Real Estate Companies Surging from the Housing Market Boom
While the pandemic devastated many aspects of the U.S. economy, the real estate market is certainly not one of them. Zillow estimates the U.S. housing market gained about $2.5 trillion last year and currently values the market stock at $36.2 trillion. Zillow further predicts that 2021 will likely be stronger as robust demand continues to drive intense competition among buyers, pushing prices higher.
Here are a few of the publicly traded companies participating in the real estate boom.
Let’s start with Zillow Group, Inc. (Tii:ZG), the most-visited real estate website in the U.S. The strength of the real estate market has the real estate services provider going into expansion mode. The company plans to hire more than 2,000 employees nationwide this year, increasing its total workforce by approximately 40%. Zillow’s mortgages segment increased 169% during the first quarter, and traffic on its mobile apps and websites reached 221 million average monthly unique users, an increase of 15%. The company’s share price has nearly doubled over the trailing 12 months ended June 11, 2021, to trade at approximately $113.
A Detroit-based holding company consisting of personal finance and consumer service brands, Rocket Companies, Inc. (Tii:RKT) provides a host of tech-driven real estate, mortgage and other financial services. For the company’s first quarter, net income increased 28x year-over-year to $2.8 billion as revenue grew 236% to reach $4.6 billion. The company cited strength in its mortgage business, which produced its highest-ever purchase application volume. Rocket Homes increased the average monthly visitors on its website by more than 300% versus the same quarter last year. Meanwhile, its Amrock business, a leading national provider of title insurance, property valuations and settlement services, achieved its highest level of closings in company history, increasing 110% from the first quarter of 2020.
One of the world’s leading franchisors in the real estate industry, RE/MAX Holdings, Inc. (Tii:RMAX), recently announced plans to acquire over 1,100 independent franchises in the North America region operating under Re/Max Integra. This acquisition will allow RE/MAX Holdings to expand its growth and reach throughout the United States and Canada. The announcement came after the company increased its number of agents by 6.4% to 140,214 agents, and its number of Motto Mortgage franchises increased 27.9% to 156 offices.
More of a real estate developer and asset manager, Comstock Holding Companies, Inc. (Tii:CHCI) oversees a portfolio and development pipeline that includes millions of square feet of mixed-use and transit-oriented properties. The company develops and manages properties in the Washington, D.C. area – one of the most expensive U.S. cities in which to purchase a home. Revenues for the company’s first quarter gained 19% as its operating subsidiaries increased leasing of its office and retail portfolio, increased leasing occupancy of the stabilized residential properties in its portfolio and expanded operations with the opening of four new parking garages.
Boasting the No. 1 real estate brokerage site, Redfin Corporation (Tii:RDFN) is a technology-powered real estate broker, instant home-buyer, lender, title insurer, and renovations company. The company recently reported that its customers saved an average of $8,200 in real estate fees in 2020 and over $1 billion since its founding in 2006. First-quarter revenues for Redfin, whose shares are up 84% for the 12 months ended June 9, 2021, increased 40% year-over-year to $268 million. Citing a pandemic-driven surge in demand and a 200% year-over-year growth in its mortgage business, Redfin tripled the rate at which it is scheduling home tours.
As the largest full-service residential and real estate services company in the U.S., Realogy Holdings Corp. (Tii:RLGY) oversees a diverse brand portfolio that includes Better Homes and Gardens Real Estate, CENTURY 21, Coldwell Banker, Coldwell Banker Commercial, Corcoran, ERA, and Sotheby’s International Realty. Unsurprisingly, the company has materially benefited from the surge in homebuying. Realogy recently reported its strongest first quarter in history, with transaction volume increasing 44% and market share expanding 15.7% -- Realogy’s third consecutive quarter of growth. Revenues for the period increased 32% to $1.5 billion. The company’s shares are up nearly 35% for the year.
With mortgage rates remaining low (the 30-year fixed mortgage rate fell to 2.96% last week, the lowest level since mid-February) and the risk of the Fed raising interest rates minimal, the real estate market may well continue its winning streak.