Zillow Group CEO Rich Barton on ‘The Great Reshuffling’ and a ‘tectonic shift’ in real estate

Zillow Group CEO Rich Barton. (Zillow Group Photo)

People are spending way more time at home during the pandemic. And that’s good news for Zillow Group.

The online real estate giant on Thursday posted better than expected financial results for its second quarter with $768 million in revenue, up 28% year-over-year. The Seattle company’s stock was trading up more than 16% Friday, and has more than doubled in price since March.

Business was looking a little bleak for Zillow as companies across the globe grappled with the COVID-19 pandemic earlier this year. As part of its coronavirus playbook, Zillow slashed expenses by 25% this year, froze hiring across the company, and cut nearly all marketing spend.

But the U.S. housing market has bounced back, driven in part by record-low mortgage rates and the shift to remote work as people look for new homes.

That’s helping drive traffic to Zillow’s mobile apps and websites, which drew a record 218 million average monthly unique users last quarter, up 12% year-over-year.

On the company’s earnings call with analysts, Zillow CEO Rich Barton said this is the beginning of “The Great Reshuffling” as the pandemic changes the way we think about home. He said families are spending an average of nine more hours per day at home, while amenities such as a backyard have become more desirable than nearby parks and gyms.

Millions of people are considering upsizing, downsizing, getting closer to family, further from the office, and other home-related changes, Barton said.

“New habits and norms are forming rapidly right now. In many cases, as with working from home, we have found better, more efficient, and more healthy ways to live and work,” he added. “We’re not going to just go back to the way things were. This is a tectonic shift that we expect to play out for years to come.”

The real value of home has never been clearer. We’re grateful to post record Q2 results today but the bigger story is the tectonic shift in RE. People are moving & came to @Zillow in huge #’s. Once-in-a-generation tailwinds in RE & tech are converging w/ Z at the nexus.

— Rich Barton (@Rich_Barton) August 6, 2020

Fellow Seattle real estate giant Redfin also beat estimates for its quarterly earnings last week as the U.S. housing market rebounds. Redfin and Zillow are riding a trend of increased home ownership and low home turnover, which is driving demand with decreased supply. The U.S. Census reported last week that home ownership rates increased year-over-year from 64% to 68%, the highest level since 2008 and one of the largest increases in history.

Barton said Zillow is well positioned to capitalize not only on the recent real estate tailwinds, but also with the overall shift to digital that is accelerated by the pandemic. Zillow is investing in the virtual home shopping experience with 3D home tours and other online tools that are seeing increased usage in recent months.

“No company in our industry is better positioned than Zillow to deliver on seismic shifts in technology adoption,” the CEO said. “Zillow recreated what it meant to search and find real estate, and we are now investing to recreate and digitize the transaction itself.”

Barton co-founded Zillow back in 2005 — he returned as CEO last year — as the company built a leading media business, helping connect homebuyers with realtors. But it made a big shift in 2019 with the launch of Zillow Offers, or what Barton refers to as “Zillow 2.0.”

Zillow is now buying and selling homes via Zillow Offers, which the company said can one day produce $20 billion in annual revenue.

(Zillow Photo)

Zillow paused Zillow Offers as the COVID-19 outbreak began, but the program is now active in all 24 markets where it was operating.

Zillow’s “Homes” segment, which includes Zillow Offers, brought in $454 million in revenue last quarter with a loss of $80 million, before income taxes. The company sold 1,437 homes and purchased 86 homes, ending the quarter with 440 homes on its balance sheet.

Barton said the pandemic “highlights some of the benefits of working with Zillow Offers,” which lets customers request cash offers for their homes directly from Zillow on its website.

“Zillow Offers is likely helping grease the skids of the great reshuffling,” he said.

Revenue from the company’s Premier Agent arm was down 17% to $192 million — the decrease was primarily due to a discount Zillow offered agents in March — but the business also hit record high retention rates and sales in June.

“We feel like we are the outsized beneficiary of agent retention right now as they hunt for new customers, simply because people have fewer places to go to shop and agents have fewer places to get visibility where customers are,” Barton said.

Zillow said it also plans to increase marketing and advertising investments in Q3 compared to Q2 levels.

Barton, who was a venture partner at Benchmark and is a board director at Netflix, said real estate in general has been a “laggard in adoption of modern technology,” even before the pandemic. And he believes Zillow is well positioned for the industry’s next evolution.

“I believe we are at the beginning of a cycle of complete re-platforming …  and a new foundation for the industry being built,” Barton said. “We are really excited about this. And we’re excited that we’re in a position to be able to just have the talent and hire the talent that is able to dream up what that looks like and make it all work together.”

Speaking of talent, Zillow last week introduced a new policy allowing about 90% of its employees the option of working from home, at least some of the time, indefinitely. It significantly extends a move the company made at the end of April in response to the coronavirus pandemic.

GeekWire reported Thursday about the impact of remote work policies on downtown Seattle where Zillow and other tech companies are based.

View the original article here

from WordPress https://cybersonday689753477.wordpress.com/2020/09/07/zillow-group-ceo-rich-barton-on-the-great-reshuffling-and-a-tectonic-shift-in-real-estate/

Univ. of Washington will shift more than 90% of classes online this fall

The “Amazon Auditorium” at the UW’s computer science school. (GeekWire Photo / Taylor Soper)

The University of Washington will move more than 90% of classes online this fall.

UW President Ana Mari Cauce announced the latest guidelines in a letter to students Thursday. A majority of classes will be remote with the exception of instruction that cannot take place virtually. Cauce said these are likely the “final plans” for fall quarter, though she cautioned that guidance could change depending on the trajectory of the pandemic.

GeekWire previously reported last month that 80% of classes would shift online due to the pandemic.

In-person classes will be held with safety measures and physical distancing. Students are allowed to live on campus but must wear face masks. UW is offering access to COVID-19 tests to those experiencing symptoms.

“While we are all disappointed that the continued spread of the virus has limited our ability to safely provide more in-person teaching, we continue to be excited about the learning and discovery in store for our academic community,” Cauce wrote. “Our faculty, teaching assistants and academic support staff have been engaged in developing innovative and creative approaches to online learning. We look forward to a meaningful and academically-rich autumn, in which we all do our part to protect our community’s health and safety.”

COVID-19 cases last month rose in Washington state and King County, where the UW is located. More than 60,000 people across the state have tested positive for the virus, including more than 16,000 in King County.

The UW has had 265 COVID-19 cases at its Seattle campus, including 154 around Greek Row.

In June, Washington state issued new safety guidelines for institutions of higher education as they prepare to re-open for the fall term. Other institutions around Seattle including the University of Puget Sound and Seattle University are shifting most coursework online this fall.

Washington Gov. Jay Inslee on Wednesday urged schools to pursue remote learning, advising that it would be unsafe for students to return to the classroom across most of the state, including schools within local tech hubs such as Seattle, Bellevue and Redmond. Nationwide, school districts in cities including Los Angeles, Miami and Chicago are teaching online.

The shift online could be a financial hit for the UW and other schools. It costs money to transition classes online, as the UW did for 98% of its courses last term. And colleges lose money when students aren’t paying for room and board. The University of Michigan estimates it could lose up to $1 billion by the end of the year, NPR reported. Financial duress led Stanford to cancel 11 varsity sports programs after this year.

The Trump administration threatened to take away visas from international students if they did not attend some university classes in person, but reversed course on that policy last month.

View the original article here

from WordPress https://cybersonday689753477.wordpress.com/2020/08/21/univ-of-washington-will-shift-more-than-90-of-classes-online-this-fall/