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Compass Files to Go Public

Compass’ Revenue Climbed 56% Last Year

Compass, the tech-powered real estate brokerage firm, filed to go public earlier this week. As housing prices surged last year, the company’s revenue climbed 56% to $3.7 billion. Compass also had $270 million in losses last year, but that was an improvement from 2019 when its losses were $388 million.

Compass has over 19,000 agents on its platform. To date, these agents have closed more than $300 billion worth of deals and have worked with over 275,000 homebuyers and sellers. The New York-based company is the largest independent brokerage firm in the US, measured by gross transaction volume. It has about 4% market share in the US.

Understanding Residential Real Estate Trends

The residential real estate market has boomed over the past year. Interest rates have been low and people have sought more space to work and social distance at home due to COVID-19. Now, some companies and workers have decided to keep remote work structures in place for the long run, so people are continuing to purchase homes where they plan to work remotely even after the pandemic subsides.

The supply of new homes has not been able to grow as quickly as demand, which has caused home prices to surge. In December 2020, home prices across the country rose 10.4% compared to the same month a year prior. This was the largest annual growth rate in over six years.

Shares of Zillow, Redfin Have Surged

Investors are eager for Compass to begin trading. Though tech-powered real estate companies had their share of difficulties at the onset of the pandemic, they have seen their share prices and demand for their services surge since then.

Online real estate site Zillow (ZG) has seen its stock price triple over the past year. Shares of real estate brokerage firm Redfin (RDFN) are up nearly as much. Though it has been a year of uncertainty and conditions could change, many are hoping that Compass’ IPO will provide another way to invest in a company seeing gains from the current residential real estate boom.

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