15 ms·

Zillow has listed 93% of the hundreds of Phoenix homes it owns at a loss

139 points by pezzana 5y ago

swiley 5y ago
Here we go.
- vmception 5y ago
  Not really if there isn’t a ton of unsecured leverage. Assuming that's what you mean, In 2008 Morgan Stanley was leveraged 46:1, meaning for every million dollars they had, they were speculating with $46,000,000 they didnt have. All on the price of CDOs, which nobody knew were based on the continued payments of individual mortgage holders who were barely making the payments introductory rates. Actually most were even the subprime borrowers, the system was so fragile that it imploded by a mere 7% of them not paying. Remains to be seen where the hidden leverage is this time. Its always hidden leverage, but rarely the same hidden leverage. So “this time is always different” in the sense that there’s a different reason for the crash. If Zillow is not overleveraged and is instead just burning treasury dollars, they just have a portfolio that declines 20%, which isnt a big deal if you arent leveraged.
  - scottjg 5y ago
    given interest rates are at a historic low, i would be shocked if they are using actual cash to buy these houses. presumably they are buying with mortgages?
    - vmception 5y ago
      or the corporate entity has borrowed funds at the super low interest rates for general purposes which it uses for this purpose cursory google search shows $1.1bn in bonds issued that way as well as a more recent $450bn which is actually collateralized by the properties they've already bought, already in their portfolio not even 1:1 leverage, and a far cry from the 46:1 leverage seen on the institutional side in 2008 https://aimgroup.com/2019/09/05/zillow-issues-1-1b-in-debt-as-home-flipping-arm-grows/ https://aimgroup.com/2019/09/05/zillow-issues-1-1b-in-debt-a... https://www.bloomberg.com/news/articles/2021-08-03/zillow-450-million-bond-deal-a-first-for-big-tech-home-flippers https://www.bloomberg.com/news/articles/2021-08-03/zillow-45...
DaveExeter 5y ago
Sometimes you're up, sometimes you're down!
dralley 5y ago
The "disrupt" mantra endorsed by Softbank et. al. has grown extremely old. Housing prices in my area have inflated 25% in the past year - one year - and real estate companies like Zillow immediately buying up everything on the market is a primary contributor. This isn't disrupting an industry, this is disrupting people's lives, and for what? What good is supposed to come from Zillow (et. al.) oligopolizing the housing market, and driving up prices like this?
- silisili 5y ago
  Agree 100%. My opinion on this president, congress, governor, and local government(so, not partisan) hinges completely on whether they do anything to curb this. I don't care if it started under X, they inherited the problem and have done nothing to even attempt to fix it, which is maddening. Prices in my area are up 75ish % since 2018. Rent prices about 50.
  - esoterica 5y ago
    Home prices and rents are up because of low interest rates and nimbys who block new construction. Corporations buying homes have literally nothing to do with it. If they buy homes to flip they have no net impact on home prices (because they buy and sell in equal quantities). If they buy homes to rent out they exert downward pressure on rents, so they are not responsible for rising rents. The reason why the government has done nothing to fix it is because 1. The median voter is a homeowner and WANTS homes to be unaffordable so their investment goes up. 2. The median non-homeowner does not understand basic supply and demand and does not understand that the lack of housing is the main driver of high home prices, so they complain about red herrings like Zillow buying up houses instead of pushing the government loosen zoning restrictions on multifamily housing. You fall into the latter category, which means YOU are part of the problem. You complain about the government not doing anything to fix the housing problem but people like you are literally the reason why it doesn't get fixed.
    - space_fountain 5y ago
      I’m not an economist but it feels to me like more most be going on. Capital is flowing into real estate because the people investing feel that they don’t have better places to put it. The fed is struggling to get capital into the places that would lift employment, like new buildings, infrastructure, new business formation, and instead a lot of that money is going to bid things up
dreyfan 5y ago
Zillow is the brokerage and they take fees when they buy the home from their users and depending on how they sell it they often take fees on that side of the transaction too. So when you see that Zillow "bought" a home at $500,000, the seller actually gets closer to $450,000 on average. They of course want the $500k price tag to hit the MLS records though, since it supports the endlessly appreciating housing market narrative. It's not as simple as a buy-low sell-high home flipping strategy. > "Altogether, Zillow Offers fees can add up to as much as 22% of your home’s sale price — much more than you’d pay while selling on the open market." [1] https://www.realestatewitch.com/zillow-instant-offers/ https://www.realestatewitch.com/zillow-instant-offers/
- zdragnar 5y ago
  That's basically all real estate agents, and if someone selling their home to zillow only pays 10% total (since sellers typically pay agents for both sides of the transaction) that isn't a bad deal for the home seller at all. Edit: I misremembered commission costs. 10% on the sale of a house is rather high unless the seller is covering additional costs as well.
