Denver Real Estate

Here is a look beyond Denver real estate, as fellow Realtor Mike Bouma of Oshawa Ontario shares his perspective on the market at large.

Trulia had its initial public offering (IPO) last week. If you don‘t know what Trulia is it is a website where you can search for listings all over the United States. The stock traded up over 40%, which translates to approximately $24 a share. Not bad for a company in the red. That’s right Trulia has yet to turn a profit, worse off they’ve lost about $7.6 million in the first half of this year. And Trulia isn’t the only one…. Zillow, a similar site, which has traded publicly since last July, was riding on a $6.8 million dollar loss at its IPO. (To be fair it is now turning a small profit).

So why are these real estate listing companies so hot? Facebook stock had the bottom fall out so it’s must not be just another tech boom or social media infatuation, the housing market isn’t exactly gangbusters in most of the country, and these companies aren’t turning profits. What is the cause of these substantial investments?

I believe Wall Street is betting that a recovery and normalization of the real estate market is just around the corner. The housing market has been in recovery for the last few years, but that recovery has been at a snail’s pace. This year we have started to see some more encouraging numbers that could indicate some traction being felt in the market in general. The Federal Housing Price Index posted home price increases of 3% in the second quarter on a year-to-year basis, and the National Association of Realtors has recently put out numbers showing that the homes sales have hit 4.82 million this year (annualized through August). That’s still not where we’d like to see home sale numbers, but it’s up almost 10% over 2011!

Could these real estate listing websites be a leading indicator of consumer confidence coming back to the real estate markets? Only time will tell, but my guess is that we’ll look back and see some interesting correlations.

Mike Bouma is a second generation Real Estate Broker who has been involved in the ‘family business’ since 2004. Visit http://www.bouma.ca for more information.