Tearing down the house

Technology is poised to upend America’s property market

At long last, the world’s biggest asset market will be shaken up

FROM FAR enough away most houses look the same. At cruising altitude over Dallas, Los Angeles and even much of New York, most dwellings are nondescript: beige- or grey-roofed, laid out in neat patterns. In sunnier climes the monotony is punctuated by the bright turquoise oblongs of swimming pools.

When it comes to valuing a home, though, the details matter. The site, square footage, number of rooms, the finishing and a thousand other factors determine whether a home is worth $200,000 or $2,000,000.

For this reason real estate has long been a fragmented, local market. There are 2m estate agents in America, according to the National Association of Realtors (NAR), just over 1% of America’s workforce. An agent does a number of tasks—appraising houses, marketing properties, organising tours—for a handful of transactions each year. An agent might dominate the market in a single neighbourhood—a few streets in Beverly Hills, say. But zoom out to Los Angeles and its sprawling suburbs and his market share quickly drops to nearly zero.

Real estate is the biggest asset market in the world. The value of residential property in America—at around $34trn—rivals the market capitalisation of all listed American companies.

Throw in commercial and retail property, together worth around $16trn, and its value easily eclipses that of public firms. For decades the market has been characterised by low volumes and extortionate transaction costs (see chart). Just 7% of American homes change hands each year.

Homeowners traded property worth $1.5trn in America in 2019, forking over some $75bn in commission to agents, or around 0.4% of GDP. The fees for trading many other financial assets pale in comparison. Around $40trn-worth of stocks are traded annually in America. The fees paid by institutional investors to brokers have halved from their peak, to less than $10bn.

On top of the brokers’ fees paid to sell a home in America, which amount to 5-6% of the price, other levies—government taxes, mortgage fees—mean that the total cost of moving exceeds a tenth of the price. The expense could help explain why owners are staying in their homes for longer. In the 1950s, 20% of households in a county moved each year. Today 9% do.

This antiquated model is on the verge of being disrupted. In America rules on commissions and data-sharing have so far kept fees higher than in other rich countries. But now regulators and courts are considering again whether practices in the real-estate industry are anticompetitive.

Technology also promises to make moving home quicker, easier and cheaper. As recently as 2012 venture capitalists invested just tens of millions of dollars in property technology, or “prop tech”, each year. By 2019 that had climbed to $6bn. The four biggest prop-tech firms, Compass, Opendoor, Redfin and Zillow, have a combined valuation of $23bn. These offer a range of services, from online listings to tools that make estate agents more productive. Some act as “intermediate buyers”, making cash offers to sellers to speed up the process of homebuying.
Technology has already transformed other big asset markets. Fifty years ago trading company shares was opaque, illiquid and expensive. Ray Dalio, who worked on the trading floor of the New York Stock Exchange in the early 1970s before founding Bridgewater Associates, now the world’s largest hedge fund, bemoans practices that were once considered normal. “Dealers had to entertain fund managers, and no one would know what the prices were.” But technology has taken over more and more aspects of trading. Today markets are transparent and liquid. Transaction costs are close to zero.

The market for houses is structurally different from that for stocks. Every share of Microsoft is identical, but no two homes are exactly alike. Emotion plays a bigger role in the decision to move house. Most buyers and sellers are links in a chain. Two-thirds of Americans selling a home are also looking to buy another. A delay at one point in a chain holds up transactions all along it.

But these difficulties cannot justify the fees Americans pay. Fees across the much of the developed world have fallen, thanks to the entry of online platforms that allow would-be buyers to search for properties themselves. American brokers argue that they provide a more holistic service than estate agents elsewhere. But a bigger factor may be the network effects associated with the multiple-listing service (MLS) through which nearly every broker lists and searches for homes, and the NAR, the industry association that regulates it.

All agents that are registered with the NAR must post their listings to the MLS in return for access to other listings. The convention in the industry is for sellers to pay the buyer’s broker, with the listing specifying the fee. Maisy Wong of the Wharton School of the University of Pennsylvania finds that brokers steer buyers away from properties that offer less than 3% commission, keeping fees high.

This used to prevent online platforms from allowing buyers to search for properties, because agents could opt out of having their listings posted on other brokers’ websites. But in 2008 the Department of Justice (DOJ) ruled that MLS listings data could not be restricted this way, and should be shared with online platforms.