  - dreyfan 5y ago
    I understand that, I'm not suggesting it's a scam or anything (though typically in the US a home seller pays 3% to the buyers agent and 3% to the sellers agent). I'm saying when Bloomberg exclaims "Zillow is selling homes at a loss!" they're missing the point of the strategy. As long as the price they sell for still exceeds the fees they take, it's a profitable move. Also many of these transactions do not involve traditional brokerages whatsoever. People sell their homes directly to Zillow and other people buy the homes directly from Zillow.
    - midasuni 5y ago
      3%? 6%? My last house sale in the U.K. was 0.5% of the sale price to the estate agent (the buyer doesn’t pay anything). Legal fees on my side for selling and buying were another 0.5%, and a little for a survey. Total cost to sell and buy well under 1.5%. Why do you get for that 6%?
short12 5y ago
Maybe they relied on their own piece of shit Zestimate tool They would have been better off pricing based on a dartboard
villasv 5y ago
https://archive.md/dylwy https://archive.md/dylwy
dopamean 5y ago
It’s interesting to me how often Zillow gets mentioned for their ibuying business when iirc they are like the 4th largest ibuyer and way way behind #1 and #2.
- ConcernedCoder 5y ago
  ..which are?
  - wffurr 5y ago
    "the three biggest iBuyers — Opendoor, Offerpad and Zillow Offers" From a bit of research.
sgpl 5y ago
While this behaviour by corporations (eg: Zillow buying and flipping, or Blackstone buying and renting out houses [0]) is inflating housing prices across the country, I don't see them stopping anytime soon even in the face of temporary losses (in the case of Zillow here). As a corporation they can withstand this, triage the situation internally and get smarter about flipping in the future. Personally I feel that this only makes housing more unaffordable in the long run for most people and only policy level intervention by the government is going to stem such actions in the future. Obviously real estate/housing is seen as a good investment because it's one of the few asset classes available to average/retail investors where they can access leverage in a massive way to build up a portfolio of housing assets over time so if any legislation about this is even considered, it'll probably face a lot of opposition even from people it won't possibly affect (because that's what happens these days + FUD). I guess I don't really see any meaningful changes in the near future that'll make housing affordable for the masses (at least in some of the most desirable real estate markets, can't talk about rural markets as I don't know enough). For more context, I live in Toronto and unless I settle for owning a condo or housing in the suburbs, owning a house in the city is pretty much a no go for me and most of my peers. [0] https://www.wsj.com/articles/blackstone-bets-6-billion-on-buying-and-renting-homes-11624359600 https://www.wsj.com/articles/blackstone-bets-6-billion-on-bu...
- space_fountain 5y ago
  I think the danger is when they assume that making money will only require some simple tweaks, happy to sell at a loss in the meantime and then at some point in the future realize that actually the whole things was a capital fueled house of cards. I think one could argue that something like this has happened with Uber and Lyft (though perhaps covid + inflation has more to do with those price increases)
- unreal37 5y ago
  I've seen Zillow in interviews claim that they are actually physically improving the homes before selling. And they sell for basically what they bought for it intentionally, so they're not actually inflating prices. They're improving homes, helping sellers get out of homes faster, and not raising the prices. This isn't like those home flippers on TV who buy a house for $70K, put $20K into it, and sell it for $200K. The story you're commenting on says they sell 90%+ for less than they paid. This isn't a simple "Zillow buying homes must be bad". More analysis required.
latchkey 5y ago
Listing != Sale price Couldn't this also be a ploy to drive demand? "Look at all those in-expensive houses on the market!"
jollybean 5y ago
Homes that are not bought to live in should be taxed in a fundamentally different manner.
- bink 5y ago
  They are, in a sense. You do not receive the capital gains tax exemption if you do not reside in the house for something like 2 of the last 5 years before the sale. You also pay a different tax level if the sale occurs within a year. I'm not sure how a 1031 exchange impacts these companies though. They're probably reinvesting the money in other real estate.
- djrogers 5y ago
  In most markets (ie. not right now in a huge run-up), house flippers are generally good for a neighborhood. They buy run down, neglected, and under-market houses, fix them up to at-market condition, then sell them. Oh, and they pay taxes on the profits. If you choose to penalize this behavior, not only will it not occur in average and down markets, you’d lose out on the capital gains tax revenue that’s currently collected.
  - mgkimsal 5y ago
    "Oh, and they pay taxes on the profits." do they? or do they just keep doing 1031 exchanges, and doing cash-out refinances now and then to use the money?
    - sakopov 5y ago
      According to IRS 1031(a)(1) a property that isn't held for investment does not qualify for 1031 exchange. A pure flip on real estate is held for sale and therefore does not qualify for 1031 exchange.
    - diveanon 5y ago
