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Zillow seeks to sell 7k homes for $2.8B after flipping halt

bloomberg.com

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Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#41

Post by wayoutthere »

silisili wrote: post #29
wayoutthere wrote: post #8

Earlier quoted context omitted.

There is plenty of idle money in the investment world that needs places to go, unfortunately. Homebuyers are still being priced out by institutional investors looking to be long-term landlords. The market consensus right now is that inflation is here to stay for the next decade and bond prices aren’t adjusting accordingly, so there’s a flood of cash into all asset classes to try to hedge.

Sorry if this is a stupid question/thought... but wouldn't a mass run to asset classes itself cause inflation? Like some self fulfilling prophecy?

The cause of the problem is that companies are claiming an outsized share of productivity growth such that the house is simply worth more to them. There’s more money in the investment class than there is among homebuyers, and the investment class needs somewhere to put their money that won’t depreciate.

This is what happens when real wages stagnate for 20 years but the economy keeps growing and consolidating. Eventually it catches up to you and you end up with a decade of stagflation while the imbalance corrects itself and a competitive market is re-established. Unchecked free-market capitalism has its drawbacks in the long term; we fucked around and we’re about to find out.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#42

Post by webinvest »

jdavis703 wrote: post #14
ineedasername wrote: post #7

Earlier quoted context omitted.

Unfortunately, at an average price of about $400,000 most of them are not going to be affordable for a typical young first-time buyer.

$400k seems very affordable. I could easily buy a house today if that’s what FHA-grade (i.e. something more than a burned out shack) housing went for. In my county the median house goes for over $1 million.

What country is that?

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#43

Post by altacc »

cletus wrote: post #15

This is a good example of the fallacy of youth: buying too far into hype and being all "the sky is falling" with negative news. It wasn't long ago that we were reading how Zillow et al were going to buy up all the housing stock and keep millenials and Zoomers homeless forever. The people saying this have obviously never gone through a "bust" cycle. This is unsurprising as we've now been in the longest bull market in…

I wouldn't be too quick to claim that the myth of institutional house buying has been dispelled. Zillow isn't the only company out there buying real estate, and they are planning to sell most of the properties to other institutions and landlords, not the open market of owner occupiers.

It appears they made some errors in their calculations and temporarily bought too many houses at too high a price but the article says they are only pausing purchasing for the rest of the year and there's no mention of if they are revising their plan to purchase up to 5,000 homes a month by 2024.

So, looks like without evidence of a market wide cessation or significant long term reduction, significant institutional real estate actors remain a factor in the market.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#44

Post by whimsicalism »

silisili wrote: post #29
wayoutthere wrote: post #8

Earlier quoted context omitted.

There is plenty of idle money in the investment world that needs places to go, unfortunately. Homebuyers are still being priced out by institutional investors looking to be long-term landlords. The market consensus right now is that inflation is here to stay for the next decade and bond prices aren’t adjusting accordingly, so there’s a flood of cash into all asset classes to try to hedge.

Sorry if this is a stupid question/thought... but wouldn't a mass run to asset classes itself cause inflation? Like some self fulfilling prophecy?

Can we please stop using the term inflation to mean rising asset prices?

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#45

Post by jdavis703 »

webinvest wrote: post #42
jdavis703 wrote: post #14

Earlier quoted context omitted.

$400k seems very affordable. I could easily buy a house today if that’s what FHA-grade (i.e. something more than a burned out shack) housing went for. In my county the median house goes for over $1 million.

What country is that?

USA.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#46

Post by r3trohack3r »

valeness wrote: post #28
cletus wrote: post #15

This is a good example of the fallacy of youth: buying too far into hype and being all "the sky is falling" with negative news. It wasn't long ago that we were reading how Zillow et al were going to buy up all the housing stock and keep millenials and Zoomers homeless forever. The people saying this have obviously never gone through a "bust" cycle. This is unsurprising as we've now been in the longest bull market in…

But didn't they sell the houses to investors and/or established landlords? I'm not sure how this helps the youth or those otherwise disillusioned with the current housing market as that housing is still unavailable to them.

I think the ops point is that it will end, not that it has ended.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#47

Post by judge2020 »

arthurcolle wrote: post #40
JumpCrisscross wrote: post #31

Earlier quoted context omitted.

> Zillow getting into flipping seems questionable to me. The customers are no longer aligned with the company on goals with something like this I'm currently looking to buy a house. Having a Zillow in between the seller and myself (as a dealer, not a broker) wouldn't be a slam dunk, but it would be worth some non-zero premium to me. (Just offering a counterpoint to the "uselessly driving up prices" narrative.)

Not only that (it's true though) but what if they committed to a certain $ figure of upgrades/renovations for the house in question? Seems valuable in terms of property values even if it costs the seller/buyer some additional premium up front

As someone selling to Zillow, they do retain a certain amount ($x thousands) from the seller for repairs and cleaning, at least for relatively new construction. I imagine it's a larger number depending on how old the house is and how much repair they think they need based on their appraisal/final walkthrough.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#48

Post by IAmGraydon »

johnnyApplePRNG wrote: post #24

How on earth did a real estate analytics company lose money buying and selling homes in THIS market?

I think the simplest way to put it is they FOMOed into a very illiquid asset class in a very high risk market and now need to close the position quickly, which is going to cost them. I’m guessing they see a residential collapse on the near horizon.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#49

Post by mywittyname »

onion2k wrote: post #25
sremani wrote: post #11

Earlier quoted context omitted.

Projected population of US in 2050 is 458 million from the current 330 million. Given that underlying reality, housing is going to be an investment.

Assuming that the additional 128m people need about 50m - 70m new homes it would make sense that there's going to be a boom in supply of homes in the near future. Without the ability to control or limit that growth it could easily result in an oversupply, especially in any given geographic region, which would lead to a contraction in prices. Unless you're also able to predict where these new citizens will live I'd su…

>Unless you're also able to predict where these new citizens will live

Larger cities, especially those in warmer regions, is a very good bet.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#50

Post by ineedasername »

IAmGraydon wrote: post #27

When I heard that Zillow was buying in the middle of an extremely exuberant residential market, it surprised me and I thought they must know something I don’t. Surely they aren’t stupid enough buy and hold a fairly illiquid asset class during market all time highs. Guess I was wrong.

Yes-- Also unless you're buying some type of financial vehicle, "buy & hold" doesn't encompass the full picture since they are physical assets with IRL needs. Unlike a security/stock/bond etc., in real estate unless you have tenants paying rent then even if the asset value remains the same, you're losing money due to costs like property taxes.
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