SAN FRANCISCO—The coronavirus and resulting economic slowdown have not stopped housing prices from continuing to appreciate, and the founder of Zillow is offering a reason for why.
Rich Barton, who is also CEO of Zillow, the online real estate marketplace, said the country’s real estate market is going through “The Great Reshuffling.” Barton, who is also a co-founder of Expedia and Glassdoor, told Inc.com he believes the current pandemic has permanently reshaped the way people live and work, and that's having a profound effect on the residential real estate industry.
“Residential real estate is mostly a seller's market. Meanwhile, commercial real estate is hurting for customers,” noted the Inc. report. “Early in the coronavirus, Zillow expected major revenue declines and took some precautionary measures. It reduced costs 25%, in part by freezing hiring and cutting marketing spend. It also paused its Zillow Offers program in which the company buys homes from sellers for cash and then resells them.”
But as Inc. reported, none of that turned out to be necessary, with Zillow reporting second quarter revenues of $768 million, up 28% from the same time last year.
The explanation, Barton told Inc., is the nationwide trend toward remote work brought on by social distancing concerns. Seventy percent of Americans report working from home at least some of the time, and all Americans are spending an average nine hours more at home per day than they did before, Barton noted.
‘New Priorities’
“And that means people have new priorities in where they want to live. A big backyard and room for a home office is more important these days than a short commute or proximity to a bustling downtown,” Inc. reported. “Some employees, now planning to work from home permanently, want to move to a different city, or out of the city altogether to suburbs or to the country, or perhaps to a different state. This is the Great Reshuffling, but–except in urban centers such as Manhattan–demand is far outstripping supply. Home buyers want more space and to move into new areas while homeowners are hanging onto their homes amid pandemic-inspired uncertainty. That dynamic is pushing home prices higher, even in these economically troubled times.”
Meanwhile, Inc. added, commercial real estate has taken a battering as employees continue to work remotely, and many employers -- including Zillow -- extend remote work arrangements indefinitely.