Zillow shares are soaring on the winds of change sweeping across the country as more Americans look for houses to shelter from a host of maladies—political, social, economic, and medical—now plaguing cities.
Shares of the digital real-estate company jumped by more than 10 percent in pre-market trading Friday after the company reported quarterly results Thursday evening that beat Wall Street expectations.
“I believe we are at the dawn of a Great Reshuffling, as COVID and work-from-home policies are inspiring people to rethink their homes and consider moving,” Zillow Group co-founder and CEO Rich Barton said in a statement.
The real value of home has never been clearer. We’re grateful to post record Q2 results today but the bigger story is the tectonic shift in RE. People are moving & came to @Zillow in huge #'s. Once-in-a-generation tailwinds in RE & tech are converging w/ Z at the nexus.
— Rich Barton (@Rich_Barton) August 6, 2020
On a GAAP basis, Zillow had zero earnings, beating expectations for a quarterly loss. Zillow reported $16 million in earnings before interest, taxes, depreciation, and amortization, or Ebitda, from $768 million in sales. Analysts polled by FactSet were expecting negative Ebitda of about $58 million from $615 million in sales.
This week, data from CoreLogic showed home prices rising nationally at the fastest pace since 2013. The housing market has received a big boost from lower interest rates and people fleeing city centers in the wake of riots, looting, and months-long lockdowns. Many of the things that made city life desirable—from cultural institutions like museums, to amenities like bars and restaurants, to quick commutes via mass transportation—remain shuttered or are now seen as undesirable. Remote working, which many big-city companies now say will continue through the fall, puts a premium on having space at home to work—something that can be hard to come by in city apartments.
Barton said in a letter to shareholders:
“The meaning of home is evolving. It used to be a place where we slept and did a little bit of a lot of things – cooking and eating, family time, some work and homework, and possibly some exercise. It has now also become our office, school, gym, staycation, and base for social connections whether they be virtual or socially distanced. The changing needs of our homes has served as a catalyst for the pent up inherent demand in peoples’ desire to move.”
Late last year, Zillow launched its Zillow Offers business of buying and selling homes, making Zillow a direct investor in homes in addition to being a digital realtor, hub for advertising, and guide to real estate. That businesses was put on hold when the economy was locked down as the pandemic struck but restarted in June and is now operating in all 24 of the company’s markets.
The company sold 1,437 homes and purchased 86 homes in the second quarter, ending the quarter with 440 homes on its balance sheet.