As Wall Street Slides, Major Real Estate Players Go With It

Shares in major publicly traded real estate companies — including Compass, Opendoor, Offerpad and Zillow — continued to drop on Monday as investors reacted to rising interest rates.

Wall Street continued its month-long slide into correction territory on Monday, with shares for the country’s largest real estate brands following suit.

Shares for some of the biggest publicly traded real estate companies were all deep in the red during early trading hours to start the week.

The drop continued a bad month not just for the publicly traded real estate companies but for the broader market in general, and analysts point to rising interest rates as a major reason for one of the worst months in recent memory.

As of last week, a number of major indices had suffered their worst monthly performance since the Great Recession, according to analysts at Charles Schwab. 

While the major indices were all down by midday Monday, stocks for some of the major real estate brands led the way to continue an abysmal start to 2022.

  • Compass (COMP): –9.18 percent (23.56 percent decline year-to-date)
  • Realogy (RLGY): –2.53 percent (9.34 percent decline year-to-date)
  • Offerpad (OPAD): –11.33 percent (53.41 percent decline year-to-date)
  • Redfin (RDFN): –10.86 percent (34.23 percent decline year-to-date)
  • Zillow (ZG): –5.68 percent (23.49 percent decline year-to-date)
  • RE/MAX (RMAX): –2.53 percent (7.93 percent decline year-to-date)
  • Opendoor (OPEN): –10.03 percent (43.46 percent decline year-to-date)

Over the past week, Offerpad shares shed over 20 percent of their value, and the company’s market cap dropped below the $1 billion mark. It now stands at $765 million compared to $2.7 billion when it went public last fall, a 72 percent drop.

Analysts attribute the declines to the Federal Reserve’s plans to pull back support that brought in strong market conditions at the onset of the coronavirus pandemic in early 2020. 

Withdrawing support is the Fed’s attempt at tamping down inflation that has been on the rise globally over the past year, led by the U.S.

It has led to the reality of housing prices continuing to skyrocket while shares of major brokerages plummet. Investors moving away from real estate stocks could indicate they expect a slowdown in the housing market this year.

There are indications that buyers have been undeterred by interest rates that are already rising, with applications for purchase loans climbing early this year. Still, that number was down 13 percent from the prior year, according to the latest Mortgage Bankers Association’s Weekly Applications Survey.

Fannie Mae also predicted that rising rates would begin to price many buyers out of the market this year.

This is an ongoing story that will be updated throughout the day.

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