Is 2021 the new 2008 for the Real Estate Market?

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by vilnitskiy

Real estate is one of society’s largest, oldest industries and has managed to resist significant disruption for many decades. According to the latest news, the performance of major housing companies is getting tougher, and my observations also confirm this.

In general, most indirect indicators signal us about a forthcoming crisis – hiring activity has significantly decreased, investors are pessimistic, and the short interest level is growing for most of the main players.

We all saw that better.com (a pre-IPO company) fired 900 employees. CEO said – «The market has changed, as you know, and we have to move with it in order to survive so that hopefully we can continue to thrive and deliver on our mission».

It looks like a powerful signal, so from words to data! Let’s take a quick overview of the main US real-estate-related companies and try to understand the overall market situation:

1. Opendoor Technologies Inc. ($OPEN) – the biggest player in the real estate market.

If you’re a home buyer or potential real estate investor, you need to be paying attention to what’s going on with Opendoor since they buy and sell more homes in the US than anyone else. And if they’re crashing down – that’s definitely a strong signal of what you can expect to see in the whole housing market. The $OPEN stock is already 30% down over November:

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$OPEN stock

We can see a constantly growing short interests level for $OPEN as well, which means that the company is actively being shorted:

$OPEN short interest

Another bad sign for Opendoor is the growth of insiders selling activity:

$OPEN insider activity

When these insiders sell the stock, it’s only natural for outsiders to wonder if something is afoot. But with the support of other powerful signals – it’s crazily bad 🙁

2. Zillow Group ($ZG) – Opendoor’s largest competitor, a digital real estate company, operates real estate brands on mobile applications and websites in the United States.

The second negative signal was made by Zillow company a month ago – its stock price has reduced significantly.

$ZG stock

The number of open job positions at Indeed and Glassdoor has dropped to zero, which means that $ZG can’t afford to hire employees:

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$ZG hiring dynamics

And situation with short interests level is similar to $OPEN’s:

$ZG short interest

3. Redfin Corporation ($RDFN) – a residential real estate brokerage company in the United States and Canada.

The third company in a list – a third bad sign. The Redfin’s shares dropped 20.9% in November:

$RDFN

At present, $RDFN has a market cap of $4 billion. But Redfin only generated low numbers in gross profit over this year and had no net income:

$RDFN fundamentals

If it’s unable to grow its business over the coming years, the stock will likely fall even more from here. Also, the company is actively being shorted over the past few months as well:

$RDFN short interest level

What are your thoughts on the real estate market? This is a fairly quick overview of the current market situation, but even from these facts, we can understand that the housing market is going through a period of turbulence.

If this post was interesting,  I can try to prepare a more detailed analysis of the market situation and include more alternative indicators and players there.

 

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