After five years of lackluster reports coming out of the housing market nationally and a general wait-and-see approach from many outside the real estate trenches, it appears that we are officially turning the corner into a new cycle.
With the highly successful IPO of Realogy Holdings last week, most industry observers are saying that the broader market is now ready for the recovery. Realogy, which owns the majority of major international real estate brands and whose franchisees and subsidiaries represented 26 percent of the U.S. real estate transactions in 2011, is only the most recent of several high-profile public offerings in the last 12 months.
In July 2011, Web pioneer Zillow went public and competitor Trulia joined them in September of this year. Both join longtime publicly traded Move Inc., which owns Realtor.com. These “Big 3” real estate search sites control a growing plurality of web traffic on a national scale.
The rise of Internet-based real estate systems such as these have left some in the industry scratching their heads in wonder that three websites could generate more than $2 billion in investor value. Others, however, have noted the natural leverage such companies can expect to bring into play over the next four years as the concentration of economic power of “bricks and sticks” real estate firms continues to erode.
Lastly, stocks of major U.S. builders have largely seen consistent upward mobility in 2012. Last week’s enthusiastic reception of Realogy’s “bricks and sticks” stock will likely cement the legacy of 2012 as a rebound year for real estate.
With Wall Street’s clear interest in the varied types of real estate-sector stocks, industry watchers will now be turning their eyes upon the response from Washington with regard to mortgage lending regulation and the fallout from Dodd-Frank (topics of discussion in the presidential debates this month). With foreclosures on the wane and bank real estate holdings at or near historic lows, all the pieces seem to be falling into place for housing.
And you know what they say – housing often leads the broader economy in recovery.
(Watch a highly informative CNBC interview with Realogy CEO Richard Smith on Oct. 11, the day of the public offering, where he give his view of this subject.)