidate my home at all costs" sellers. For example, nearly half the inventory for sale in Northeast Florida has been on the market over 60 days which tells us they're overpriced and just seeing what they can get. - 💡 Prices don't automatically fall based on the imbalance.
Redfin says the imbalance between sellers and buyers hasn't been this big since 2013. But in 2014, we were really close. What happened back then? Buyers caught up over time and home prices kept rising through the whole thing. This doesn't mean we're guaranteed to see the same thing today, but it challenges the idea that there's only one possible (negative) outcome. After all, Redfin is only predicting a -1% decline in home prices this year based on this. The talking heads on social media don't mention this part...
Unfortunately, we're all headline readers.
It's rare we sit down and really think about what's behind the headline because it's hard and takes time.
But, if you want to think accurately, you've got to do it.
One benefit as a members is you can post articles clients question you about in our private community to get feedback and a video response from me to get the full story and share with the client.
Keep seeking the full story and educating your clients! 🚀
Dr. Alex Stewart
Founder
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