      I personally know someone who did this up to a $30m home in ft. Lauderdale that they cashed out recently and paid effectively no taxes on. The system is completely broken.
djrogers 5y ago
FTA: “If the company were to sell all of its Phoenix homes right now at their list prices, it would lose $6.3 million dollars.” Over 224 homes, we’re not exactly talking about a huge loss here. Sure, profit is better than loss, but 6mil to learn some lessons in building out a new division in a company isn’t all that bad in the grand scheme of things.
- refulgentis 5y ago
  I don't think people are worried about the corporation's loss, much the opposite, they're worried that its a big fish that creates inflated pricing, ex. given the data you shared, it overshot $30,000/house.
  - rasz 5y ago
    $30,000 is less than what they charge per transactions, meaning they made money, and are playing musical chairs with numbers.
lumost 5y ago
I suspect that the problem boils down to the following: 1) Zillow made a financial/ML model which would predict the sell price of a home in N months. 2) Zillow leveraged dirt cheap mortgage rates + VC money to outbid other sellers to be able to sell the home in N months 3) Zillow drove property developers and house flippers out of the market. 4) The homes Zillow is looking to sell within N months don't have the "improvements" to justify the increased price. 5) The Zillow financial model turns out to have been biased on historic trends. As others have noted Zillow makes money on more than just the price delta, they are also deploying capital to acquire more of the market to collect fees from. They are also theoretically able to benefit from appreciating prices being much much higher than interest costs in 2021. The con of all of this is that it's a rent seeking business model entering markets that are already full to the brim with rent seekers. If Zillow acquires enough of the "float" in the market they can effectively set prices to be whatever the demand will bear. Surprisingly housing is so constrained at this point that in a major city like Boston you could purchase all outstanding homes for <200 Million dollars.
- jdross 5y ago
  This isn’t really how this business works, nor why Zillow failed operationally to price correctly. To everyone at Opendoor when Zillow started to scale, this was a long time coming
- lotsofpulp 5y ago
  > Surprisingly housing is so constrained at this point that in a major city like Boston you could purchase all outstanding homes for <200 Million dollars. And then do what?
  - taneq 5y ago
    Sell them again now that you’ve pumped the market?
    - lotsofpulp 5y ago
      If it was that easy, what is stopping other cash rich entities? There are clearly large risks and liabilities associated with this maneuver.
sp332 5y ago
Their stated reason for not buying more houses for the rest of this year is that they ran out of people who can fix the houses up before flipping them. https://slate.com/technology/2021/10/ibuying-zillow-purchase-pause-interview.html https://slate.com/technology/2021/10/ibuying-zillow-purchase... So maybe they could sell these houses for more money if they just had the workers available to increase the value of the houses.
victor22 5y ago
This really sounds like a PR piece for Zillow
RustyConsul 5y ago
The supply and demand chart of real estate has gotten weird lately. Tech has generated unbelievable wealth, government is racking up debt to perpetuate this endless cycle of asset inflation, while Airbnb further defined rent-seeking all leading to rapid asset consolidation of 'real-world assets'. I don't have any idea what the answer is, but some of the asset classes are really stressing the idea of how a market can function with constrained liquidity and unlimited appetite. One non-obvious example but tangentially demonstrative to my point is Shibu Inu coin. With 80% of the 'Coin' being either burned or controled by insiders, and use of highly leveraged instruments(100-1000x) has lead to constrained liquidity and have sent it on an absolute surge. Granted, this example falls flat because as soon as the insiders attempt to cash out on their scheme, it all comes crashing down. But the real estate market is different because we are talking about a necessity, not some autistic cybernaught dystopia coin. Constrained liquidity on a necessity that also has very long lead times and regulatory bottle necks is going to lead to a revolution. With 20% APR's on house prices, my generation will never be able to own a home in a city. Every metric imaginable seems to point to some asymptote in the late 2040's. Every generation seems to be living in the most interesting of times, but I truly believe my generation is going to be facing something bigger.
irrational 5y ago
We sold our house earlier this year. Out of curiosity we asked Zillow for a quote. To our surprise their quote was very competitive. The one downside is they required us to pay $3000 for repairs, but this was in a market where home inspections were being waived and asking the seller to do repairs was out of the question. The surprising thing was every 2 weeks after that they gave us a new quote that was 5% higher. They did that 3 times. We ended up not using them.
diveanon 5y ago
So at what point are we as a society going to acknowledge that affordable housing is basic human right and push for legislation to ban this kind of behavior? We are well on our way to another massive housing crisis and I am not confident at all that we will recover from it. It’s been clear for a while that the US government does not serve the people, maybe this will be the straw that breaks the peoples back.

