Zillow’s status has been moved from Hold to Buy by Deutsche Bank. Its new price target is $106, a 20% increase.
The reason for the recent share price spike can be linked back to record-low mortgage rates recorded earlier last month.
Zillow reported that it has outpaced its original Q2 predictions, with revenue increasing by 28% year-over-year, and Zillow Offers revenue up 82% after the operation was put on hold for a couple of months earlier this year due to the pandemic and lockdown orders.
Zillow shares are up 4.6% pre-market to $92.50.
On the rental front, landlords are offering more incentives and concessions this year over last year. The amount on concessions reported has nearly doubled across The States since the beginning of the pandemic.
Zillow economist Joshua Clark, said:
"Before the pandemic, rent growth was accelerating and the nation was seeing concessions dwindle. That trend reversed sharply after the pandemic hit in February. In a softer rental market, landlords are trying to push the right button to bring renters into their space."
The markets where concessions are most common are Washington, D.C., Charlotte, and Austin.
Bevan White, vice president of marketing at Pegasus Residential
"We have slightly increased concessions in some markets, and we have also focused on increasing the availability of smart homes as a way to add value to a unit instead of simply offering free rent.”
Clark explained that concessions can be an indicator of a coming drop in price if landlords are offering them before reducing rent. If the concessions don’t work, then they will drop the price of rent. A rent price drop could last longer than a recession in the market, which means less money for the landlords in the long-term.