By: Benyamin Davidsons
The S&P started off the month posting its worst week of 2019, primarily owing to the escalating trade war between the U.S. and China. The Real estate stocks, however, withstood the volatility of the market, performing well overall for the week.
On Friday August 9th, after the market’s closing bell, the Real Deal studied the progress for the stock prices of 28 major real estate companies for the week beginning on Monday morning August 5th. They found 17 of the 28 real estate stocks ended the week with gains. The remaining 11 stocks had primarily modest percentage declines. Of the stocks reviewed, the largest gain found was for Realogy, the ailing brokerage giant, which enjoyed a 23 percent price increase for the week, closing on Friday with a per share price of $5.92.
The weightiest loss, within the 28 real estate stocks reviewed, was by Zillow. The online listings database company was down 18 percent from $48.09 on Monday. The decline came after the release of the company’s second-quarter earnings report on Wednesday. Zillow reported an 84 percent rise in revenue, to $599.6 million. It also, however, reported heavy losses of approximately $72 million, a distressing development, when it lost only $3 million last year.
A Zillow representative declined to comment on the falling stock price. The rep diverted the question to quote from the company’s quarterly shareholder letter, stating: “We understand this is a sizable shift from the ‘search and find’ nature of Zillow 1.0, but we are more confident than ever that evolving to a transaction-driven company is the right direction for our customers, the industry, the company, and our shareholders.”
The trade war between President Donald Trump and Chinese President Xi Jinping is ongoing with Trump having raised tariffs from 10 percent to 25 percent on more than $200 billion worth of Chinese products, as per the Real Deal. In return, China increased tariffs on $60 billion of U.S. goods to 25 and 20 percent, up from 10 and 5 percent previously charged. China’s tariffs primarily target U.S. farmers on products such as peanuts, sugar, wheat, chicken and turkey. Still, the struggle between the world’s two largest economies threatens to damage the global economy as a whole, and to increase prices across the board. Ultimately, even the real estate industry cannot be invulnerable to the turbulence, as the costs of building materials will eventually rise unless an agreement is reached. Moreover, the feelings of uncertainty can easily slink into the industry putting a damper on new-development plans.