139 points by pezzana 5y ago

swiley 5y ago

Here we go.

vmception 5y ago
Not really if there isn’t a ton of unsecured leverage. Assuming that's what you mean, In 2008 Morgan Stanley was leveraged 46:1, meaning for every million dollars they had, they were speculating with $46,000,000 they didnt have. All on the price of CDOs, which nobody knew were based on the continued payments of individual mortgage holders who were barely making the payments introductory rates. Actually most were even the subprime borrowers, the system was so fragile that it imploded by a mere 7% of them not paying. Remains to be seen where the hidden leverage is this time. Its always hidden leverage, but rarely the same hidden leverage. So “this time is always different” in the sense that there’s a different reason for the crash. If Zillow is not overleveraged and is instead just burning treasury dollars, they just have a portfolio that declines 20%, which isnt a big deal if you arent leveraged.
- scottjg 5y ago
  given interest rates are at a historic low, i would be shocked if they are using actual cash to buy these houses. presumably they are buying with mortgages?
  - vmception 5y ago
    or the corporate entity has borrowed funds at the super low interest rates for general purposes which it uses for this purpose cursory google search shows $1.1bn in bonds issued that way as well as a more recent $450bn which is actually collateralized by the properties they've already bought, already in their portfolio not even 1:1 leverage, and a far cry from the 46:1 leverage seen on the institutional side in 2008 https://aimgroup.com/2019/09/05/zillow-issues-1-1b-in-debt-as-home-flipping-arm-grows/ https://aimgroup.com/2019/09/05/zillow-issues-1-1b-in-debt-a... https://www.bloomberg.com/news/articles/2021-08-03/zillow-450-million-bond-deal-a-first-for-big-tech-home-flippers https://www.bloomberg.com/news/articles/2021-08-03/zillow-45...

