They became part of the feedback in their model. Real estate markets are high value with limited inventory, if you add market maker (zilllow) they set the floor

They became part of the feedback in their model. Real estate markets are high value with limited inventory, if you add market maker (zilllow) they set the floor. They had too much influence on the price, and didn’t just provide liquidity. Additionally these transactions take time to settle, and Zillow tried to improve their profit buy improving adding additional risk by increasing holding time. Finally im not sure how they hedged the risk. How do you short houses? If you consider mortgages like you holding 20% to protect the bank from losing, the variability can be difficult up to 20%, and leaves you with a hell of a downside.