A press release
(http://dtn.fm/eWZO4) issued yesterday by the Commerce Department reported that
‘sales of new single-family houses in April 2016 were at a seasonally adjusted
annual rate of 619,000’. The estimates, prepared jointly by the U.S. Census
Bureau and the Department of Housing and Urban Development, indicated that
construction of new homes in the U.S. in April 2016 rose almost 17 percent
above the March 2016 figure of 531,000, and about 23 percent above the April
2015 number of 500,000. This is good news for eXp World Holdings, Inc. (OTCQB:
EXPI) and the over 1,100 agents and brokers who use its avant-garde cloud
brokerage.
According to a
Trading Economics analysis (http://dtn.fm/9w6EB), this ‘is the highest reading
since January of 2008 and the biggest gain since 1992. New home sales in the
United States averaged 652,450 from 1963 until 2016, reaching an all time high
of 1,389,000 in July of 2005 and a record low of 270,000 in February of 2011.’
‘The median sales
price of new houses sold in April 2016 was $321,100’ up by almost 10 percent
from a year ago, meaning that half of the newly constructed homes sold in April
2016 had a price tag of over $321,100. The arithmetic average sales price was
higher, at $379,800. According to numbers released by the National Association
of Home Builders (http://dtn.fm/fOB2E), the 619,000 annual rate of new homes
sold in April 2016 comprised 10 percent of the 6,069,000 annual rate of all
home sales. The annual rate of existing homes sold in April 2016 was 5,450,000.
These numbers bode
well for eXp World Holdings and its wholly-owned eXp Realty subsidiary. A
recent research report on eXp World Holdings (http://dtn.fm/O1sMz), issued by
Fundamental Research, stated that ‘the U.S. real estate brokerage industry is
approximately $62 billion per year… based on the assumption that approximately
90% of the 5.25 million homes are sold through agents at an average price of
$0.22 million per house, based on an average commission rate of 6%’. The
Commerce Department’s April numbers would raise Fundamental Research’s
estimates by about 15 percent.
eXp World Holdings
is set to benefit from this resurgence in the residential housing market in two
ways. First, its Agent-Owned Cloud Brokerage is attracting realtors in
increasing numbers. In March 2016, the number of member agents grew by over 10
percent to more than 1,100, the fastest rate ever, according to CEO Glen
Sanford in a MissionIR interview (http://dtn.fm/1wfRf). In 2015, eXp realtors
put through 3,667 transactions with a value of $889 million. The company
expects that figure to reach $1.5 billion this year. Revenues in 2015 were
$22.87 million with gross profit of $3.41 million. As Fundamental Research
point out, ‘the company can generate approximately 3% of total transactions in
revenues, implying $45 million in revenues from $1.5 billion in transactions a
year. Gross margin is estimated to be approximately 15%, implying gross profit
of $6.75 million’.
Second, eXp World
Holdings owns 90.5 percent of First Cloud Mortgage, Inc., which was set up in
July 2015 to originate and provide loan products and services to potential
homeowners. First Cloud will act as a mortgage broker, so no proprietary funds
of eXp or its subsidiaries will be required. As of March 2016, First Cloud
Mortgage was licensed to do business in Arizona, California, New Mexico and
Texas. It has pending applications in Georgia and Virginia. It is expected that
First Cloud Mortgage will broker between $50 million and $75 million in loans
over the next 12 months and over $100 million in 2017. Gross profit should fall
between 1.5% and 3.0% of transactions.
For more
information, visit the company’s website at http://investors.exprealty.com
About MissionIR
MissionIR is committed to connecting the investment community with companies that have great potential and a strong dedication to building shareholder value. We know our reputation is based on the integrity of our clients and go to great lengths to ensure the companies represented adhere to sound business practices.
Sign up for “The Mission Report” at www.MissionIR.com
Please see disclaimer on the MissionIR website http://www.missionir.com/disclaimer.html
MissionIR is committed to connecting the investment community with companies that have great potential and a strong dedication to building shareholder value. We know our reputation is based on the integrity of our clients and go to great lengths to ensure the companies represented adhere to sound business practices.
Sign up for “The Mission Report” at www.MissionIR.com
Please see disclaimer on the MissionIR website http://www.missionir.com/disclaimer.html