DaveExeter 5y ago

Sometimes you're up, sometimes you're down!

dralley 5y ago

The "disrupt" mantra endorsed by Softbank et. al. has grown extremely old. Housing prices in my area have inflated 25% in the past year - one year - and real estate companies like Zillow immediately buying up everything on the market is a primary contributor. This isn't disrupting an industry, this is disrupting people's lives, and for what? What good is supposed to come from Zillow (et. al.) oligopolizing the housing market, and driving up prices like this?

silisili 5y ago
Agree 100%. My opinion on this president, congress, governor, and local government(so, not partisan) hinges completely on whether they do anything to curb this. I don't care if it started under X, they inherited the problem and have done nothing to even attempt to fix it, which is maddening. Prices in my area are up 75ish % since 2018. Rent prices about 50.
- esoterica 5y ago
  Home prices and rents are up because of low interest rates and nimbys who block new construction. Corporations buying homes have literally nothing to do with it. If they buy homes to flip they have no net impact on home prices (because they buy and sell in equal quantities). If they buy homes to rent out they exert downward pressure on rents, so they are not responsible for rising rents. The reason why the government has done nothing to fix it is because 1. The median voter is a homeowner and WANTS homes to be unaffordable so their investment goes up. 2. The median non-homeowner does not understand basic supply and demand and does not understand that the lack of housing is the main driver of high home prices, so they complain about red herrings like Zillow buying up houses instead of pushing the government loosen zoning restrictions on multifamily housing. You fall into the latter category, which means YOU are part of the problem. You complain about the government not doing anything to fix the housing problem but people like you are literally the reason why it doesn't get fixed.
  - space_fountain 5y ago
    I’m not an economist but it feels to me like more most be going on. Capital is flowing into real estate because the people investing feel that they don’t have better places to put it. The fed is struggling to get capital into the places that would lift employment, like new buildings, infrastructure, new business formation, and instead a lot of that money is going to bid things up

dreyfan 5y ago

Zillow is the brokerage and they take fees when they buy the home from their users and depending on how they sell it they often take fees on that side of the transaction too. So when you see that Zillow "bought" a home at $500,000, the seller actually gets closer to $450,000 on average. They of course want the $500k price tag to hit the MLS records though, since it supports the endlessly appreciating housing market narrative. It's not as simple as a buy-low sell-high home flipping strategy. > "Altogether, Zillow Offers fees can add up to as much as 22% of your home’s sale price — much more than you’d pay while selling on the open market." [1] https://www.realestatewitch.com/zillow-instant-offers/ https://www.realestatewitch.com/zillow-instant-offers/

zdragnar 5y ago
That's basically all real estate agents, and if someone selling their home to zillow only pays 10% total (since sellers typically pay agents for both sides of the transaction) that isn't a bad deal for the home seller at all. Edit: I misremembered commission costs. 10% on the sale of a house is rather high unless the seller is covering additional costs as well.
- dreyfan 5y ago
  I understand that, I'm not suggesting it's a scam or anything (though typically in the US a home seller pays 3% to the buyers agent and 3% to the sellers agent). I'm saying when Bloomberg exclaims "Zillow is selling homes at a loss!" they're missing the point of the strategy. As long as the price they sell for still exceeds the fees they take, it's a profitable move. Also many of these transactions do not involve traditional brokerages whatsoever. People sell their homes directly to Zillow and other people buy the homes directly from Zillow.
  - midasuni 5y ago
    3%? 6%? My last house sale in the U.K. was 0.5% of the sale price to the estate agent (the buyer doesn’t pay anything). Legal fees on my side for selling and buying were another 0.5%, and a little for a survey. Total cost to sell and buy well under 1.5%. Why do you get for that 6%?

short12 5y ago

Maybe they relied on their own piece of shit Zestimate tool They would have been better off pricing based on a dartboard

villasv 5y ago

https://archive.md/dylwy https://archive.md/dylwy

dopamean 5y ago

It’s interesting to me how often Zillow gets mentioned for their ibuying business when iirc they are like the 4th largest ibuyer and way way behind #1 and #2.

