The nearly two months since the United States began shutting down large swathes of the economy to fight COVID-19 have been a whirlwind. The financial repercussions are only just beginning to be felt, as are the changes in the long-term activity of consumers and businesses. But for many it has been a crisis in a microcosm.

This was the case with a small, tech-driven real estate broker Red tuna (NASDAQ: RDFN). Unsurprisingly, buying activity which was stronger than ever in January and February 2020 suddenly reversed in March. Surprisingly, the resumption of activity on its real estate platform since then has been just as spectacular.

All in all, the company posted an impressive performance in the first quarter of the year. While Redfin has cautiously released a forecast for declining year-over-year revenue in the second quarter, question marks abound. But some things are certain: Buying a home in the future seems to change forever due to COVID-19.

First a few figures

While the company’s growth trajectory has changed – at least for the immediate future – the first quarter of 2020 will be important as it sets the peak against which future results are measured. And Q1 was another big win for Redfin, at least until mid-March when the wheels started pulling off the wagon.

Data source: Redfin.

In total, Redfin’s core brokerage services revenue increased 26%. Redfin’s sales from buying and selling homes on its own were up 276% to $ 79 million, and other services like loans and securities were up 39%.

Basic buying and selling in Redfin’s digital marketplace, however, is a key indicator of where businesses are heading. For the week ended April 5, CEO Glenn Kelman said home purchase demand was 68% of what it was in January and February. Surprisingly, that figure had improved to 96% on May 3. Demand to sell is another story. Activity on new home listings had fallen to minus 52% in mid-April year-on-year and improved to minus 39% by early May. Progress, yes, but without a more pronounced increase in real estate listings, buying households will soon run out of inventory.

Mass migration to the suburbs?

In short, as real estate activity rallies, it will be a bumpy race. To strengthen the balance sheet, Redfin raised new capital in April ($ 110 million in common and preferred shares), giving the company a total of $ 426 million in cash and cash equivalents. Kelman and his company believe this should last until the end of 2021 at the current rate of crisis-level cash consumption.

But monumental changes could emerge in the wake of the pandemic. First, the migration continues to virtual purchases. Redfin’s share of the total home purchase market improved further by 0.1 percentage point in the first quarter (to a total of 0.93%). Conversion using new digital tools (virtual tours, video conferencing, etc.) has also increased, resulting in better gross margins. And of course, Redfin’s discount sale is still convincing (1% of the price of a home for customers who use Redfin for buying and selling a home, 1.5% for everyone else) .

But the biggest change is the migration from larger cities to smaller ones – a trend that had started in recent years but could seriously gain momentum as the world begins to piece together chunks of the economy after COVID – 19. Kelman explained:

Before this pandemic, the housing affordability crisis was already pushing people from big cities to small ones. From now on, more permissive policies regarding remote working and a growing distrust of proximity are likely to accelerate this trend. More people will be leaving San Francisco, New York, and even Seattle, some for nearby cities like Sacramento and Tacoma that are close enough to endure a weekly visit to the office, others for completely secluded lives in Charleston, Boise, Bozeman or Madison. .

There is data to back it up. Searches for housing in cities with fewer than 50,000 inhabitants have increased by 71% since March 15. This trend may subside as concerns about infectious disease subside, but I personally believe that a new standard has been set. Recent announcements like Twitter (NYSE: TWTR) to say that remote working is now an option for all its employees in the future could be the beginning of a trend. For big tech companies, making remote working possible for mass employees isn’t a far-fetched idea. The infrastructure is there to support it, which means employees are now free to live wherever they want.

Besides the fear of falling ill, the high cost of living in the city makes moving to the suburbs even more restrictive. And the type of worker who might take such a step are tech-savvy and accustomed to doing business over the Internet. These are all trends that favor Redfin if it is a lasting change in homeownership.

Of course, that doesn’t mean the Redfin stock is for everyone. The company may be in high octane growth mode (although the second quarter forecast calls for a 4-9% drop in revenue), but this growth is necessary because the rate of cash consumption remains a serious consideration before making a purchase. Nonetheless, this little brokerage technologist remains an asset in my portfolio (albeit small at around 1% of my net worth to invest) as he continues to disrupt the status quo in buying and selling a home.