The stock market was having a generally weak day on Wednesday, thanks to some hotter-than-expected inflation data. And real estate stocks were especially hard-hit. Real estate investment trusts, or REITs, were down sharply as a group, as high inflation reduces the probability of further Federal Reserve interest rate cuts. Additionally, leading real estate technology platform Zillow Group was sharply lower after missing earnings expectations.
On the other hand, Redfin (RDFN 8.80%) was a standout, with shares up by 9% at 10:45 a.m. ET after rising by as much as 11% earlier in the day.
Redfin's move isn't related to its earnings. In fact, its fourth-quarter results aren't set to be released until Feb. 27. And at first thought, you might expect Redfin to be under pressure today. After all, higher-than-expected inflation means that mortgage rates are likely to remain higher for longer, and this can weigh on the housing market.
However, there's one big news item driving Redfin stock higher, and it came from Zillow of all places.
Along with Zillow's fourth-quarter earnings report, Redfin and Zillow jointly announced a partnership. Under the terms of the agreement, Zillow will become the exclusive provider of multifamily rental listings on Redfin and its owned rental sites, Rent.com and ApartmentGuide.com.
There are about 50,000 multifamily properties (defined as those with 25 or more units) on Zillow's platform today, and by providing Redfin's multifamily listings, it will greatly increase the reach of properties that advertise through Zillow.
To be clear, the financial details of the partnership weren't disclosed. In other words, we don't know exactly what type of revenue split or fee is involved. Apartment owners pay Zillow to advertise on the platform, so it's fairly certain that some money will flow Redfin's way for putting the listings on its platform.
Redfin CEO Glenn Kelman said in the press release announcing the partnership that it could increase the overall traffic to Redfin and the profits from its rental business. The syndicating of Zillow's listings to Redfin and its rental sites is expected to begin this spring.
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