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00:00We've talked when the stock is down but today shares are up more than 14 percent. How do you square that with the housing market taking a turn from the worse to use your words. Well I think it could have been worse. Analysts were worried that the market it completely crashed. And instead over the past four weeks it's gotten better. So in June demand was far worse than almost anyone expected. We had the biggest rate hike since 1987. Economists were thinking that there'd be a 1 percent decrease in home sales and instead there was a 9 percent decrease in home sales. So people freaked but things got a little better in the last few weeks of July and that led to some optimism in the housing market. So when you look at the housing market are you optimistic or are you freaking out a little bit. What are the trends that you see that are most alarming. It changes day to day so I think on one hand you've got places like Boise Salt Lake City and Denver having more than half their listings dropped their price in Boise with 62 percent. The eye buyers are just ripping the bottom out of the market because we have to price ahead of everyone else to liquidate our inventory. So that has made the correction sharper but hopefully more short lived than anyone expected. And on the other side the Fed was dovish about interest rates last week. And so mortgage rates have really come down. Buyers have come back because home prices are down and now the mortgages are more affordable. So we've seen a slight uptick in demand. I think it's good that we're letting some air out of the balloon in general. It was too crazy in 2020 and 2021. So what direction is this all going. And I mean do you think a recession is inevitable or are we already in one and somebody just has to call it. I don't think we're already in a recession. I think the housing market is definitely in a jam where it has been very volatile. It has been hard on people trying to buy and sell their home but the rest of the economy is doing reasonably well. The stock market has recovered. There was a great job spread today. So it just depends on whether the Fed has to take really aggressive action with inflation. And I was surprised to help dovish they are because I think that inflation trends are deep seated. And so the Fed is going to have to take another bite at the apple and raise rates later in the year. But we'll see. I don't run the Fed. It's the reason. Well you do have a great outlook on the housing market. And what is your outlook for let's say second half of the year availability and affordability of homes. What are you expecting. Homes are going to get more affordable. Prices are coming down. Sellers across the board are cutting their prices. The beautiful homes are the ones that are selling right now. The homes that have a funky layout are actually being withdrawn from the market. So the price drops are actually steeper than most people realize because of the selection bias. If we had to sell the homes that we sold a year ago prices really would've fallen. So that has led to more buyers coming back to the market. I think that it's going to be a fairly balanced market for the next few months until the Fed makes another move. But if the Fed makes another booth all the bets are off because consumers have been so ridiculously rate sensitive over the past few months. I'm used to that. I've been doing this for 15 years but I've never seen such rate increases and consumers respond so strongly to those rate increases. So what's this mean for those would be first time homebuyers that are just trying to get on the property ladder and have not been able to. Yeah it's a real generational challenge for the fabric of American society. There's a whole bunch of people who are coming of age right now who can't afford the American dream. And the pension is that they're stuck between rising rents and very high home prices. So we try to tell people to date the rate marry the house. That just means that you can refinance in a couple of years. But if you can now buy a house that would have sold for two hundred thousand dollars over asking some crazy bidding war just three months ago and that is now sitting on the market make an aggressive offer. And that is especially true in the middle of the country and in the coastal markets. We've definitely seen price declines but things got way out of hand in places like Las Vegas Phoenix Boise Salt Lake the middle of the country. And the Sunbelt was way overpriced. And that is now coming back to Earth. And there's going to be a significant correction there. Now we've seen a number of layoffs at tech companies. Oracle just the latest one today. Redfin also having some layoffs after you said they hired you hired faster than ever last year. What was the miscalculation. Well it wasn't just a miscalculation it was my miscalculation I was the one who hired into that. It's so hard because you're not gaining as much share as you should. You're turning away thousands of customers every month. You don't have enough real estate agents to serve the demand. You can't solve all the problems that are coming at you left and right. And then the market just drops out. And so we laid off six percent of our workforce. And I'm the one accountable for that. I feel so ashamed about it. I was so blue. I still am. But it's what we had to do to run a profitable business. And now I think we feel more optimistic about the future. But we're still running on a knife's edge. We're out of the woods yet. Well I appreciate you being honest with us about your feelings and I wonder how it makes you think differently about the future. How are you diversifying your business if things get worse. How are you recalculating your approach to hiring in a new environment. Well every time you go through something like this you say never again. Every single time I hire somebody I mean I remember I might have to fire that person one day because we don't have enough money. And it's just hard because it's almost like you're on drugs or you've drank too much or you're just out. At least some party or something at 3:00 in the morning and all of a sudden the lights come up and you're like what have I done. So you just have to be really careful about your hiring. I don't think we're going to diversify the business because we are going to keep taking share. We sell homes faster for more money. We charge a 1 percent fee. The basic engine of the business is very good. If we wanted to get out of the business I don't know what else we would do because there isn't a better business than that. So we just have to focus execute keep doing what we're doing and the rest is going to take care of itself. And you know as we look to the second half of the year and you know the evolution of the pandemic may be another Covid spike maybe monkeypox gets out of control. We're just talking and talking to John Zimmer of Lift about this earlier. How are you taking the unpredictable into account. Well by its very nature you can't take that into account. I just think that instead of responding immediately to more demand by hiring instead of investing in a long term future you just have to be more careful and take it day by day. So. We recognize that. Life is complicated that the world has all these different forces there's a war in Ukraine there's inflation there's all sorts of geopolitical unrest and we just try to stick to our knitting and do what we do best. And if bad things are going to happen you can't just rely on the idea that you're going to have incredible commercial success. You have to have some rudder that guide you through your life where you really believe in what you're doing. So if there's a moral dimension to it it helps you get through the ups and downs a little bit better. But if it's all about the money as soon as there ain't no money in it your whole being collapses. And so I think we just have to remember that we got into this business to make housing more affordable to make it more fair. And if we do that we're also going to make a pretty penny for all the people who've invested in us. We want to vindicate you but the way to do it is to do it right.

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Redfin CEO on the Cooling Housing Market

Redfin CEO Glenn Kelman joins Emily Chang to discuss how real estate platforms can navigate the new waters of a cooling housing market after the housing boom of the last few years. (Source: Bloomberg)

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