Homes.com isn’t going anywhere, CoStar says in response to investor pushback

A day after a prominent hedge fund investor attempted to force CoStar to abandon its attempt to build a fourth major real estate portal, parent company Homes.com pushed back against the idea.

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Third Point founder Daniel Loeb released a blistering public letter Tuesday calling CoStar’s heavy investments in residential real estate a “fiasco” and calling for a new list of directors on the company’s board of directors who would consider leaving Homes.com.

But exiting Homes.com and the company’s other residential real estate investments would be premature, CoStar responded Wednesday, as it sought to build confidence that its strategy would pay off.

“Third Point’s demand that we leave Homes.com reflects their complete misunderstanding of our company, our industry and the strong progress we are making,” the company said. “The third point would have you believe that Homes.com could be jettisoned or closed without any negative impact on our business or competitive position.”

Much of the battle centers on the ability of CoStar, a commercial real estate giant that has pushed its way into residential construction in recent years, to generate stronger returns for investors.

But at its core are questions about whether CoStar Homes.com can morph into a behemoth residential real estate tool on par with Zillow, Realtor.com and Redfin.

The company has suggested that it was friendlier to real estate agents than its competitors, specifically targeting Zillow and creating a model that made it easier for consumers to connect directly with agents.

In his letter Tuesday, Loeb suggested that consumers were already entrenched in the other top three portals, and that easy access to listings through the other MLS syndicators meant Homes.com lacked “meaningful differentiation.”

Loeb’s promise to appoint a series of new directors and CoStar’s response set off a battle over whether shareholders agree with Loeb or CoStar’s management.

After years of heavy spending on marketing to raise awareness of the Homes.com brand, CoStar announced earlier this month that it would make drastic cuts in 2026 and continue those cuts through 2030.

The cuts follow a $1 billion marketing spend that began in 2024 $1.6 billion acquisition from 3D scanning company Matterport, a purchase that can be applied to CoStar’s brands.

In its letter on Wednesday, CoStar positioned the cuts as the end of an investment period that is standard for the company. And it was said that the housing market is too big to ignore.

“CoStar Group has always grown by investing with a long-term vision. The investment periods, whether CoStar, Apartments.com, LoopNet or our other platforms, have always taken time, and we asked investors to trust that we have the expertise to make the vision a reality,” the company said. “We have never failed to deliver on the vision before, and we will never fail again.”

“One thing we know for sure is that exiting Homes.com as it winds down its investment phase would be a surefire way to destroy long-term value for shareholders,” CoStar said.

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