Bargains in real estate are exceedingly rare these days, but one corner of the market is well below its recent asking price. Shares of Zillow Group and Redfin Corp. are down an average 28% over the past six months, while shares of Opendoor are down more than 45%. Buyers should look before they leap.
Both Zillow and Redfin reported strong results on Thursday with revenue coming in above Wall Street’s forecast. Recent market dynamics have proven especially good for their so-called iBuying, or automated home flipping, businesses. Zillow showed 5% returns on a per-home basis, even after interest expense—well above its stated target returns of plus or minus 2%. The online real-estate company said it purchased a record number of homes in the quarter, while Redfin reported an 80% increase in home transactions year-over-year.