Zillow and Redfin now publish MLS listings. But commission norms still make it hard for “discount” brokerages to get a footing. Purplebricks, a British company that expanded into America in 2017, offered to sell homes for a fee of around $4,000 regardless of price. After two years of making losses, it withdrew. REX, a brokerage founded in 2015, will return half of the fees it collects to the buyer. But such rebates are illegal in many states.

Disgruntled home-sellers have mounted class-action lawsuits against their estate agents for anticompetitive behaviour. They want to cut the ties between buying and selling fees, arguing that they are forced into paying inflated fees for buyers’ brokers. The DOJ is also investigating anticompetitive practices in the industry. It is looking into whether brokers can search listings by commission rates.

The new middlemen

A better comparison for real estate might be the market for bonds rather than shares. Bonds vary by tenor (the length of time till they fall due) and coupon (interest) rate. That makes matching buyers with sellers harder. To create liquidity, institutions such as investment banks act as intermediaries, holding an inventory of corporate bonds and guaranteeing to buy from or sell to clients at any time. Fees are a little meatier than those paid to trade stocks—but still much lower than real-estate commissions.

Similarly, intermediaries known as instant buyers, or “i-buyers”, are muscling into the property market. Opendoor, founded in San Francisco in 2014, now operates in more than 20 cities. Zillow and Redfin began i-buying in 2018.

These firms use vast quantities of data and whizzy machine-learning algorithms to appraise homes and make an initial offer, often within hours of a seller asking for one. A couple in Covina, in greater Los Angeles, requested an offer from Zillow on Christmas Eve 2019, had their home inspected on December 26th and accepted the bid the next day.

They chose to set a closing date in March 2020, but could have opted for December 28th. Once they move Zillow will sell the house on—often within 30 to 90 days. The fee is typically around 6-7%, almost the same as a seller would pay an agent—but for a much quicker and easier process. Knock, another prop-tech firm, follows a different model, buying a new home for a homeowner and selling the old house once they have moved.

At the national level, i-buyers are still small. They bought 60,000 homes worth $8.9bn in 2019, or around 0.5% of transactions. But in the 18 markets in which they buy, their share is 3%. It is even higher in places like Phoenix, Arizona and Raleigh, North Carolina, where i-buyers have operated for several years.

Some markets are better suited to i-buying than others. The model works best when homes are new and homogenous. Parts of the suburbs of Dallas are packed with cookie-cutter houses. These are easy to price, because it is likely that a similar house has sold recently. Two identical homes built next door to each other in 2010 can only be a little different.

By contrast, adjacent Brooklyn brownstones built in the 1920s could be entirely different beasts. Some markets might be too idiosyncratic for i-buying, says Sean Black of Knock. Prices jump in Palo Alto, a town south of San Francisco that is popular with tech workers, when a large company goes public. Loft apartments in Tribeca, a neighbourhood in Manhattan near the downtown financial district, soar in years when banker bonuses are fat.

Alex Rampell of Andreessen Horowitz, a venture-capital firm that has invested in Opendoor, says i-buyers create a pool of liquidity, allowing investors keen to buy rental properties to do so at scale. “Institutional investors buy to achieve a certain rental yield, so they are less sensitive to price uncertainty.”

The success of i-buyers also depends on whether their algorithms get the price right. The most important factor is location, says Bridget Frey of Redfin. It interacts with other factors, too.

“You need location to tell the algorithm what weight to put on the thousands of other variables you might look at.” Swimming pools add value in San Diego but tend to decrease it in New Jersey. In Atlanta proximity to a golf course is highly prized.

Before Zillow launched there a worker traced every golf course on Google Maps, so that it could be added as a variable. For years Rich Barton, Zillow’s founder, found it odd that the algorithm assigned a negative value to extra bedrooms. “It seemed backwards. But once you’ve factored in square footage, extra rooms actually deduct from the value of a house.”

The process is not entirely devoid of human input. At Zillow’s offices in Seattle a group of youthful workers spend their days on Google Maps zooming in on pictures of houses that sellers have requested prices for, verifying that nothing looks too out of the ordinary. Ms Frey would like to get to a point where the algorithm beats the human. But at present Redfin also uses agents to conduct home inspections, and defers to them if their assessment differs from that of the algorithm.

