Zillow Group Inc Stock Price, News & Analysis

Zillow reports that urban and suburban housing markets in the U.S. are showing similar strength, despite notable exceptions in high-cost cities like San Francisco and Manhattan. Newly pending sales have increased since February, with a faster selling rate in suburbs. Urban median sale price growth has flatlined, down 9.3 percentage points year-over-year, while suburbs slowed only 3.1 percentage points. A supply shortage is limiting urban recovery. Rental markets are struggling due to unemployment spikes. Overall, Zillow remains optimistic about housing demand.

In July, New York City's housing market faced a slowdown despite a surge in new listings. The total number of homes for sale was 6% lower than the previous year, yet Manhattan saw an 87% increase in new listings, totaling 2,714. However, pending sales dropped 37%, with homes selling for an average of 10% less than initial asking prices. In Manhattan, home prices fell 4.2% year-over-year to $1,450,000, while Brooklyn's dropped 2.1% to $969,000. Queens was an exception with a 1% increase in prices to $650,000. Buyers are negotiating lower prices significantly amid market adjustments.

Zillow's Weekly Market Report indicates newly pending sales dipped 0.9% week over week but are up 13.8% from last year, reflecting a market favoring sellers due to low inventory. New listings fell 3.6% week over week and are 15.8% lower year-over-year. The median list price surged to $343,680, a 6.6% increase from last year. However, the rental market faces uncertainty as expired unemployment benefits may impact demand. Despite a brisk sales pace, the lack of inventory continues to hinder market growth, with total listings down 26.9% from last year.

Zillow Group reported a 28% year-over-year revenue growth to $768 million for Q2 2020, driven by increased resale volume in Zillow Offers. However, the company faced a net loss of $84 million amidst challenges in its Premier Agent segment, which saw a 17% decline in revenue. The Homes segment thrived, generating $454 million, an 82% increase. Traffic to its platforms reached 218 million unique users. The company ended the quarter with a record cash balance of $3.5 billion, following nearly $1 billion in capital transactions.

As government unemployment aid expired, 22.6% of U.S. apartment households missed rent payments in early July, a rise from 19.2% in June. This increase poses risks of housing insecurity for both renters and rental property owners. By July 13, the percentage of unpaid rent dropped to 12.4%, but was still notably higher than last year. The pandemic has significantly affected the rental market, with rent prices slowing and the average return on rental units falling to 6.4% from 13.3% in 2015. Analysts warn of potential financial instability as missed payments could ripple through the rental ecosystem.

On August 4, 2020, Zillow's analysis revealed that Black mortgage applicants face denial rates 80% higher than white peers. Despite some progress, the Black homeownership rate remains low at 44%, compared to the overall rate of 65.3%. Reasons for denials often link to historical inequalities in credit access, with many Black applicants lacking adequate credit history. Moreover, mortgage denials are more prevalent in predominantly Black neighborhoods, reflecting long-standing issues like redlining. Suggested solutions include reforming credit scoring systems and increasing funding for HUD's fair housing efforts.

Zillow Group has resumed home purchases in four additional markets, bringing the total to 24 markets for its Zillow Offers program. This decision follows a pause initiated on March 23 due to COVID-19 concerns. Homeowners in Las Vegas, South Florida, Tampa Bay, and Houston can now sell homes with enhanced safety protocols. Zillow emphasizes health and safety through its 'Move Forward. Stay Safe.' initiative, providing virtual viewing options and strict hygiene measures. Despite market uncertainties, pending sales are showing robust annual growth, indicating resilience in the housing market.

Following the early impact of the coronavirus pandemic, the for-sale market has rebounded, but rent growth has significantly slowed, especially in urban areas. Zillow's data indicates that from February to June 2020, annual rent growth in urban areas dropped by two percentage points, while suburban areas saw a 1.4 percentage point decline. Many renters have been financially impacted by unemployment and are moving back home, affecting rental demand. Notably, urban rent growth is stronger in some markets, such as Kansas City and Detroit, while others like Dallas-Fort Worth saw urban decline.

According to Zillow's Weekly Market Report, homes moving from for-sale to pending are up 16.1% year over year, indicating strong buyer demand. However, new listings are down 12.2% year over year, contributing to a 26.3% decrease in total inventory. Homes are selling at a record pace, typically within 14 days. While newly pending sales dropped 1.4% month over month, they continue to outpace last year's figures. List prices rose by 0.3% week over week, now averaging $342,660, 6% higher than a year ago.