Zillow's IPO Bonanza: A Step Forward for Real Estate?
Then again, it could just demonstrate investors' unending love affair with dot-com suitors.
Zillow Inc., an online listings and public records depot for real estate, debuted as a publicly traded company on the Nasdaq at a valuation of nearly $1 billion, according to Inman News. Shares rocketed from the initial public offering price of $20 to $35.77 during the course of its first day – a 79 percent jump, reports the Los Angeles Times.
While it's too soon to proclaim Zillow's IPO success a boon to the housing market, its achievement still carries symbolic value.
Soon after its founding in 2005, the Seattle-based company made headlines with its "Zestimate" home value product, an automated valuation model (AVM), based on public records, which is designed to guide consumers on their home purchase. It emerged at a time when inflated home appraisals would soon become emblematic of the mid-2000s run-up to the housing crisis, and home valuation was emerging as a hot-button issue for thousands of homebuyers saddled with volatile mortgage products.
The Zestimate came under fire from both Realtors and consumer groups who accused the company of misleading homebuyers, and tempers would only flare as the housing crisis took center stage in the unfolding recession drama.
But after several tweaks to the Zestimate algorithms and a retooling of the company's assets, Zillow has emerged as an enticing option for investors looking to funnel money back into a constellation of growing online real estate companies.
As Inman News reports, several other online real estate companies have benefited from a recent surge in popularity. Shares in Move.com, a real estate listings site (which provides listings to AOL Real Estate), rose 12 percent on the same day that Zillow went public, and has enjoyed a 42 percent climb since hitting a stock low of $1.80 this year. Similarly, listing site ZipRealty has experienced a boost in recent weeks. Meanwhile Zillow competitor Trulia is preparing for its own IPO.
But will Wall Street's enthusiasm for the online real estate industry have any effect on consumer confidence? Despite tight credit restrictions and slumping home values, an April Gallup poll shows that 69 percent of respondents still think now is a good time to buy -- virtually the same percentage as in 2009. The reality, however, still falls short of both Main Street and Wall Street's expectations -- home sales in 2011 are on pace for the worst year since the housing bubble burst, according to the most recent data release.
For more on related topics, see these AOL Real Estate guides:
- How to Shop for Your First Home
- Surprise Home Buying Wisdom
- Don't Be Surprised by Costs of Homeownership
- How to Find a New Home Online
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