There’s another consideration here. The entire buying operation was debt financed which created incentives for risky behavior and left very little margin for er

There’s another consideration here. The entire buying operation was debt financed which created incentives for risky behavior and left very little margin for error. Not only does your sales price need to cover the cost of the house and any improvements, it must also cover the interest expense (123 million YTD according to their latest 10Q, vs 2.67B in sales of houses or about 4.6% yield relative to sales). And that interest expense is there regardless of how many houses you sell. If Zillow predicted housing prices to go up and it merely stayed flat instead, they can’t just hold the inventory for longer in hopes that the market might go up a few months from now. They’ve got that interest expense to cover. The whole operation implodes the moment they made a bad prediction because of the debt financing. Yes, their models were wrong. But if they had a different capital structure maybe they’d be able to hold the inventory for longer to try to turn a profit and rebound instead of collapse.