The bosses of the teams building the algorithms all talk about their “buy-boxes”. Rather than buying the most expensive or the cheapest homes in any neighbourhood, they prefer the 60% or so in the middle. They find it easier to provide an offer for average homes with confidence; over more unusual homes there tends to be greater uncertainty. And the more uncertainty, the lower the offer they might have to make—if they make one at all. “We sometimes can’t quite figure out why that particular home is so much cheaper or more expensive than the rest,” says Stan Humphries of Zillow.

That said, where i-buyers do operate, they seem to get close to offering fair value. Research by Zillow finds that, when sellers decline the firm’s initial offer, their eventual sale price is only 0.2% different. An independent study by Mike DelPrete of the University of Colorado found that, on average, the offers made by Zillow and Opendoor were 98.6% of the price that standard industry models suggest, implying a 1.4% discount compared with the market.
Getting value right is critical to how the model works, says Glenn Kelman, the boss of Redfin. “If we start buying homes cheap, or trying to fix them up too much, our business will start to be valued like a real-estate investment firm. That is the opposite of what we want.” Tech firms tend to trade at higher valuations than property investment companies. I-buyers say they are in the business of providing convenience and liquidity, not flipping homes for profit.

A big question, though, is whether i-buying can be profitable. None of them yet make any money. Zillow’s home-buying business spends $1.40 for each $1 of revenue it receives. The firm makes most of its revenue selling leads on buyers to agents it is partnered with.

Free agents

Other innovations are nibbling away at the many other tasks that estate agents do. Redfin and Opendoor use remote electronic locks, which can let buyers into a home by themselves. Your correspondent let herself into a lovely two-bedroom flat in Santa Monica using Redfin’s app. Had she wanted to buy it, she could have done so without consulting an agent, by filling out an offer form on the app.

But not all of the biggest prop-tech companies in America are betting on estate agents becoming redundant. Redfin’s focus is on lowering agents’ costs. Sellers who list their home with Redfin pay commission as low as 1%, instead of the usual 3% (though sellers must still pay traditional commission rates to the buyers’ broker).

Compass, which was founded in 2012 and is now worth more than $6bn, is the most focused on helping agents. Its tools take the drudgery out of their work, in order to make them more productive. Its platform for agents analyses the best time to list properties and automatically sends them listings their buyers might like. Robert Reffkin, its founder, claims that agents who use Compass make more deals. “If Compass fails it is because my faith in the role of the agent is misplaced.”

Lower fees, therefore, need not mean a big hit to agents’ pockets. They might boost productivity. They could encourage people to move house more often, offsetting the fall in fee rates. Clients, meanwhile, would undoubtedly benefit. People rank buying a home second only to divorce as the most stressful time of their lives. If it becomes a little less so, and cheaper into the bargain, that would be a welcome change.

Fed Funds cuts are for TV news and headlines

The average investor still believes their portfolio can be saved by moderate Democrats, or the FOMC

John Dizard

Jay Powell’s Fed publicity machine does not offer a shelter to investors © Kevin Lamarque/Reuters

The Federal Reserve’s publicity machine is providing investors with a parachute, not a safe landing.

Take the parachute while it is still on offer.

We are still in the phase of the economy and the financial markets where the public is willing to believe “good news”.

That means that when people turn on the sound for TV news and Democratic primary results just after a “50 basis point cut”, they can be persuaded to buy some risky assets.

Since human nature has not changed, it is safe to say that the next long-term bull market will only start after the public no longer cares about any good news when it is announced. This is not that moment. The average investor still believes their portfolio can be saved by moderate Democrats, or the Federal Open Market Committee, or gobs of hand sanitiser.

Start with the thin underlying reality of the Fed’s policy rates. The actual rates at which even most institutions can borrow against Treasuries or government backed securities have not been cut by any 50bp.

On Tuesday, the widely used DTCC GCF Repo index quickly rose from 1.6 per cent at the open to 1.85 per cent, and only came briefly down to 1.5 per cent before creeping up again. The index settled at a 1.72 per cent average for the day.

By that evening, “ease” or no ease, the Fed was turning down some of the record $111bn of bids for repo from within its own select circle of counterparties.

The “Fed Funds cuts” are for television news and headlines. Even the DTCC GCF Repo index is only an approximation of what professional investors have to pay to get liquidity. Thanks to the post-crisis Basel reforms that effectively limit the size of bank and dealer balance sheets, one’s ability to turn even good assets into ready cash is rationed by quantity as well as price.