ConcernedCoder 5y ago
..which are?
- wffurr 5y ago
  "the three biggest iBuyers — Opendoor, Offerpad and Zillow Offers" From a bit of research.

sgpl 5y ago

While this behaviour by corporations (eg: Zillow buying and flipping, or Blackstone buying and renting out houses [0]) is inflating housing prices across the country, I don't see them stopping anytime soon even in the face of temporary losses (in the case of Zillow here). As a corporation they can withstand this, triage the situation internally and get smarter about flipping in the future. Personally I feel that this only makes housing more unaffordable in the long run for most people and only policy level intervention by the government is going to stem such actions in the future. Obviously real estate/housing is seen as a good investment because it's one of the few asset classes available to average/retail investors where they can access leverage in a massive way to build up a portfolio of housing assets over time so if any legislation about this is even considered, it'll probably face a lot of opposition even from people it won't possibly affect (because that's what happens these days + FUD). I guess I don't really see any meaningful changes in the near future that'll make housing affordable for the masses (at least in some of the most desirable real estate markets, can't talk about rural markets as I don't know enough). For more context, I live in Toronto and unless I settle for owning a condo or housing in the suburbs, owning a house in the city is pretty much a no go for me and most of my peers. [0] https://www.wsj.com/articles/blackstone-bets-6-billion-on-buying-and-renting-homes-11624359600 https://www.wsj.com/articles/blackstone-bets-6-billion-on-bu...

space_fountain 5y ago
I think the danger is when they assume that making money will only require some simple tweaks, happy to sell at a loss in the meantime and then at some point in the future realize that actually the whole things was a capital fueled house of cards. I think one could argue that something like this has happened with Uber and Lyft (though perhaps covid + inflation has more to do with those price increases)
unreal37 5y ago
I've seen Zillow in interviews claim that they are actually physically improving the homes before selling. And they sell for basically what they bought for it intentionally, so they're not actually inflating prices. They're improving homes, helping sellers get out of homes faster, and not raising the prices. This isn't like those home flippers on TV who buy a house for $70K, put $20K into it, and sell it for $200K. The story you're commenting on says they sell 90%+ for less than they paid. This isn't a simple "Zillow buying homes must be bad". More analysis required.

latchkey 5y ago

Listing != Sale price Couldn't this also be a ploy to drive demand? "Look at all those in-expensive houses on the market!"

jollybean 5y ago

Homes that are not bought to live in should be taxed in a fundamentally different manner.

bink 5y ago
They are, in a sense. You do not receive the capital gains tax exemption if you do not reside in the house for something like 2 of the last 5 years before the sale. You also pay a different tax level if the sale occurs within a year. I'm not sure how a 1031 exchange impacts these companies though. They're probably reinvesting the money in other real estate.
djrogers 5y ago
In most markets (ie. not right now in a huge run-up), house flippers are generally good for a neighborhood. They buy run down, neglected, and under-market houses, fix them up to at-market condition, then sell them. Oh, and they pay taxes on the profits. If you choose to penalize this behavior, not only will it not occur in average and down markets, you’d lose out on the capital gains tax revenue that’s currently collected.
- mgkimsal 5y ago
  "Oh, and they pay taxes on the profits." do they? or do they just keep doing 1031 exchanges, and doing cash-out refinances now and then to use the money?
  - sakopov 5y ago
    According to IRS 1031(a)(1) a property that isn't held for investment does not qualify for 1031 exchange. A pure flip on real estate is held for sale and therefore does not qualify for 1031 exchange.
  - diveanon 5y ago
    I personally know someone who did this up to a $30m home in ft. Lauderdale that they cashed out recently and paid effectively no taxes on. The system is completely broken.

djrogers 5y ago

FTA: “If the company were to sell all of its Phoenix homes right now at their list prices, it would lose $6.3 million dollars.” Over 224 homes, we’re not exactly talking about a huge loss here. Sure, profit is better than loss, but 6mil to learn some lessons in building out a new division in a company isn’t all that bad in the grand scheme of things.

