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Online Real Estate Sector Improving

Posted on Friday, Feb 17th 2012

Analysts believe that the housing market may have finally bottomed out last year. According to real estate research firms, 2011 home prices fell 2.1% over the year. Researchers believe that during the current year, the housing market will see growth of 0.2% across all markets. Another report estimates growth to continue into 2013, when home prices will grow 3% through 2016. With unemployment finally dropping and the economy picking up, home shopping may soon be on the rise again.

Zillow’s Financials
Zillow’s (Nasdaq:Z) Q3 revenues of $19.1 million more than doubled and were ahead of the market’s expected revenues of $17.1 million. EPS of $0.05 also managed to beat the Street’s target of $0.03 for the quarter.

For the full year, Zillow has projected revenues of $63 million-$64 million, compared with revenues of $61.7 million.

Zillow’s Mobile Offerings
Zillow continued to expand their mobile offerings and recently launched the Android version of their Mortgage Marketplace App. The app gives consumers access to the payment calculator that helps them estimate their monthly payment and helps shoppers narrow down home searches based on customized filters, calculate refinance options, and personalized loan quotes.

Earlier last quarter, they also released an Android Tablet and a Kindle Fire app that lets shoppers search for homes, view photographs through Google Street View, find estimated prices and share information using social networks such as Facebook and Twitter.

Zillow’s Social Network Expansion
Realizing the importance of social networking, Zillow recently launched Neighborhood Advice on their website. Neighborhood Advice is a social home-shopping experience that uses the Facebook platform to help buyers and renters interact with their Facebook contacts to understand about neighborhoods. Zillow consumers can activate Facebook Connect and see where their Facebook friends live and get inputs on them about the area.

Zillow’s Acquisitions
Zillow also announced plans to acquire California-based Diverse Solutions, a marketing tools startup, for $7.8 million. Diverse Solutions is known for their property search and listing tools that are used by real estate agents to put on their websites and blogs. Zillow hopes to leverage the acquisition to help real estate agents market themselves online using web and mobile tools.

Their stock is trading at $33.03 with a market capitalization of $902.59 million. Its stock peaked at $60.00 on listing in 2011.

Move’s Financials
Another real estate player, Move (Nasdaq:MOVE) saw Q4 revenues fall to $47.3 million from $48.9 reported a year ago. Net income, however, grew to $0.09 compared with $0.01 in the previous year. Move ended the year with revenues of $191.7 million, compared with $197.5 million in 2010. Net income of $0.08 per share was significantly higher than the loss of $0.54 reported a year ago.

During the year, Move’s maintained their leadership as the most trusted online real estate site and reported more than 2.8 billion minutes of viewership accessing 6.0 billion total pages. Move also saw significant traction within the mobile segment, where the number of leads delivered to real estate professionals in 2011 grew by 400% over the year driven by the iPad, iPhone, Android, and Windows apps.

Move’s Expanding Offerings
In the recent quarter, also expanded their offerings to include rental apartment communities to their website. Consumers can now access for rental listing besides sales listings.

Move’s International Expansion
Move is also expanding their international footprint and became the first U.S.-based real estate site that now offers information in multiple languages and features such as currency and measurement conversions. The site is now available in 11 languages and offers details on 20 currencies. They also began international listing and now have listing in more than 13 countries including Spain, France, and Italy.

The stock is trading at $9.10 with a market capitalization of $347.38 million. It touched a 52-week high of $10.24 in July 2011.

Trulia’s Financials
Meanwhile, the market is abuzz with news that the private player Trulia may be looking out for an IPO listing soon. The San Francisco–based real estate search company recently hired a CFO and a full-time general counsel to strengthen their management team, and these positions will be needed when they go public.

Trulia is said to attract more than 17 million unique visitors monthly. Their financials are largely unknown, but the company has reportedly broken even over the last year.

Trulia’s Social Networks
Of late, Trulia has been expanding their social networking features. They recently added a social recommendation tool for that helps consumers select a real estate agent based on their recommendation by the consumer’s Facebook friends and connections. The recommendation will also act as an equivalent of a word-of-mouth referral for real estate agents and brokers.

Although the real estate players will benefit from the improved housing market situation, I do believe that their investments in expanding within social networks and improving mobile access for their consumers will help them expand their traffic.

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