RE/MAX IPO signals confidence in housing
When RE/MAX filed for its initial public offering Monday, the brokerage signaled to the markets that it believes the housing recovery is here to stay, analysts claim.
"RE/MAX going public means that the market has turned around and the company sees it as a reality," explained Brendon DeSimone, a national real estate expert and broker, who follows the space closely.
The real estate brokerage firm is setting the pace for other competitors in the market – which means housing has, indeed, found its footing, DeSimone suggested.
When asked about RE/MAX's move, he added, "They think that in order to compete and capture real estate sales that are expected to happening over the next few years, they need to build up their franchise."
DeSimone firmly believes the IPO is intended to beef up RE/MAX’s presence around the nation, which will generate capital and amplify the company’s current franchise to take advantage of the market over the next few years.
RE/MAX’s IPO filing is a bigger sign of the changing times in real estate. Other companies have jumped on the recent boom, especially Zillow (Z) and Trulia (TRLA) — both stocks have been impressively outperforming expectations.
Zillow is continuing its expansion efforts, embarking on its acquisition of StreetEasy, a real estate website, for $50 million.
The transaction will allow Zillow to continue to grow its overall audience sharing, pulling homebuyers from one of the busiest real estate markets in the nation.
Interestingly, when one takes a look at the HW 30 index — a compilation of key real estate/mortgage stocks provided by HousingWire — Zillow's performance year-to-date is up more than 206%, and is also up nearly 30% for the month.
However, today’s reading shows Zillow’s stock is down more than 4%.
On a similar note, Trulia’s stock has generally outperformed, up nearly 160% year-to-date, and also up almost 20% for the month.
But today’s reading shows the firm’s stock is down nearly 2%.
Sterne Agee vice president and senior equity analyst Jay McCanless attributes the drop in the real estate-related stocks on Monday to the 10-year Treasury rate being only up four basis points as well as the market anticipation about the Federal Open Market Committee minutes, which will be released Wednesday.
The company has outperformed on the screens, with shares soaring as high as 22% during its market debut.
Realogy’s year-to-date performance is up 4.25% and also up 26.14% for the year. Currently, the company is up 0.54% when looking at morning trading.
"Flow of information is so readily available these days that people are jumping really quickly into the market. While they may not want to buy tomorrow, they want to buy in the future since companies sitting on the sidelines are now coming back out," DeSimone said.