Zillow Group Inc Stock Price, News & Analysis

The U.S. housing market has seen a significant correction, with a loss of 58 'million-dollar' cities since July 2022, bringing the total to 464, according to a new analysis by Zillow. Average home values in these cities have decreased by $114,500. The most affected areas include California, which lost 20 cities, and metro regions like New York and San Francisco. The typical U.S. home has lost 4.1% of its value since last July, while homes in million-dollar cities have declined by 6.3%. Despite these declines, sellers can still achieve higher prices than last year due to ongoing demand, though affordability remains a challenge.

According to Zillow's recent survey, 73% of economists and housing experts advocate for zoning reform as a primary solution to the housing affordability crisis in the U.S. The survey, conducted by Pulsenomics, reveals that housing affordability continues to be a significant challenge, with monthly mortgage payments nearly $1,600, up 46% from last year. The chronic shortage of new housing, estimated at a 3.79 million-unit gap, affects both renters and buyers. Experts suggest that easing zoning regulations could lead to rapid home construction and assist communities in becoming more livable.

Zillow has identified Austin, Texas as the most pet-friendly city for renters, with 80.8% of rental listings allowing pets. Across the U.S., more than half (55.1%) of rental listings on Zillow permit pets, reflecting a growing trend as 59% of renters reported having at least one pet in 2022, up from 46% in 2019. The demand for pet-friendly rentals is evident, as renters frequently filter listings based on this criterion. Zillow's new tools, including a dedicated 'Moving with Pets' page, aim to assist pet owners in their search for suitable rental homes.

The Zillow Home Price Expectation survey predicts a 1.6% decline in home prices for 2023, followed by an average growth of 3.5% annually through 2027. Sales of new and existing homes are also expected to decline, with existing home sales forecasted at 4.2 million for the year. Though affordability issues are dampening demand, experts believe a return to normal growth would be beneficial after recent volatility. Furthermore, mortgage rates are likely to decrease after Q1 2023, with predictions of around 6% by year-end.

Zillow's recent survey reveals that 84% of first-time home sellers in the past two years have regrets about their selling experience. Common issues involve incorrect pricing, poor online curb appeal, bad timing, and inadequate home repairs. Specifically, 39% wish they had set a higher list price, while 39% think better listing photos could have enhanced sale prices. Additionally, 25% felt they chose the wrong time to sell. To address these regrets, Zillow emphasizes the importance of a strategic pricing approach and leveraging professional services to improve home presentation. Sellers preparing for the market this spring are advised to enhance their properties for optimal results.

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.