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CoStar Group (CSGP) Launches New Approach to Listing Apartments

Zacks Equity Research
·4-min read

CoStar Group CSGP owned Apartments.Com recently announced the launch of Listing of the Future, a new approach to listing apartments.

Listing of the future is a unique initiative by Apartments.Com that addresses the prevalent issues in the industry currently.

Presently renters searching for properties have access to only building-wide information and photos. The majority of listings show photos and floor plans only for sample units and not the exact unit that the renter is considering.

With the launch of Listing of the Future, Apartments.Com becomes the first online rental network to offer customers the option of presenting unit-specific information for every single unit in the community, including photos of floor plans, walkthrough videos and 3d tours and more.

CoStar Group, Inc. Price and Consensus

CoStar Group, Inc. Price and Consensus
CoStar Group, Inc. Price and Consensus

CoStar Group, Inc. price-consensus-chart | CoStar Group, Inc. Quote

CoStar Group’s New Approach to Aid Drive Market Share

Apartments.Com has developed the new approach after analyzing the current consumer demand through a survey of 45,000 renters, out of which 94% want unit-specific floor plans and availability, while 82% want specific information about the location of units in a building and 63% are interested in the unit’s view.

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Listing of the Future provides all of this information while eliminating time-consuming conversations between prospective renters and property managers. This leads to higher quality leads for each listing.

This separates Apartments.Com services from its competitors and aids it in winning market share in the online network market space.

However, rising inflation and the recent Fed rate hikes can hinder the company’s plans to implement the new approach as demand for property renting might decline amid current market volatility.

The Federal Reserve has recently raised interest rates — the highest since 1994 — to counter the rising inflation without sending the economy into recession. However, the recent move may push up rent, a major component of consumer price increases.

The hike in interest rates has increased mortgage rates, and there is also a huge risk of mortgage default, which might cripple the economy.

As a result of rising mortgage prices, which are now in many cases higher than rents on the same homes, consumers are financially forced out of home ownership. As a result, many people have preferred renting rather than buying a house, which in turn is driving the prices of rent.

Rising inflation is currently forcing the underbuilding of new properties relative to demand in the United States. The elevated mortgage rates are discouraging homebuilders from starting new projects, which will lead to a reduction in number of properties people can actually rent.

However, Apartments.Com is positive about the company’s revenue growth despite the current volatility. The company is experiencing more and more traffic from renters on its online platform while the same is decreasing for several of its competitors. In the online renting space, the chief competitors include the likes of Zillow Group, Inc. ZG, Redfin Corporation RDFN and AppFolio, Inc. APPF.

Due to tighter market conditions, the advertisement budgets of competitor companies are decreasing, which is resulting in declining brand awareness.

Apartments.Com is capitalizing on this situation by increasing its advertisements and brand promotions on various social media platforms like Tiktok, Instagram, Snapchat, YouTube and Facebook.

As a result, brand awareness about Apartments.Com has been increasing among customers. Along with this, better pricing power amid market volatility and growing sales would help the company generate double-digit revenue growth in the second half of the year. This is evident from its stock price performance compared with its competitors.

Zillow Group shares have fallen 49.1% year-to-date (YTD) compared with the Zacks Internet Services industry’s decline of 25.1%.

Redfin Coproration’s shares have tumbled 78.3% YTD compared with the Zacks Real Estate Operations industry’s decline of 32.6%.

AppFolio shares have slumped 22.9% YTD compared with the Zacks Internet-Software industry’s decline of 53.3%.

CoStar Group stock, which currently carries Zacks Rank# 3 (Hold), has fallen 26.8% YTD compared with the Zacks Computer-IT Services industry decline of 31.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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