To all the agents in the house,
It's earnings call season, a time, I suppose, to reflect on the universe of publicly traded real estate companies. My main reflection: These companies are mostly young, and I'm not sure what curve to grade them on.
Take Opendoor. Thursday afternoon I read a statement that the eight-year-old, San Francisco-based iBuyer sent me about its 2021 earnings: "Opendoor had an outstanding year, and continued to exceed expectations, allowing it to pull forward its financial targets by years."
Then I leafed through the numbers. Opendoor actually lost $662 million in 2021, which was actually even worse than Zillow, which abandoned iBuying, because they could not foresee a path to predicting when to instantly buy homes and then resell them.
But there's some who thought it's too early to judge Opendoor on this bottom line. For example, Ygal Arounian, managing director of internet equity research at Wedbush Securities, wrote this in an investor's note Friday:
"We continue to see Opendoor as one of the most misunderstood and mispriced stories in our coverage universe. It remains in very early stages of a massive secular shift toward technology disruption in residential real estate, is a clear leader in iBuying, has executed with strength, and has the capability to expand and evolve its model to capture more transaction share over time."
But – and this is a question I've reached out to Arounian on – when do we stop saying Opendoor is in a very early stage?
See, Opendoor, Compass, Zillow, Redfin, Offerpad, and eXp are all about "modernizing an archaic industry." That quote comes from Compass CEO Robert Refkin on a past earnings call. It has been echoed almost verbatim by the leaders of these other businesses.
However, at some point, if that point hasn't already come, these companies are the industry they claim to modernize. Compass and eXp have grown so fast they may overtake Realogy, HomeServices of America, Keller Williams and RE/MAX on RealTrends' biggest brokerage lists. And these incumbent companies are hardly dinosaurs. Okay, Realogy and HomeServices are conglomerates that include 100-year-old brokerages. But Keller Williams and RE/MAX are both less than 50-years-old.
Agents, a couple of questions on this. What companies do you see as perhaps the grain or establishment in real estate? And who is truly changing the ecosystem of buying and selling residential property?
And, zooming out, how has this wave of new companies affected your professional lives?
Please send me an anonymous note at mblake@housingwire.com.
Sincerely,
Matthew Blake
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