Zillow Group Inc Stock Price, News & Analysis

A new analysis by Zillow reveals significant progress in Black Americans' housing wealth, with the value gap between typical Black-owned homes and the overall U.S. home value narrowing to its smallest in over two decades. As of January 2023, the typical Black-owned home is valued at 14.8% less than the average U.S. home, compared to a 17.3% gap in February 2020. Black homeowners have gained approximately $84,000 in equity since the pandemic began, with home values appreciating by 42.5%. Despite these gains, barriers to homeownership persist, particularly in markets with high appreciation rates where mortgage denial rates are disproportionately affecting Black applicants.

U.S. home values increased by 6.2% year-over-year, now averaging $329,542, but sales are hindered by low seller inventory, the second-lowest January count on record.

Despite a slight uptick in buyer activity, the 230,000 new listings in January were 17% lower than last year's record low. Buyers may be encouraged by declining mortgage rates from 7.08% to 6.09% since November. However, rising rates in early February threaten to dampen both supply and demand, as current homeowners with lower rates are reluctant to sell.

Overall, the housing market remains competitive, but widespread bidding wars are unlikely compared to previous years.

As the spring home shopping season approaches, Zillow's analysis indicates a calmer market compared to the frenzy of 2021-2022. While buyers will encounter competition, particularly for competitively priced homes, the overall number of buyers is expected to be lower. Affordability remains a significant challenge, with buyers spending an average of 31% of their income on mortgages. Despite a slight drop in mortgage rates, demand is unlikely to match the intense competition of prior years. The market is characterized by low inventory, and sellers will need to price homes competitively to attract buyers.

Zillow Group (NASDAQ: Z, ZG) reported its financial results for Q4 2022, achieving consolidated revenue of $435 million and a net loss of $72 million. The full-year revenue stood at $2.0 billion, reflecting an 8% decline year-over-year. The IMT segment saw a 14% revenue decline to $417 million, driven by a 20% drop in Premier Agent revenue. However, Rentals revenue increased by 13% to $68 million. Adjusted EBITDA was $73 million for Q4. The company's cash reserves were $3.4 billion, with share buybacks totaling $174 million.

Zillow and Opendoor have launched a new partnership allowing homeowners in Atlanta and Raleigh to compare selling options directly on Zillow. Sellers can now request cash offers from Opendoor while also getting market estimates from Zillow Premier Agent partners. This initiative is part of Zillow's commitment to simplify the home-selling process, as highlighted by a recent survey indicating a third of Americans find selling emotionally taxing. This feature is expected to enhance the user experience on Zillow, which sees millions of visitors monthly. Future market expansions are planned to roll out additional services.

Zillow and Opendoor have partnered to streamline the home-selling process for homeowners in Atlanta and Raleigh. Homeowners can now request a cash offer from Opendoor while simultaneously receiving an estimate for selling on the open market through Zillow Premier Agents.

This initiative aims to simplify selling by offering multiple options in one place. Users can work with licensed advisors or explore options independently. The service is part of Zillow's broader aim to enhance its real estate offerings, including financing through Zillow Home Loans. This new feature will expand to more markets across the United States in the upcoming months.

On February 13, 2023, Zillow reported that single renters in the U.S. pay an average "singles tax" of $7,000 annually for living alone. The burden varies by city, with New York City leading at $19,500 more per year compared to cohabiting couples. Cohabitating renters collectively save $14,000 annually, with potential savings in NYC reaching up to $39,000. Zillow emphasizes the importance of individual rental decisions and offers tools like budget calculators and automated tour scheduling to assist renters during their search for housing.

As mortgage rates have slightly decreased, buyers are gaining more purchasing power, particularly in more affordable markets like Memphis and the Midwest. A $3,000 monthly mortgage payment now allows for the purchase of homes valued around $620,000, up $60,000 from last October, while the average home size has increased by 84 square feet. However, the overall purchasing power remains lower than last year, with homes being 140 square feet smaller than in early 2022. Markets like Hartford and Indianapolis experienced significant declines in square footage available. Zillow's analysis shows that home shoppers should improve credit scores to secure better mortgage rates.

According to a Zillow analysis, rent affordability is significantly better in cities with higher minimum wages. Currently, in the U.S., it requires nearly four full-time workers earning the federal minimum wage to afford a typical two-bedroom rental. Only 10 of the 50 largest cities allow two full-time minimum wage workers to afford such housing. Cities with higher local minimum wages show improved affordability. The analysis emphasizes the necessity of increasing housing supply, with support from 77% of surveyed homeowners and renters for more diverse housing options to mitigate affordability issues.