Real estate stocks jump after blue wave election
Many of the Democrats elected on Nov. 3 oppose the U.S.-Iran war. A resolution could help lower mortgage rates and provide relief for cost-strapped homebuyers.
Real estate stocks surged in the wake of the midterm elections in what may be a sign of investor optimism for the beleaguered industry.
Most real estate stocks up post-election: The Dow Jones was trading about 3% higher on Nov. 4, and nearly all stocks related to residential real estate were also up. Opendoor led the way percentage-wise with a 15.5% jump, followed by Real REMAX Group (up 11.8%) and Zillow (up 10%).
Other real estate brokerages and companies were generally up between 5% and 8%. Offerpad, which released its Q3 earnings report earlier this week, was an exception, with the iBuyer's share price down 3%.
Still 'a lot of uncertainty' about the Iran war: Though investors appeared to be initially optimistic about the big wins posted by Democratic candidates across the country, the ongoing U.S.-Iran war remains an important wildcard, according to Jake Krimmel, senior economist at Realtor.com.
"Many Democrats have been vocal critics of the conflict, which has sparked inflationary oil supply shortages. A resolution would likely improve oil supply, helping to ease price pressures and potentially providing relief for mortgage rates," Krimmel said. "However, a lot of uncertainty remains. Wanting the conflict to end, and finding terms that work for all involved are two different things."
Share prices still below last year's levels: Wednesday's jump in real estate company share prices is significant because many of the firms were previously trading at 52-week lows. AGNT, CoStar, Real REMAX Group and Zillow shares have fallen more than 50% in the past year, while shares of Opendoor and Offerpad dropped over 70%. Compass stands as an exception, posting an increase of nearly 20% year-over-year.
The widespread deterioration escalated in September and October when 30-year mortgage rates rose above 7%, ensuring that affordability concerns will continue to drive strong headwinds for homebuyers through the end of the year and possibly well into 2027.
A big week for earnings: These post-election share price gains will be tested later this week as several real estate companies prepare to announce their earnings results for the third quarter. Zillow will be first, with its report slated for release Wednesday afternoon. AGNT, Compass, Opendoor and Real REMAX Group are scheduled to release their Q3 earnings reports on Thursday.