Zillow revenue grows 22% in 2020

Zillow Group reported fourth quarter 2020 revenue of $789 million on Wednesday, easily beating Wall Street’s estimates.

Despite what Zillow officials referred to as a “rough” first half of the year due to COVID-19’s impact on the economy, the $789 million represents a consolidated revenue growth of 22% from 2019.

It also boasted $170 million in earnings before interest, taxes, depreciation and amortization (EBITDA) in the fourth quarter, above Wall Street’s estimate of $125 million. For the year 2020, Zillow posted $343 million in EBIDTA.

All of that pushed Zillow into the black during the fourth quarter. The company’s net profits checked in at $46 million in Q4, far above the $101 million loss it suffered in the fourth quarter of 2019. It’s the second consecutive quarter Zillow has been profitable.

Online traffic reached record highs, with 201 million average monthly unique users reported in the fourth quarter of 2020 – the most unique users Zillow has ever had in the fourth quarter of a year, according to officials – and 2.2 billion visits.

For 2020, Zillow reported 9.6 billion visits, up 19% from the previous year.

Zillow also announced it has agreed to pay $500 million to acquire ShowingTime, which makes software for prospective buyers to arrange showings with agents.

The Seattle-based company, which has mostly pivoted from selling advertising to real estate agents into iBuying, acquired 1,789 homes in the fourth quarter. That was just two more homes than they had acquired a year prior, just before COVID-19-related shutdowns froze the business in place.

In a letter to shareholders, Zillow CEO and co-founder Rich Barton and CFO Allen Parker said the company also expects a strong first quarter of 2021.

“Looking ahead, our Zillow economists have made bold predictions for an even stronger housing market in 2021 than what we experienced in 2020,” the letter states. “They are projecting the number of home  sales to grow 21% for the year, as well as double-digit home price appreciation.”

Year over year, Zillow’s IMT segment revenue grew 33% to $424 million, home segment revenue reported $304 million (a fourth quarter 2019-pace), and mortgage segment revenue grew 190% to $61 million. Cash and investments grew to $3.9 billion at the end of the fourth quarter, up from $3.8 billion at the end of the third quarter.

According to Zillow’s own Home Value Index, the company expects seasonally adjusted home values to increase by 3.7% from the end of December 2020 to March 2021, and by 10.5% through December 2021. It also predicts home value appreciation to peak in June 2021 at 13.5%.

The seasonally adjusted annualized rate of existing home sales in November 2020 was 6.69 million – up 25.8% from November 2019, per Jeff Tucker, Zillow senior economist. Officials expect this rate to remain high – above 6.65 million – through 2021. 

“Our bullish outlook for sales and home values is driven by the current strength of the home-buying market and our expectation that low mortgage rates, demographic tailwinds and an improving economy will continue to prop up market competition,” Tucker said.

Expect more technological advances for the company in the new year, the letter to shareholders said.

“We are connecting services together for our customers and using our low cost of customer acquisition across multiple products to compete against an industry of largely single-point  solution providers with high customer-acquisition costs,” it read.

Source: housingwire.com

Zillow: Expect another record year for home sales

Zillow’s 2021 housing forecast echoes the projections of other industry experts of a rapid acceleration of home value appreciation, with numbers anticipated to be even higher than in 2020.

According to Zillow’s Home Value Index, the company expects seasonally adjusted home values to increase by 3.7% from December 2020 to March 2021, and by 10.5% through December 2021. It also predicts home value appreciation to peak in June 2021 at 13.5%.

In fact, the company has already upped its December 2020 forecast: Zillow initially expected a 10.3% increase in home values through November 2021.

Approximately 5.6 million existing homes were sold in 2020, a 5.3% increase from 2019, according to officials. Zillow predicts 6.82 million existing home sales in 2021, the most recorded in a single calendar year since 2005 and a 21.1% increase from 2020.

Quarterly Zillow Home Value Index growth as of December 2020 was 3.2%, the strongest three-month appreciation since 1996.

“Home values rose sharply near the end of the year at their fastest quarterly rate on record,” said Jeff Tucker, Zillow senior economist. “Sales are taking place at a rapid clip, as momentum gathering in the market since June is still pushing forward at full force and is expected to continue for the foreseeable future.”

Tucker added that record-low mortgage rates are keeping buyers coming to the table – despite rising prices.

“[The low rates] are keeping monthly payments in reach,” he said.

Although mortgage rates are expected to rise in 2021, it’s not out of the realm of possibility that sub-3% rates become the norm following the economic turmoil caused by the COVID0-19 pandemic.

Rates fell to 3.13% in June before bottoming out around 2.67% by the end of the year.

Rounding out the 2020 data, the seasonally adjusted annualized rate of existing home sales in November was 6.69 million – up 25.8% from November 2019. Zillow officials expect this rate to remain high – above 6.65 million – through 2021. 

“Our bullish outlook for sales and home values is driven by the current strength of the home-buying market and our expectation that low mortgage rates, demographic tailwinds and an improving economy will continue to prop up market competition,” Tucker said.

Source: housingwire.com