The red hot housing market has hurt Opendoor’s (NASDAQ:OPEN) business in the near term. As the housing market starts to cool off, OPEN stock will rebound in a big way.
In a nutshell, we’ve been in a seller’s market. There are buyers everywhere, limited inventory, bidding wars and as a result, houses are selling for enormous premiums.
In a market like this, home sellers simply won’t be interested in using Opendoor to sell their house at fair value.
They’re going to take their chances on the booming market.
But that will change soon. Markets are beginning to cool off.
Home price growth has flatlined, and we’re seeing new home sales drop — buyers are being priced out of the market. The number of houses on the market is down 20.6 percent from this time last year, and the median house price shot up over 23 percent from May of 2020 to May of this year.
As a result, sales have dropped in many places across the country — in the Midwest, where houses are more affordable, sales actually rose.
Buyers just can’t keep up with the rate at which house prices are rising in most of the country.
Because of this, we expect the housing market to cool significantly in the coming months. We will then start to see a more reasonable balance between buyers and sellers. And in that balanced market, more people will turn to Opendoor.
At the same time, Opendoor has dramatically expanded its geographic presence in recent months.
This expanded presence, coupled with a more favorable housing market environment, will spark big growth for the company.
We expect that second-half numbers will push OPEN stock back to its $30 level.
OPEN is one of my top picks in the Everything E–Commerce megatrend. Yes, long-term, Opendoor will score investors big returns, but it’s far from the only hypergrowth stock on my radar.
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On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