refulgentis 5y ago
I don't think people are worried about the corporation's loss, much the opposite, they're worried that its a big fish that creates inflated pricing, ex. given the data you shared, it overshot $30,000/house.
- rasz 5y ago
  $30,000 is less than what they charge per transactions, meaning they made money, and are playing musical chairs with numbers.

lumost 5y ago

I suspect that the problem boils down to the following: 1) Zillow made a financial/ML model which would predict the sell price of a home in N months. 2) Zillow leveraged dirt cheap mortgage rates + VC money to outbid other sellers to be able to sell the home in N months 3) Zillow drove property developers and house flippers out of the market. 4) The homes Zillow is looking to sell within N months don't have the "improvements" to justify the increased price. 5) The Zillow financial model turns out to have been biased on historic trends. As others have noted Zillow makes money on more than just the price delta, they are also deploying capital to acquire more of the market to collect fees from. They are also theoretically able to benefit from appreciating prices being much much higher than interest costs in 2021. The con of all of this is that it's a rent seeking business model entering markets that are already full to the brim with rent seekers. If Zillow acquires enough of the "float" in the market they can effectively set prices to be whatever the demand will bear. Surprisingly housing is so constrained at this point that in a major city like Boston you could purchase all outstanding homes for <200 Million dollars.

jdross 5y ago
This isn’t really how this business works, nor why Zillow failed operationally to price correctly. To everyone at Opendoor when Zillow started to scale, this was a long time coming
lotsofpulp 5y ago
> Surprisingly housing is so constrained at this point that in a major city like Boston you could purchase all outstanding homes for <200 Million dollars. And then do what?
- taneq 5y ago
  Sell them again now that you’ve pumped the market?
  - lotsofpulp 5y ago
    If it was that easy, what is stopping other cash rich entities? There are clearly large risks and liabilities associated with this maneuver.

sp332 5y ago

Their stated reason for not buying more houses for the rest of this year is that they ran out of people who can fix the houses up before flipping them. https://slate.com/technology/2021/10/ibuying-zillow-purchase-pause-interview.html https://slate.com/technology/2021/10/ibuying-zillow-purchase... So maybe they could sell these houses for more money if they just had the workers available to increase the value of the houses.

victor22 5y ago

This really sounds like a PR piece for Zillow

RustyConsul 5y ago

The supply and demand chart of real estate has gotten weird lately. Tech has generated unbelievable wealth, government is racking up debt to perpetuate this endless cycle of asset inflation, while Airbnb further defined rent-seeking all leading to rapid asset consolidation of 'real-world assets'. I don't have any idea what the answer is, but some of the asset classes are really stressing the idea of how a market can function with constrained liquidity and unlimited appetite. One non-obvious example but tangentially demonstrative to my point is Shibu Inu coin. With 80% of the 'Coin' being either burned or controled by insiders, and use of highly leveraged instruments(100-1000x) has lead to constrained liquidity and have sent it on an absolute surge. Granted, this example falls flat because as soon as the insiders attempt to cash out on their scheme, it all comes crashing down. But the real estate market is different because we are talking about a necessity, not some autistic cybernaught dystopia coin. Constrained liquidity on a necessity that also has very long lead times and regulatory bottle necks is going to lead to a revolution. With 20% APR's on house prices, my generation will never be able to own a home in a city. Every metric imaginable seems to point to some asymptote in the late 2040's. Every generation seems to be living in the most interesting of times, but I truly believe my generation is going to be facing something bigger.

irrational 5y ago

We sold our house earlier this year. Out of curiosity we asked Zillow for a quote. To our surprise their quote was very competitive. The one downside is they required us to pay $3000 for repairs, but this was in a market where home inspections were being waived and asking the seller to do repairs was out of the question. The surprising thing was every 2 weeks after that they gave us a new quote that was 5% higher. They did that 3 times. We ended up not using them.

diveanon 5y ago

So at what point are we as a society going to acknowledge that affordable housing is basic human right and push for legislation to ban this kind of behavior? We are well on our way to another massive housing crisis and I am not confident at all that we will recover from it. It’s been clear for a while that the US government does not serve the people, maybe this will be the straw that breaks the peoples back.