Monthly Archives: June 2016

Biggest profit ever

Don’t look now, but Zillow Group just turned in its best quarter ever.

The online real estate giant said Tuesday that it brought in record revenue in the third quarter, earning $224.6 million in the quarter, which represents a 35% increase over 2015.

And even more than record revenue, Zillow revealed that it ended a nearly three-year run in the red, as the company posted a profit in the third quarter, its first quarterly profit since the fourth quarter of 2013.

And even more than that, Zillow’s profit during the third quarter was its largest quarterly profit ever.

For the record, Zillow went public in 2011, posting its first quarterly results in August 2011 for the second quarter of 2011.

According to Zillow, it posted GAAP net income of $6.8 million, or 3% of its revenue, in the third quarter of 2016, compared to GAAP net loss of $26 million, or 15% of revenue, in the same period last year.

The third quarter’s profit represents a 126% year-over-year increase from last year.

Zillow’s adjusted EBITDA was $59.5 million in the third quarter, an increase of 102% year-over-year.

“Our third-quarter performance was terrific,” said Zillow Group CEO Spencer Rascoff.

“We delivered another quarter of record revenue, and Adjusted EBITDA exceeded our expectations,” Rascoff continued.

“Traffic to Zillow Group’s mobile apps and websites increased year-over-year and revenue growth in our Premier Agent marketplace accelerated,” Rascoff added. “With all of our marketplaces performing strongly, we expect to end 2016 in a strong position to continue executing on our strategic priorities.”

The Zillow Group websites, which include brands like Zillow, Trulia, SreetEasy, HotPads and Naked Apartments, saw more than 164 million average monthly unique users, an increase of 16% year-over-year.

According to Zillow, its websites captured “nearly three quarters of total market share for the mobile-only real estate category.”

Zillow also said that its market share in September 2016 was nearly two-thirds of the total online real estate category, according to comScore.

Zillow’s marketplace revenue increased 45% to $206.9 million from $142.3 million in the third quarter of 2015. Its Premier Agent revenue increased 33% to $158.3 million from $119.4 million in the third quarter of 2015.

According to Zillow, leads to the company’s Premier Agent advertisers grew nearly 40% year-over-year to 4.6 million during the third quarter.

Zillow also said that the total sales to Premier Agent advertisers who have been customers for more than one year increased 59% year-over-year. Sales to existing Premier Agent advertisers accounted for 71% of total bookings.

The number of of Premier Agent advertisers who spend more than $5,000 per month increased 80% year-over-year on a total dollar basis, and increased 79% year-over-year in the number of agent advertisers.

Additionally, Zillow said that its “other real estate revenue,” which includes agent services, dotloop, StreetEasy, Naked Apartments, rentals and other offerings to endemic advertisers that are not traditional display advertising, increased 182% to $28.8 million from $10.2 million in the third quarter of 2015.

Zillow’s mortgage revenue increased 57% to $19.8 million from $12.6 million in the third quarter of 2015.

The company said that its display revenue fell by 25% to $17.7 million from $23.5 million in the third quarter of 2015. The company said that this decline is primarily a result of the “company’s strategy to deemphasize display advertising and improve the user experience.”

Riding the wave of these positive results, Zillow said that it is raising its revenue outlook to the range of $837 million to $842 million.

Measures for affordable housing

How do you know when California has a housing problem? Besides the low housing supply and rapidly rising home prices, the total of 17 ballot measures could be a give-away.

That’s right, San Francisco is looking at 17 different ballot measures this election for affordable housing, according to an article by Melody Gutierrez for the San Francisco Times.

However, this high number of ballot measures is not unexpected, according to Gloria Bruce, East Bay Housing Organizations executive director, the article states. Many organizations are seeking a solution to the problem.

From the article:

“We aren’t having to convince people there is a problem,” Bruce said. “That has opened a political window for measures that increase resources because we aren’t seeing opposition. That’s huge. People realize this is the time to invest and do what we need to do.”

One measure, for example, would allow the county to give up to $580 million in general obligation bonds to buy or renovate affordable housing or low- to moderate-income families, veterans, seniors and people with disabilities. The money would also be used for home-buyer programs for residents, according to the article. No one filed an opposing argument.

Predictions bring bad news for housing

After last month’s uptick in construction, ADP now predicts yet another drop in its monthly National Employment Report.

Overall, the company predicts an increase of 147,000 in total nonfarm private sector employment in October. This is compared to September’s increase of 156,000

“Job growth appears to be shifting from small to large companies due to the lessening impact the global economic environment had on large companies earlier in the year,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute.

“This is also true because large companies often have the resources to attract workers with better pay and benefit packages,” Yildirmaz said.

“Job growth remains strong although the pace of growth appears to be slowing,”Moody’s Analytics Chief Economist Mark Zandi said. “Behind the slowdown is businesses’ difficulty filling open positions. However, there is some weakness in construction, education and mining.”

Here is a breakdown of the sectors where the changes occurred:

The goods-producing sector decreased by 18,000 with decreases in these areas:

Construction: Decrease of 15,000

Manufacturing: Decrease of 1,000

Natural resources, mining: Decrease of 2,000

The service providing sector increased by 165,000 with increases in these areas:

Trade, transportation and utilities: Increase of 17,000

Information: Increase of 3,000

Financial activities: Increase of 18,000

Professional, business services: Increase of 69,000

Education, health services: Increase of 22,000

Leisure, hospitality: Increase of 38,000

Other services: Decrease of 2,000

The decrease in construction does not bode well for housing, which is already struggling with low inventory levels and high home prices. Many of the gains, however, occurred in the professional and business sector, which could help consumers afford higher-priced homes.

Last month, ADP predicted an increase of 154,000, just slightly lower than the employment report’s 156,000. In August the report’s 151,000 was further off from theprediction’s 177,000.

Ownership database now covers all of nation

Last year, First American Financial launched a new property research website, boasting that DataTree would be the “fastest, most comprehensive and easiest to use property research solution on the market.”

At the time, First American claimed that DataTree would be built on the industry’s “largest database of property and homeowner information and document images,” and would include 99% of U.S. housing stock.

But 99% wasn’t enough for First American, as the provider of title insurance, settlement services and risk solutions for real estate transactions is now claiming that DataTree is able to provide 100% coverage of U.S. property ownership data.

According to First American, recent additions of new data assets make First American the “first and only” real estate data provider to offer “complete” coverage for property data.

“Our data acquisition and product investments have further solidified our position as the industry leader in real estate data and demonstrate our commitment to delivering the most robust real estate data set available to our customers,” said Jim Portner, senior vice president of product and market strategy, First American Database Solutions.

First American also claims that over the last year, the company launched the housing industry’s largest, nationwide homeowners association database, adding in additional property transaction deed and mortgage coverage, as well as expanding the company’s property tax database nationwide.