It depends on your bureaucratic status within the financial world. Do you believe your requests for repo quotes will always be met with a friendly wave on to the banks’ balance sheets? Soon, maybe not.

For fixed-income investors, that probably means letting someone else own your high-yield bonds that are now priced at a premium to par. In part due to the rapid decline of Treasury bond rates, about two-thirds of the bonds in the BofA US High Yield index are trading above par, twice the 30-year average.

That means your junk portfolio still incorporates a lot of bubble-era pricing. Even if the White House is right, and we have years of expansion ahead, then many of your par-plus bonds are likely to be called in for refinancing by their issuer, leaving you with even less yield.

If your job description requires you to hold on to high yield, even now, the reward you get for assuming risk is better if you buy into a sector that has already been slammed by deep discounts. Like, say, low-investment-grade or high-junk-rated bonds issued by natural gas producers.

Yes, you must walk the ESG street of shame. But even wind turbine makers and solar panel manufacturers believe some gas-fired generation will be needed, at least for a few years.

Since it is effectively impossible for most gas-heavy E&P companies to issue new shares or bonds, their spending on new drilling is being cut below the levels needed to maintain production. We are not getting rid of the 40 per cent of the US electric generation provided by natural gas within the next 18 months.

If a junk-financed producer is still solvent, gas prices they receive will have to double or triple from today’s level in order to keep the lights on for the remainder of the bonds’ term. Then sell them and use the profits to buy some more solar panels and batteries for your house.

Is Political Change Coming to China?

Because President Xi Jinping has concentrated more power in his own hands than any Chinese leader since Mao Zedong, many within China and around the world have concluded that he is politically unassailable. But the coronavirus epidemic has come at the worst possible time, laying bare the fundamental weaknesses of Xi's rule.

Yuen Yuen Ang

ang4_Pang XingleiXinhua via Getty Images_xi jinping corona

ANN ARBOR – In contemporary China, profound political transformation can – and has – taken place in the absence of regime change or Western-style democratization. The starkest example is the period of “reform and opening” that began in 1978 under Deng Xiaoping’s charge. Although Deng rejected multiparty elections, he fundamentally changed the direction of the Communist Party of China (CPC), as well as the distribution of power within it.

The coronavirus epidemic that began in Wuhan in December 2019 may augur a similar historic turning point. The outbreak of what is now called COVID-19 represents more than just a passing moment of stress for the CPC. The world should be prepared for what could come next.

Normally, a single epidemic, even if mishandled, would not break the Chinese regime. Over the past four decades, the CPC has weathered numerous crises, from the 1989 Tiananmen tragedy and the 2002-03 SARS epidemic to the 2008 global financial crisis. Some of the regime’s critics have long predicted its imminent demise, only to be proven wrong. Before President Xi Jinping, the Chinese style of governance was adaptive and decentralized, or what I call “directed improvisation.” In addition, civil society, including muckraking journalism, expanded rapidly.

This time is different. Since coming to power in 2012, Xi has tightened political control at home and projected superpower ambitions abroad. These policies have unnerved Chinese private investors, alarmed Western powers, and sharpened tensions with the United States, all of which have contributed to a broader economic slowdown.

The COVID-19 outbreak has added an additional source of stress and unpredictability to the regime’s mounting challenges. As the epidemic persists, China will struggle to reopen for business, bringing even stiffer economic headwinds as small- and medium-size enterprises fail, workers lose jobs, and inflation picks up. While the Chinese leadership is highly adept at solving one crisis at a time, it has rarely had to confront so many near-existential crises at once.

In a recent commentary, Kevin Rudd, a former Australian prime minister who is now president of the Asia Society, argued that “the crisis, once resolved, will not change how China is governed in the future.” But that prognosis is too optimistic. Indeed, cracks are already appearing in Xi’s supreme leadership.

For example, at the peak of the public outrage over the government’s initial cover-up of the outbreak, Xi disappeared from public view. After his meeting with the director-general of the World Health Organization, Tedros Adhanom Ghebreyesus, on January 28, he didn’t resurface until his state meeting with Cambodian Prime Minister Hun Sen on February 5. For a leader who normally dominates China’s news cycle every day, Xi’s absence amid a national panic was conspicuous, and led some Chinese observers to speculate that his grip on power may be in peril.

