To say that the housing market has been undergoing a tough time of it late would be an understatement. Many first-time buyers are finding the market difficult due to inflation fears, rising costs of goods, and increased competition.
However, for investors, there has never been a better time to buy real estate stocks, and we’ve got just the pair for you.
First up is a leader in the technology-driven real estate market, Redfin (NASDAQ: RDFN). This $5.4 billion business acts as a full-service real estate brokerage.
Redfin broke with the traditional commission model that typically resulted in 6% of the transaction going to agents. Instead, Redfin built out a network of salaried agents who received bonuses based on customer feedback. This process innovation cut commissions down to 1.5% when selling, whilst also adding the incentive to buy on the Redfin platform, lowering the commissions once again.
This has also led to faster sales and huge customer satisfaction, though the company still only commands roughly 1% market share in the U.S.
Where the real value lies right now for investors is in the company’s outlook, which could see it quintuple its sales and push to recurring profitability by mid-decade. As well as this, with its share price down 24% year-to-date (YTD), it’s looking like a great discount opportunity.
The biggest name in iBuying is without a doubt Zillow (NASDAQ: Z), the largest real estate and rental website in the U.S, with its mobile apps alone driving 9.6 billion visits for the full year 2020.
In early August, the company released its Q2 earnings report, which showed that it had brought in revenue of $1.3 billion and a gross profit of $538 million, which was up 92% YoY. Rich Barton, Co-founder and CEO of Zillow Group credited the company’s success by stating:
“Of particular note, our iBuying business, Zillow Offers, continues to accelerate as we offer more customers a fast, fair, flexible and convenient way to move. Zillow Offers is proving attractive to sellers even in this sizzling-hot seller’s market.”
Zillow has seen its share price fall roughly 25% in 2021 due to inflation fears and a tough housing market. However, this could make its current price a significant deal.
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Editor at MyWallSt
Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.