Real estate stocks rally despite trade war worries

Outlier Zillow’s saw shares drop 18% for the week

Zillow CEO Rich Barton (Credit: iStock and JD Lasica via Flickr)
Zillow CEO Rich Barton (Credit: iStock and JD Lasica via Flickr)

Real estate stocks have performed well this week despite wider market volatility, fueled by an escalating trade war, which last week led the S&P 500 to its worst week of 2019.

At the close of market on Friday, The Real Deal reviewed the stock prices of 28 major real estate companies. From opening bell on Monday 17 were up, with mostly small percentage drops for the other 11.

Of the 28 stocks, troubled brokerage giant Realogy had the biggest uptick — reporting an increase of 23 percent for a closing share price of $5.92 at the end of Friday.

Zillow, meanwhile, led the decline. The listings company was down 18 percent from $48.09 at the beginning of the week. Its stock price dropped following the release of its second-quarter earnings Wednesday. While the company’s revenues increased by 84 percent to $599.6 million, its losses had also gone up — totalling roughly $72 million compared to just $3 million last year.

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“Timing issues for the Premier Agent revenues was one of the key reasons for today along with the inventory adjustment in the Homes business, although the move the Flex significantly expands the potential total available market for Premier Agent potentially over time,” said Brad Berning, an analyst with Craig-Hallum Capital Group, in an email Wednesday.

A representative for Zillow declined to comment on the stock price, instead directing TRD to a portion of the company’s quarterly shareholder letter, which states: “We understand this is a sizable shift from the ‘search and find’ nature of Zillow 1.0, but we are more confident than ever that evolving to a transaction-driven company is the right direction for our customers, the industry, the company, and our shareholders.”

The intensifying trade war between the United States and Donald Trump reached a boiling point earlier this year, when Chinese President Xi Jinping increased tariffs on $60 billion of U.S. goods in retaliation for President Trump’s decision to raise tariffs on $200 billion in Chinese products from 10 percent to 25 percent.

Despite the rising stock prices, the real estate industry is not immune to the unrest as the costs of building materials increase, and a creeping sense of unpredictability complicates new-development plans.