If that seems unthinkable, it is worth remembering that the past years have produced events that few anticipated. Who predicted, for example, that an American real-estate mogul would face off with a Chinese princeling in an earth-shaking superpower rivalry, or that China might replace the United States as a champion for capitalist globalization? The current moment of precariousness could well give way to more profound political change.

Three possibilities stand out. The most extreme, worst-case scenario is regime collapse. China bashers who read that sentence should not gloat, because the sudden dissolution of an authoritarian regime does not necessarily lead to democratization; in many cases, it leads to civil war, as we saw in Iraq after the United States forcibly removed Saddam Hussein and as we see today in post-Qaddafi Libya. A violent power struggle within China would be catastrophic for the entire world.

Fortunately, this scenario is unlikely. Although China is under unprecedented stress, its economy has not come to a standstill. As Shang-Jin Wei of Columbia University pointed out, China’s highly developed e-commerce industry allows residents to continue shopping from home. And while tens of thousands of Chinese are infected with the virus and many more are furious at the government, the vast majority of the population is nowhere near desperation.

The second scenario is a change in leadership at the highest level. Xi cannot avoid blame for the backlash against his restrictive domestic policies and assertive actions abroad, which had already begun to undercut support for him even before the COVID-19 epidemic. With the death of Li Wenliang, a doctor who was rebuked by state authorities for warning others about the virus, the failings of Xi’s top-down approach have been laid bare. News of Li’s passing unleashed a firestorm of online criticism of the government, and Xi’s failure to appear on the frontlines of the fight has further diminished his credibility as a populist leader.

In principle, Xi’s abolition of constitutional term limits allows him to stay on as president for life. But whether he actually will remain in office after his current term ends in 2022 is now an open question.

Owing to the concentration of power in the Chinese system, the paramount leader has an outsize impact on all spheres of society, as well as foreign policy. If a new leader were to take over in 2022 – or even before then – the most likely outcome would be a reset of all of Xi’s policy priorities, forcing the rest of the world to revisit its thinking about China and its global role.

In the third scenario, Xi clings to his post, but it is hollowed out and power shifts over to various other competing factions. Such an arrangement would not be without precedent. After the Great Leap Forward, Mao Zedong’s fanatical campaign in 1958-62 to “catch up with Britain in ten years,” killed 30 million peasants, Mao was forced into retirement but remained paramount leader in name. (Later, he would stage a comeback, ushering in another decade-long disaster: the Cultural Revolution).

It is already clear that Chinese politics and governance will not be the same after the COVID-19 outbreak. The myth that Xi and his supporters have sustained about the virtues of centralized control has been demolished. Li’s parting words – “A healthy society should not have only one voice” – will remain etched in the minds of hundreds of millions of Chinese, who have seen for themselves that censorship can endanger their lives.

Yuen Yuen Ang is a professor of Political Science at the University of Michigan, Ann Arbor. She is the author of How China Escaped the Poverty Trap and the forthcoming China's Gilded Age.

The Progressive Lane Narrows

Bernie Sanders and Elizabeth Warren probably both can’t squeeze through.

By Michelle Cottle

Credit...Illustration by The New York Times; photographs by Elizabeth Frantz for The New York Times and Chang W. Lee/The New York Times

In the Democratic presidential primary, two states have had their say — two small, unrepresentative, delegate-poor states. Yet those elections — or whatever one calls what happened in Iowa — have reset the contest, vitalizing some campaigns (Klomentum!) while leaving others on life support. Three wound up in the morgue.

The early voting is also helping distill the campaigns to their essentials. This is particularly instructive in the so-called progressive lane, where Bernie Sanders and Elizabeth Warren have been fighting over the party’s excitable base.

Ms. Warren came roaring into this race with credibility as both an insider and an outsider, an anti-corruption crusader with experience navigating Washington’s bizarre folkways. She was a candidate of passion and substance, a fighter who churned out policy proposals faster than President Trump spits out conspiracy theories. Whatever your issue, Liz had a plan for that.

But upon emerging as a favorite last fall, Ms. Warren drew heavy fire from her competition, especially over her Medicare for All plan. Her response was less than nimble. She put out a more modest, phased-in plan, prompting attacks from the left. Her poll numbers and fund-raising slid, until she landed at a disappointing third in Iowa, followed by a dismal fourth in New Hampshire.

Ms. Warren’s campaign is far from dead, but it is now being discussed in the hushed tones reserved for the critically ill, and her path to a comeback is unclear.

In an election defined by Democrats’ desperation to defeat a president many consider a threat to democracy, a candidate’s perceived electability is crucial. Ms. Warren was already considered a risk by many. Some feared her policies were too progressive. Others found her manner condescending.

Still others shared Mr. Sanders’s alleged concerns that a woman cannot beat Mr. Trump.

Back-to-back electoral flops will make it that much harder for her to allay voters’ — and funders’ — anxieties. She does not poll particularly well with minority voters, so, unlike Joe Biden, she cannot offer reassurances that the shift to more diverse states will turn things around. And unlike certain billionaires, she lacks the wherewithal to buy herself a permanent spot in the race.

Ms. Warren insists that her campaign is built “for the long haul.” She has also vowed to stick with her focus on policy and unity and to avoid personal attacks on the competition.

On the night of her New Hampshire loss, Ms. Warren bemoaned the intensifying nastiness between some of the other campaigns and their supporters. “The fight between factions in our party has taken a sharp turn in recent weeks,” she said. “These harsh tactics might work if you’re willing to burn down the rest of the party in order to be the last man standing.” But to beat Mr. Trump, she said, “we will need a nominee that the broadest coalition of our party feels like they can get behind.”

Ms. Warren maintains that she is the person to build that coalition — that she will outlast flashier candidates and eventually make voters see the rightness of her position.

If Ms. Warren is the progressive of high-minded policy, Bernie Sanders is the progressive of belligerent revolution. Much of his appeal, dating back to his 2016 presidential run, lies in his grouchy, I’m-not-here-to-make-friends pugilism. For voters spoiling for a fight — whether against Mr. Trump, the Democratic establishment, the 1-percenters — Mr. Sanders has become a cult hero.

But many Democrats fear that the democratic socialist and his rowdy revolutionaries would usher in a second Trump term. This is especially true of moderates, who see Mr. Sanders as so far outside the mainstream that he would drag down other Democrats on the ballot. For much of this race, Mr. Sanders languished in Ms. Warren’s shadow, dismissed as too divisive to be the standard-bearer for a nervous party to which he does not even belong.

But as Ms. Warren has faded, Mr. Sanders has consolidated progressives behind him, while moderates remain split between multiple contenders. After a narrow loss in Iowa to Pete Buttigieg (at least at last count), Mr. Sanders scored a solid win in New Hampshire, which borders his home state. The victory was far from overwhelming, edging Mr. Buttigieg by less than two percentage points. But it was enough to make him the presumptive front-runner.

If he is to lead the entire Democratic Party, Mr. Sanders needs to find a way to reach beyond his core supporters and reassure the moderates who fear he would be a disaster in the general election.

This is no small challenge, in part because of his passionate — some might say rabid — following. The so-called Bernie Bros have a nasty reputation on social media for abusing those who dare to criticize their guy, spewing invective and issuing threats against offending organizations and individuals.

A fight along these lines is brewing in Nevada, whose Feb. 22 caucuses are next on the primary calendar. Organized labor is a powerful force in the state, thanks to the legions of workers who keep the casinos and hotels humming. Recently, the state’s Culinary Workers Union issued a flier outlining the candidates’ positions on top issues. Under health care, they noted that Mr. Sanders’s plan would “end” the union’s hard-won benefits.

This did not sit well with the Bernie Bros, who, the union reports, “viciously attacked” its members with ugly emails, calls and tweets. The union issued a statement condemning the behavior. Bernie fans turned up the heat, blaming union bosses, the media, political elites and the rest of Democratic field for the controversy.

It was a sad reminder of 2016, when Mr. Sanders’s narrow loss to Hillary Clinton in the state enraged his followers, who insisted the process had been rigged. Party officials were harassed and the state’s nominating convention was shut down early over security concerns. A bad scene all around.

Mr. Sanders recognizes the problem and now and again calls on everyone to keep it respectful. Last month he offered a rare apology for an over-the-top op-ed from one of his surrogates accusing Mr. Biden of corruption.

The coming weeks promise even more churn and drama, as more diverse electorates cast their votes in states with vastly more delegates on the line. For now, Mr. Sanders’s progressive vision has the upper hand. But the race is young — and turbulent.